Dow Jones futures rose slightly Monday morning, along with S&P 500 futures and Nasdaq futures. All eyes are on Nvidia this week.
The stock market rally saw the Dow Jones, S&P 500 and Nasdaq hit record highs during the past week, with many stocks breaking out or flashing other buy signals. Stocks paused late in the week, but the Dow Jones closed Friday above 40,000 for the first time.
Nvidia earnings are due Wednesday night. The AI chip leader's results and guidance will have a huge impact on other artificial intelligence plays — which goes far beyond actual AI companies. So Nvidia this week has big repercussions for the broader market rally.
Nvidia stock broke out into a buy zone last week. AI plays Broadcom, Microsoft, Super Micro Computer and, arguably, Advanced Micro Devices are all near buy points.
Also reporting next week: PDD Holdings, Palo Alto Networks, Modine Manufacturing, Toll Brothers, Synopsys, Deckers Outdoor and Williams-Sonoma.
Pinduoduo and Temu parent PDD is already in buy range, along with luxury builder Toll Brothers. Modine Manufacturing, Synopsys, Deckers and Williams-Sonoma are near buy points. Palo Alto is working its way up a new base, with Monday night's results relevant for other cybersecurity plays such as CrowdStrike.
Nvidia stock is on IBD Leaderboard. AVGO stock and Nvidia are on SwingTrader. Microsoft stock and Synopsys are on the IBD Long-Term Leaders list. Nvidia and PDD stock are on the IBD 50. Nvidia, Broadcom and SMCI stock are on the IBD Big Cap 20.
Dow Jones Futures Today
Dow Jones futures rose 0.1% vs. fair value. S&P 500 futures advanced 0.2% and Nasdaq 100 futures climbed 0.3%. Nvidia provided a slight boost to S&P and Nasdaq futures.
The 10-year Treasury yield edged down to 4.41%.
Crude oil futures fell slightly.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
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Stock Market Rally: Dow Jones Above 40,000
The stock market rally got a lift from cooling inflation and other economic data signaling a slowdown. Key indexes made a big move Wednesday, then paused late in the week, awaiting Nvidia.
The Dow Jones Industrial Average rose 1.2% in last week's stock market trading, ending the week just above 40,000. The S&P 500 index popped 1.5%. The Nasdaq composite jumped 2.1%. The small-cap Russell 2000 gained 1.7%. The Dow Jones is in a five-week win streak while the other indexes are up for the last four weeks.
Homebuilders and related stocks, various financials, medicals, energy plays, aerospace, specialty footwear, restaurants and global e-commerce firms are among the many areas showing strength.
The 10-year Treasury yield fell 8 basis points to 4.42%, though it did come well off weekly lows of 4.32%.
U.S. crude oil futures rose 2.3% to $80.06 a barrel last week.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF jumped 3.5%. Microsoft stock is a major component with Palo Alto also in IGV. The VanEck Vectors Semiconductor ETF rallied 3.1%. Nvidia stock is the No. 1 holding in SMH, with AMD and Broadcom also key members. SNPS stock is in both SMH and IGV.
SPDR S&P Metals & Mining ETF ran up nearly 4% last week. The Global X U.S. Infrastructure Development ETF fell nearly 1%. U.S. Global Jets ETF ascended 1.7%. SPDR S&P Homebuilders ETF edged down 0.3%. The Energy Select SPDR ETF climbed 1.2% and the Health Care Select Sector SPDR Fund gained 1.9%.
The Industrial Select Sector SPDR Fund dipped 0.3%. The Financial Select SPDR ETF rose 1.5%.
Reflecting more-speculative story stocks, ARK Innovation ETF bounced 5.9% last week and ARK Genomics ETF jumped 6.6%.
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Nvidia Earnings
The chip giant reports Wednesday night. Analysts expect Nvidia earnings to skyrocket 413% to $5.59 a share with sales up 242% to $24.57 billion.
Even if Nvidia beats views and raises guidance once again, will that be enough to satisfy investor expectations?
NVDA stock rose 2.9% to 924.79 last week. Shares cleared a 922.20 cup-with-handle buy point on Wednesday, pulling back to test that entry on Friday.
NVDA stock rose more than 1% early Monday, with Barclays and Stifel both raising price targets substantially, to 1,100 and 1,085, respectively.
Other AI Stocks
Broadcom stock rose 4.7% to 1,395.29 last week, briefly topping a 1,438.17 consolidation buy point, according to MarketSurge. Shares did move above a 1,403.98 early entry, but fell back below that level on Friday.
AMD stock jumped 8.25% to 164.46 for the week, but hit resistance at a sliding 50-day line. Decisively clearing that area could offer an aggressive entry, but AMD has been a laggard vs. Nvidia and many other AI plays in recent months. Microsoft's Azure reportedly will offer cloud-computing clients the option of running AMD's AI processors. That gave AMD stock a boost Friday morning, but shares pared gains.
Microsoft stock advanced 1.3% for the week to 420.21, moving off the 50-day line and working toward a 430.82 flat-base buy point. Investors could use a move above Thursday's high of 425.24 as an early entry for the Dow Jones giant, coinciding with a trendline.
Super Micro stock soared 11.2% to 887.89 for the week, just below the 50-day line. Investors could use a decisive clearing of this area as an early entry into the AI server maker.
Taking new positions in any of these names before Nvidia earnings would be highly risky.
Of course, this is just a sampling of AI plays that could be affected, with everything from chips and software to even thermal cooling firms like Modine Manufacturing and utilities such as Constellation Energy.
A disappointing Nvidia earnings report could trigger heavy selling in several huge market sectors.
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What To Do Now
After running to record highs, the stock market rally is taking a breather. That's letting stocks forge handles or move up the right side of bases, flexing relative strength.
The past two weekMagnificent Seven? Just Two Clear This Bars have offered a steady diet of buying opportunities, which have generally worked. Investors should be significantly or heavily exposed now.
Be wary about buying AI stocks ahead of Nvidia earnings. Nvidia results could have a big impact on the broader market, so be judicious about adding exposure overall.
It's a good time to review your portfolio. Are there laggards that could be dropped to make room for add-on or new buys? Are you too heavily exposed to AI stocks for your liking?
Definitely work on your watchlists. Many stocks are setting up again across a range of sectors.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
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