Dow Jones futures rose early Wednesday, along with S&P 500 futures and Nasdaq futures. AI leader Nvidia delivered another strong beat-and-raise report Tuesday night, but NVDA stock wavered before the open.
Nvidia earnings have huge implications for the market rally and artificial intelligence stocks. Notable AI plays Microsoft, Advanced Micro Devices, Google parent Alphabet, Meta Platforms, Palantir Technologies and Super Micro Computer are in or near buy areas. All were up slightly early Wednesday.
Meanwhile, Sam Altman is returning as CEO of Microsoft-backed OpenAI CEO.
The major indexes pulled back modestly Tuesday heading into Nvidia earnings, while small caps saw larger losses. The stock market rally still looks strong, though many leading stocks are extended.
In addition to Nvidia, Urban Outfitters, HP Inc., Autodesk and dLocal also reported earnings Tuesday night. Deere reported early Wednesday.
ADSK and URBN stock initially rose late, but reversed lower, after both closed in buy range. HP stock fell modestly on mixed results. DE stock tumbled on weak fiscal 2024 guidance. DLO stock plunged after Q3 EPS and revenue fell short.
Microsoft stock, Nvidia and Meta Platforms are on IBD Leaderboard. META stock is on SwingTrader. MSFT stock is on the IBD Long-Term Leaders list. Nvidia stock, Microsoft and Super Micro are on the IBD 50. Microsoft, Meta Platforms and SMCI stock are on the IBD Big Cap 20.
Dow Jones Futures Today
Dow Jones futures were 0.1% above fair value, even as Caterpillar fell on Deere guidance. S&P 500 futures climbed 0.2% and Nasdaq 100 futures advanced 0.4%. Nvidia stock is a major S&P 500 and Nasdaq 100 component, along with many other big AI plays.
The 10-year Treasury yield fell a few basis points to 4.37%.
Crude oil tumbled nearly 4%.
Israel and Hamas overnight agreed to a four-day cease fire in Gaza. Hamas will release some 50 hostages from Israel. Hamas said the truce will start early Thursday.
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
The stock market rally retreated modestly Tuesday, with investors taking some profits ahead of Nvidia earnings.
The Dow Jones Industrial Average fell 0.2% in Tuesday's stock market trading. The S&P 500 index also lost 0.2%. The Nasdaq composite gave up 0.6%.
The Nasdaq 100 fell back from Monday's 52-week high. The small-cap Russell 2000 fell 1.3%, hovering below the 200-day line.
U.S. crude oil prices lost 6 cents to $77.77 a barrel.
The 10-year Treasury yield was flat at 4.42%.
Minutes from the Oct. 31-Nov. 1 Fed meeting showed policymakers still worried about inflation and not thinking about rate cuts. Fed minutes had little impact on stocks or Treasury yields.
The market rally, which entered a power trend Monday, looks healthy. Tuesday was only the third down day for the S&P 500 and Nasdaq since they bottomed in late October. Leading stocks are acting well, though many are extended.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF just edged lower Tuesday. Microsoft stock is a major IGV component. The VanEck Vectors Semiconductor ETF retreated 1.5%. Nvidia stock is the No. 1 holding in SMH. with AMD stock a notable member.
Reflecting more-speculative story stocks, ARK Innovation ETF slumped 2.25% and ARK Genomics ETF skidded 3.7%.
SPDR S&P Metals & Mining ETF rose 0.25% and the Global X U.S. Infrastructure Development ETF dipped 0.3%. SPDR S&P Homebuilders ETF stepped down 0.9%. The Energy Select SPDR ETF fell 0.2% and the Health Care Select Sector SPDR Fund climbed 0.6%
The Industrial Select Sector SPDR Fund and the Financial Select SPDR ETF edged down 0.1%.
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Nvidia Earnings
Nvidia earnings skyrocketed 593% vs. a year earlier while revenue leapt 206% to $18.12 billion, both easily beating fiscal Q3 views. The AI chip giant also guided higher.
But after blowout beat-and-raise reports in Q1 and Q2, that didn't wow investors.
NVDA stock edged higher early Wednesday after sinking nearly 2% after hours and then rising earlier Wednesday. Shares dipped 0.9% to 499.44 in Tuesday's session, still in range of a 476.09 buy point from a double-bottom base.
OpenAI CEO Altman
Altman will return to the AI startup, seemingly putting an end to a wild, five-day saga. Former Salesforce co-CEO Bret Taylor and former Treasury Secretary Larry Summers will join OpenAI's revised board.
OpenAI's board had ousted Altman on Friday, but a day later was in talks to bring him back as big investors like Microsoft and key staff rebelled. Microsoft said Monday it would hire Altman and fellow co-founder Greg Brockman to form a new AI lab. The vast majority of OpenAI staff threatened to quit to work for Altman at Microsoft.
AI Stocks
Microsoft stock climbed slightly in premarket trading. Shares fell 1.2% to 373.07 on Tuesday, in range of a 366.78 cup-base buy point. A longer pause would let the moving averages catch up.
AMD stock edged higher. Shares sank 1.9% to 119.18 on Tuesday. The Nvidia rival now has a 122.41 cup-with-handle buy point.
Google stock tilted higher. Shares edged up 0.5% Tuesday to 136.97. Investors could use Thursday's high of 137.22 as an early entry in a flat base. The official buy point is 141.22.
Meta stock rose a fraction. Shares edged down 0.9% to 337.01 on Tuesday, within a buy zone.
PLTR stock climbed slightly. Shares tumbled 7.2% to 19.80 on Tuesday in an outside, downside reversal. Palantir stock fell back below a 20.24 cup buy point, according to MarketSmith analysis. On Tuesday, Palantir won a contract with the U.K.'s National Health Service, though that had been expected.
SMCI stock rose modestly early Wednesday. Shares fell 4.8% to 289.85 on Tuesday after jumping 5.55% on Monday. Super Micro stock has a 317.50 buy point from a less-than-ideal double-bottom base. Investors could use Monday's high as an early entry.
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What To Do Now
The stock market rally had a modest pullback, but has shown real strength in November.
Investors should be significantly invested, taking advantage of the stream of buying opportunities in the past few weeks. At this point, many leading stocks are extended. A market pause would let some stocks forge new buy points or add-on entries.
The market rally is in a power trend, so investors can try to hold potential winners for longer, and be more willing to bet on aggressive growth plays. But stick to your sell rules.
Remember to look for new setups, updating your watchlists.
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