Dow Jones futures rose slightly early Friday, along with S&P 500 futures and Nasdaq futures, after an ugly market day. Deckers and Intuit headlined key earnings after an ugly day for the stock market.
The stock market rally retreated Thursday, with the Nasdaq and S&P 500 reversing from record highs while the Dow Jones and the Russell 2000 tumbled toward the 50-day line. Stronger-than-expected economic data lifted Treasury yields.
Nvidia charged ahead on yet another quarter of booming earnings and bullish guidance. But breadth was so anemic that NVDA stock felt like the only stock rising.
Even other AI stocks retreated or came well off highs, including chipmakers Taiwan Semiconductor, Super Micro Computer, Advanced Micro Devices and Broadcom, along with software plays such as Microsoft and ServiceNow. All but Taiwan Semi stock were at buy points or early entries early Thursday.
Arista Networks stumbled on fears that Nvidia will be a competitive threat.
Meanwhile, Deckers Outdoor, Intuit, Workday and Ross Stores reported Thursday night. Deckers and Ross Stores jumped while Intuit and Workday tumbled.
Nvidia stock is on IBD Leaderboard. Booking stock is on SwingTrader. Microsoft stock and Synopsys are on IBD Long-Term Leaders. Nvidia and Arista Networks are on the IBD 50. Super Micro stock, Nvidia and Deckers are on the IBD Big Cap 20.
Dow Jones Futures Today
Dow Jones futures were just above fair value. S&P 500 futures rose 0.2% and Nasdaq 100 futures climbed 0.2%. Workday and Intuit stock are Nasdaq 100 giants. Both are S&P 500 members along with DECK stock.
The 10-year Treasury yield edged up to 4.49%.
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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Earnings
Deckers earnings easily beat after the close. Hoka running shoe revenue grew 34%. DECK stock jumped in late trading, signaling a breakout Friday. The specialty footwear maker climbed 1.3% to 904.65 in Thursday's regular session. Deckers stock has a 916.65 cup-with-handle buy point.
Workday earnings beat views but the software maker cut its full-year sales guidance. WDAY stock plunged in overnight action. Shares of the customer and financial management software maker inched up 0.4% to 260.90 on Thursday, closing just above the 50-day line.
Intuit earnings comfortably beat fiscal Q3 views but implied Q4 profit guidance was weak. INTU stock fell sharply in extended trade. The Turbo Tax maker fell 1.2% on Thursday to 662.26, trading slightly below a 671.01 flat-base buy point. Intuit stock flashed an early buy signal back on May 15, as it cleared a downward-sloping trendline.
Ross Stores earnings topped forecasts, with ROST stock up solidly after hours. The off-price apparel retailer edged up 0.3% on Thursday to 131.86, off the 200-day. Ross Stores is still in a downtrend and below its 50-day line.
Stock Market Rally
The stock market rally started off with the Nasdaq and S&P 500 hitting record highs, led by Nvidia. But a flash PMI reading soon after the open signaled economic activity was ramping up, reviving doubts about Fed rate cuts. The Nasdaq and S&P 500 reversed lower while the Dow Jones and Russell 2000 suffered sharp losses.
The Dow Jones Industrial Average slumped 1.5% in Thursday's stock market trading, partly due to fresh Boeing woes. The Dow is back near the 50-day line. The S&P 500 index fell 0.7% and the Nasdaq composite 0.4%.
Losers crushed winners on the NYSE and Nasdaq. The small-cap Russell 2000 tumbled 1.7%, testing the 50-day but closing above that level.
The Invesco S&P 500 Equal Weight ETF sank 1.4%, fractionally above the 50-day.
The First Trust Nasdaq 100 Equal Weighted Index ETF gave up 1%.
U.S. crude oil prices fell 0.9% to $76.87 a barrel, down 4% so far this week.
The 10-year Treasury yield rose 4 basis points to 4.47%. The yield hit 4.31% intraday on May 16.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF slid 0.9%. Microsoft stock and Intuit are among the largest holdings in IGV with Workday also a member. The VanEck Vectors Semiconductor ETF rose 1.4%. Nvidia stock is the No. 1 holding in SMH, with AMD, Taiwan Semiconductor and Broadcom also major components.
SPDR S&P Metals & Mining ETF retreated 1.2% and the SPDR S&P Homebuilders ETF lost 0.8%. The Energy Select SPDR ETF gave up 0.9% and the Health Care Select Sector SPDR Fund shed 1.1%.
The Industrial Select Sector SPDR Fund slid 1.2% and the Financial Select SPDR ETF declined 1.4%. The Innovator IBD 50 outperformed, dipping just 0.14%.
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Nvidia Stock, AI Plays
Nvidia stock gapped up 9.3% to 1,037.99, blasting out of a base to a record high. The relative strength line hit a new high as well, reflecting NVDA stock's outperformance vs. the S&P 500 index. At this point investors could wait to see if Nvidia consolidates or holds the gap-up for a few days.
Nvidia earnings skyrocketed 461% with revenue soaring 262%. The AI chip leader reported Wednesday night, the fourth straight quarter of triple-digit growth for both. Guidance for the current quarter also was strong.
Nvidia didn't provide much of a boost for AI plays. Taiwan Semiconductor, which makes Nvidia's chips, hit a record high but closed up just 0.6%. TSM stock is extended from a buy point.
Broadcom stock edged up 0.1% after flashing an early entry intraday. AMD stock reversed lower for a 3.1% decline after clearing some short-term highs to start.
Super Micro stock, soaring 11.1% early, closed down 3%, below the 50-day line.
Microsoft stock gave up 0.8%, backing off a buy point for a third straight session, according to MarketSurge analysis. ServiceNow stock fell 1.7% after teasing a trendline entry early on.
Meanwhile, Arista Networks tumbled as much as 8.6% after Nvidia sounded upbeat on its networking business, potentially undercutting Arista's Ethernet business. ANET stock rebounded from its 10-week line to close down 4.8% to 301.32. Shares closed below a 307.74 cup-base buy point but above the 21-day line.
What To Do Now
Thursday was disappointing given Nvidia's powerful move, with narrowing breadth a concern. Investors have to be quick to pare back new or add-on buys from the past week that aren't working.
However, the market rally has had a solid run over the past several weeks. Perhaps the major indexes and leading stocks just need another breather. That could let stocks forge handles and let moving averages catch up.
So work on your watchlists while updating your exit plans. Medicals, including biopharma and other products is a broad area to watch. They aren't part of AI while relatively insulated from slowdown fears hitting consumer and commodity names.
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