Finance
Dow Jones Futures: Nvidia Tumbles as Earnings Don’t Surprise; Salesforce is rising
Dow Jones futures rose slightly overnight, while S&P 500 futures and Nasdaq futures fell. Nvidia (NVDA) sold overnight despite disappointing ratings, going higher and announcing a $50 billion buyback.
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Sellers Hit Nasdaq Ahead of Nvidia Results; Palantir, TDG, Evercore Hold Up
Other AI stocks like Broadcom (AVGO), Nvidia chipmaker Taiwanese semiconductor manufacturing (TSM), Advanced micro devices (AMD), Arista Networks (ANET) withdrew somewhat.
In the meantime, Salesforce (CRM), CrowdStrike (CRWD) And Okay (OKTA) all beat views Wednesday night, as well as save plays NetApp (NTAP), Pure storage (PSTG) And Nutanix (NTNX). But shares diverged.
The stock market rally retreated on Wednesday, heading into Nvidia’s gains, but rebounding strongly from intraday lows. NVDA stock retreated, as did most AI stocks, but also cut losses significantly.
Nvidia stock is on IBD rankings. Nvidia, Arista and Pure Storage stocks are on the list IBD50. Arista’s stock is on the ropes IBD Bigcap 20.
Dow Jones futures today
Dow Jones futures rose 0.15% from fair value, with Salesforce stock a Dow component. S&P 500 futures fell 0.5%. Nasdaq 100 futures fell 0.9%. NVDA stock is a key member of the S&P 500 and Nasdaq 100, with Broadcom, AMD and Arista also being notable players, along with many other tech giants benefiting from Nvidia revenue.
Remember, overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading during the next regular stock market session.
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Stock market rally
The stock market rally retreated on Wednesday after Super Micro and Nvidia led tech companies lower heading into Nvidia’s earnings report.
The Dow Jones Industrial Average fell 0.4% in the stock market on Wednesday. The S&P 500 index lost 0.6%, with SMCI shares by far the worst performer. The Nasdaq index lost 1.1%. The small-cap Russell 2000 fell 0.65%.
The Nasdaq closed below the 50-day mark and briefly undershot the 21-day mark. The Dow Jones and S&P 500 retreated more modestly, holding above key levels and near record highs.
Nvidia Partner Super microcomputer (SMCI) plunged 19%, almost a huge run from earlier this year. The AI server maker postponed a 10,000 SEC filing a day after Super Micro was accused of suspicious accounting in a short sale report.
Foot Locker (FL), Abercrombie & Fitch (ANF) And Li Auto (LI) were among the big profit losers. Neurocrine biosciences (NBIX) plummeted after its experimental schizophrenia drug lagged behind rivals’ treatments.
US crude oil prices fell 1.3% to $74.52 per barrel. The yield on ten-year government bonds rose by one basis point to 3.84%.
ETFs
Of the growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) fell 1.2%, with Salesforce shares having a large stake. The VanEck Vectors Semiconductor ETF (SMH) lost 1.7%. Nvidia stock is number one in SMH, with Taiwan Semiconductor, Broadcom and AMD all notable members.
Reflecting more speculative story stocks, ARK Innovation ETF (ARKK) fell 2.5% and ARK Genomics ETF (ARKG) retreated 1.6%.
SPDR S&P Metals & Mining ETF (XME) lost 1.9%. SPDR S&P Home Builders ETF (XHB) fell by 0.7%. The Energy Select SPDR ETF (XLE) fell 0.6% and the Health Care Select Sector SPDR Fund (XLV) rose by 0.1%.
The Industrial Select Sector SPDR fund (XLI) lost a fraction. The Financial Select SPDR ETF (XLF) rose by 0.25%.
Time the market with IBD’s ETF market strategy
Nvidia revenue
Nvidia’s profit and revenue showed triple-digit growth for the fifth quarter in a row. But the size of the gain was relatively modest compared to the company’s big results in previous quarters.
The AI chip giant guided third-quarter revenue slightly above consensus.
Nvidia also announced a $50 billion buyback. The chip giant still had $7.5 billion left on its existing license.
Amid reports that Blackwell processors would be delayed, Nvidia CEO Jensen Huang said on the earnings call that shipments of the next-generation AI chip would begin in volume in the fourth quarter.
Investors will want to hear confirmation on delays to the next-generation Blackwell AI chip and whether customers will double down on the current generation of AI chips.
Nvidia Stock, other AI hardware games
Nvidia shares fell sharply during the overnight action, signaling they were falling below the 50-day line. Shares fell 2.1% to 125.61 in Wednesday’s session after undermining recent intraday lows. Getting above that range would provide a quasi-handle early access. The official NVDA stock buy point is 140.76, with 136.15 as the new early entry.
Shares of Broadcom, Taiwan Semiconductor and AMD fell sharply and Arista fell modestly. All stocks except AMD had been relatively close to buying opportunities.
A look into Nvidia’s competitive AI moat
Other income
Salesforce revenue topped the list, with the software giant providing widely varying guidance. CRM shares rose modestly in late trading. Shares closed 2% lower, slightly below the 200-day line.
CrowdStrike’s earnings beat expectations, but the cybersecurity giant ended lower after causing a global outage on July 18. CRWD shares fell sharply in overnight trading after initially rising. Shares have bounced back from their August 5 lows but are still well below the 50-day and 200-day ranges.
Okta’s results modestly exceeded views in the second quarter. Okta shares plummeted amid extended action. Shares fell 0.45% to 96.54 on Wednesday. Okta has a buy point at 114.50, but could use a clear move above 100 as an early entry.
NetApp’s profits fell short of revenue, which exceeded consensus. NTAP shares fell sharply overnight. The data storage giant fell 0.9% to 131.91 on Wednesday. NetApp stock has a buy point of 134.37 points on a V-shaped consolidation.
Pure Storage revenues reached the top. PSTG shares fell in extended trading after recently hitting resistance at the 50-day line. Shares fell 2.2% to 59.76 on Wednesday. A decisive clearing of the 50-day would also surpass the short-term highs and a trendline, providing an early entry into the storage game. The official buy point for Pure Storage stock is 70.41.
Nutanix earnings exceeded fourth-quarter expectations. NTNX shares rose after hours. Shares fell 1.7% on Wednesday, stuck between their 200-day and 50-day lines after plunging following fiscal Q3 results.
What to do now
The stock market rally stalled or retreated toward Nvidia’s gains.
Investors may need to be active on Thursday, ready to add or cut exposure depending on the reaction to Nvidia, Salesforce and more. So make sure you prepare your watchlists and exit strategies.
Read The Big Picture every day to stay informed about market direction and the most important stocks and sectors.
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