Dow Jones futures rose slightly Monday morning, while S&P 500 futures were little changed and Nasdaq futures fell. Micron Technology earnings and the Fed's favorite inflation gauge headline the coming week.
The stock market rally saw weekly gains, with the S&P 500 and Nasdaq composite setting fresh all-time highs as recently as Thursday morning. But there was some weakness late in the week.
Nvidia and other artificial intelligence chip plays like Broadcom, Taiwan Semiconductor, Arm Holdings and Micron stock reversed lower from record highs after big moves in recent weeks. Nvidia stock in particular was flirting with extremely extended levels.
NVDA stock continued to fall early Monday.
Dow Jones Futures Today
Dow Jones futures rose 0.2% vs. fair value. S&P 500 futures edged higher. Nasdaq 100 futures lost 0.1%.
Crude oil futures rose slightly to about $81 a barrel.
The 10-year Treasury yield climbed to 4.27%.
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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Micron earnings late next Wednesday could be key for whether this AI chip play finds support or suffers a more-serious retreat.
Carnival, FedEx and Dow Jones component Nike also report this coming week. All three stocks have been laggards but will offer readings on the economy and consumer spending.
Amazon.com, Meta Platforms, Nu Holdings are stocks setting up.
Nvidia and Taiwan Semiconductor stock are on IBD Leaderboard. Meta Platforms, Nu Holdings and Amazon stock are on SwingTrader. Nvidia stock and Arm Holdings are on the IBD 50. Broadcom stock and Nvidia are on the IBD Big Cap 20.
Apple has held talks with Meta Platforms about integrating the latter's generative AI model into Apple Intelligence, The Wall Street Journal reported Sunday. The iPhone giant named OpenAI, backed by Microsoft, as its first Apple Intelligence partner earlier this month. Apple is also talking with AI startups Anthropic and Perplexity, while continuing discussions with Google parent Alphabet about using Google Gemini.
Fed's Inflation Gauge
The Commerce Department will release the Fed's favorite inflation gauge, the core PCE price index, on Friday morning. Economists are expecting a relatively tame May reading. Markets now see roughly 65% odds of a Fed rate cut in September and two cuts in 2024.
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Stock Market Rally
The stock market rally saw slim-to-solid gains on the key indexes this past week, despite turbulence late in the week from AI chip plays.
The Dow Jones Industrial Average led the indexes with a 1.45% advance in last week's stock market trading, moving above the 50-day line to a one-month high. The S&P 500 index gained 0.6%. The Nasdaq composite rose less than one point.
The small-cap Russell 2000 climbed 0.8%, but is still stuck below the 50-day.
The Invesco S&P 500 Equal Weight ETF rose 1.1%, back above the 50-day line. The First Trust Nasdaq 100 Equal Weighted Index ETF advanced 1%, just below record highs.
Leading stocks had a mixed week, with gains mostly on Monday and some suffering heavy losses over Thursday-Friday.
Still, the Nasdaq and S&P 500 are just below all-time highs. It's hard to see many problems on weekly charts.
The Nasdaq is now 6.7% above its 50-day line. That's still extended but down from 8.3% on Monday. The Nasdaq pausing or falling slightly over a couple weeks as Nvidia and AI stocks take a breather would be positive.
Even better would be if small caps and some other areas of the market powered above key levels.
The 10-year Treasury yield rose four basis points to 4.26%.
U.S. crude oil futures popped 3.4% to $80.73 a barrel last week.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF fell 1.1% last week. The iShares Expanded Tech-Software Sector ETF climbed 2%. The VanEck Vectors Semiconductor ETF sank 1.1%. Nvidia is the No. 1 holding in SMH, but Taiwan Semiconductor, Micron and Broadcom are key members.
SPDR S&P Metals & Mining ETF rose 1.5% last week. The Global X U.S. Infrastructure Development ETF advanced 0.9%. U.S. Global Jets ETF ascended 1.5%. SPDR S&P Homebuilders ETF fell 1%. The Energy Select SPDR ETF bounced 1.9% and the Health Care Select Sector SPDR Fund climbed 0.6%. The Industrial Select Sector SPDR Fund bounced 1.5%. The Financial Select SPDR ETF climbed 1.7%.
Reflecting more-speculative story stocks, ARK Innovation ETF fell 1.2% last week and ARK Genomics ETF slid 2.8%.
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Nvidia Stock
Nvidia stock fell 5% for the week to 126.57. Shares reversed lower from a record 140.76 intraday peak Thursday. The AI chip leader is now 25.3% above its 50-day line. That's after briefly topping 40% at Thursday's peak.
Back on March 7, NVDA stock closed 41.9% above the 50-day line, the most in 21 years. The next day, Nvidia stock staged a sharp reversal that marked the start of a consolidation.
Nvidia fell modestly early Monday.
Micron Earnings
Micron reports fiscal Q3 results on Wednesday. It's expected to report a profit of 42 cents a share, the first positive reading in six quarters. Revenue should surge 58% to $5.82 billion after Q2's 16% gain.
The memory-chip giant's results and guidance will be important for other AI plays. It will also affect the broader semiconductor space, including chip-equipment makers.
Micron fell 1.3% to 139.54 in last week's stock market trading, coming far off Tuesday's peak of 157.54. Shares did bounce slightly from Friday's test of the 21-day line.
Other AI Chip Stocks
Broadcom stock fell 4.4% to 1,658.63, reversing lower from a record 1,851.62 intraday Tuesday. That followed a 23% spike in the prior week on earnings.
Arm stock rose 1.5% to 160.30 for the week, but came well off Tuesday's record high of 177.31. The U.K.-based wireless chip giant settled below the official consolidation buy point of 164. Still, Arm Holdings has soared over the past two months. Investors may wait to see if Arm stock can pause around the buy point, letting moving averages close the gap.
Taiwan Semiconductor stock edged up 0.8% for the week to 173.96, despite coming off Tuesday's all-time high of 184.86.
Stocks Near Buy Points
Meta Platforms fell 1.9% during the week to 494.78, carving out a handle and testing the 21-day line. The Facebook parent now has a 414.01 buy point from a cup-with-handle base. Meta stock could have an early entry from breaking the downtrend of the handle.
Amazon stock rose nearly 3% to 189.08 last week, rebounding from the 50-day line. The e-commerce and cloud-computing giant has a flat base with a 191.70 buy point. The June 12 high of 188.35 offered an early entry into AMZN stock. Investors could treat the base as a short, shallow cup-with-handle with 188.35 as the official entry.
Nu Holdings stock popped 4.2% to 12.25 for the week, matching a record close after several weeks of tight action. The Brazilian digital bank has a flat base right next to another consolidation, according to MarketSurge analysis. The buy point is 12.49. NU stock was actionable Friday from breaking a downtrend in the flat base.
What To Do Now
The market seems a bit indecisive. It doesn't help that the Nasdaq is still somewhat extended while the Russell 2000 is below its 50-day line.
If you owned a big stake in Nvidia you might feel a little banged up heading into the weekend. But that's after massive gains in the past several weeks and months.
The Nasdaq and AI chip plays may simply be taking a bit of a break.
Meanwhile, other megacaps are generally looking strong, with Meta and Amazon setting up while Microsoft and arguably Google-parent Alphabet are in buy range.
There are a number of stocks in non-tech sectors that are showing strength or nearly in position.
So investors should be tracking these names. But it's not an especially great time to be adding exposure, except perhaps for swing trades.
Meanwhile, if positions start to struggle, investors should be quick to exit.
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