Dow Jones Futures Rise After Iran Drone, Missile Attack on Israel

Dow Jones futures rose slightly on Sunday evening, along with S&P 500 futures and Nasdaq futures, after Israel thwarted Iran’s drone and missile attack.

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Israel, the US and other allies shot down 99% of about 350 Iranian drones and missiles. An Israeli military base was slightly damaged in Saturday’s attack.

Tehran had vowed retaliation for the Israeli attack on its consulate in Damascus on April 1. Iran told the UN on Saturday that the case “can be considered closed.” The well-telegraphed attack appears to have been an attempt to deliver a strong response while minimizing the risk of a much wider escalation.

President Biden and fellow Group of Seven leaders “strongly condemned” Iran’s attack in a statement on Sunday but called for calm. Israel’s war cabinet met to consider its options.

Dow Jones futures today

Dow Jones futures rose 0.2% versus fair value. S&P 500 futures rose 0.25% and Nasdaq 100 futures rose 0.15%.

Crude oil futures were flat.

The interest rate on ten-year government bonds rose slightly to 4.52%.

Gold and copper futures rose sharply.

Bitcoin rose above $65,000 on Sunday, but was below pre-attack levels around $67,000. Bitcoin prices fell 5.1% to $66,870.29 on Friday.

Remember, overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading during the next regular stock market session.

That could be especially true as futures traders try to digest geopolitical news that is still unfolding.

The stock market rally sold off on Friday on fears of an attack on Iran. The Nasdaq fell this week, despite hitting a record on Thursday Nvidia (NVDA) and other mega-cap and AI stocks rallied. The S&P 500, Dow Jones and Russell 2000 suffered larger weekly losses.

The CBOE Volatility Indexor VIX, spiked Friday to the highest level of market fear since late October on concerns about Iran.

Nvidia leads five stocks near buy points

Other news

late Friday, Tesla (TSLA) reduces the price of full self-driving plans from $199 to $99 per month. Tesla has halted Cybertruck deliveries, according to online rumors over the weekend.

Salesforce.com (CRM) is in advanced talks to acquire a data management software maker Computer science (INFA), The Wall Street Journal reported on Friday evening.

Important profit figures are looming

Goldman Sachs (GS) And Charles Schwab (SCHW) report early Monday. Goldman stock fell below the 50-day line on Friday, while Schwab is in a buy zone.

Giant of chip equipment ASML (ASML) and Nvidia chipmaker Taiwanese semiconductor (TSM) are perhaps the two most important revenues of the week. Their results and guidelines have major implications for the chip sector, including Nvidia, Broadcom (AVGO), Lam Research (LRCX), Applied materials (AMAT) And KLA Corp. (KLAC).

All of these chip stocks have new bases or potential entries.

Nvidia stock is on IBD rankingsSwingTrader and the IBD50. KLA stock is on the IBD Long-Term Leaders list. Nvidia, ASML and Broadcom shares are on the list IBD Bigcap 20.

Join IBD experts as they analyze leading stocks and the market on IBD Live

Stock market rally

The stock market rally had a tough week on the high CPI inflation report and Middle East concerns, with Friday’s losses negating Thursday’s bullish signals.

The Nasdaq, which closed at a record Thursday, fell 1.6% in Friday’s stock trading to end the week with a loss of 0.45%. The composite finished below the 21-day line, but just above the 50-day and 10-week lines. It is also still trading with the big reversal day of April 4.

The S&P 500 index fell 1.55% this week, down 21 days. The benchmark index closed just above the 50-day line, but below the 10-week line.

The Dow Jones Industrial Average fell 2.4% to its lowest level since late January, while the small-cap Russell 2000 fell 2.9% to its lowest level since late February. Both are clearly below 50 days.

The Invesco S&P 500 Equal Weight ETF (RSP) fell by 2.6% and broke the 50-day mark on Friday. The first Trust Nasdaq 100 equal-weighted index ETF (QQEW) fell 1.7%, below the 50-day line, to the worst level since the end of February.

Crude oil fell 1.4% this week to $85.66 a barrel, leaving Friday’s intraday high of $87.67. Gold climbed 1.3% to $2,356.20 an ounce, also well below Friday’s highs.

Ten-year Treasury yields rose 12 basis points to 4.5%, with Thursday’s peak of 4.59% marking a five-month high. Investors see only a modest chance of a Fed rate cut in June and are only leaning toward a move in July.

The fear meter in the stock market is rising

The CBOE Volatility Index shot up 16.1% on Friday, reaching its highest level since late October. At the very least, excessive fear could portend a short-term bottom. But the market’s fear gauge is still a far cry from the October highs, let alone the Covid highs.

If tensions in the Middle East ease, there could be a quick rally in the stock markets. Several indicators that the market is becoming oversold also reinforce this hopeful situation.

But an escalating conflict between Iran and Israel could trigger a much bigger fear spike and a major pullback from stocks.

ETFs

Of the growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) fell 1.7% this week. The VanEck Vectors Semiconductor ETF (SMH) fell by 0.9%. Nvidia and Taiwan Semiconductor are SMH’s largest holdings, with ASML, Lam Research, KLA and AMAT also holdings.

Time the market with IBD’s ETF market strategy

ASML, Taiwanese semi-profits

Dutch chip equipment giant ASML reports on Wednesday morning and Taiwan Semiconductor is due to appear early on Thursday.

Analysts expect ASML’s profits to decline in the first quarter, but see a recovery in the second half. Taiwan Semi’s earnings are expected to remain flat, although the foundry giant reported better-than-expected first-quarter sales on April 10.

Taiwan Semi is benefiting from strong demand for AI chips. TSMC’s earnings and capital expenditure guidance will be critical for the industry.

ASML shares fell 1.8% last week to 961.84, right around the 50-day and 10-week lines. It now has a flat base with a buy point of 1,056.34. Investors could use a trendline entry around 1000 to start a position outside the 10-week period, or from the April 1 high at 1002.66.

TSM shares rose 0.85% to 142.56 this week. The shares have been consolidating for a few weeks now, but need another week to get a good footing. Investors could use the April 10 high of 148.43 as an entry point if Taiwan Semi stock rises on earnings.

Chip stocks

Nvidia shares rose 0.2% this week to 881.86. Shares recovered from the 10-week line Wednesday through Thursday before retreating Friday, still holding the 21-day line. NVDA stock is now on a flat base with a buy point of 974. Investors could use Thursday’s high of 907.39 as an early entry.

Broadcom has a consolidation base with a buy point. According to them, Lam Research and KLA have a flat base Market wave. Applied Materials has a de facto flat base and a tight three-week pattern.

What to do now

After Thursday’s strong action, expectations were that the market would continue to rise, especially the Nasdaq and leaders like Nvidia.

Instead, there was a major retreat on Friday in anticipation of an attack on Iran. While Treasury yields fell on Friday, the weekly increase – which further pushes back on Fed rate cuts – is a broader headwind.

It’s still a time to work with watchlists. When the threat of war subsides and the upcoming earnings response is positive, you want to be ready. But you also have to be willing to scale more aggressively.

With earnings season just around the corner, you’ll know when your positions are reporting, as well as when key rivals, customers and suppliers are available.

Read The Big Picture every day to stay informed about market direction and the most important stocks and sectors.

Follow Ed Carson on Threads at @edcarson1971 and X/Twitter on @IBD_ECarson for stock market updates and more.

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