Dow Jones futures tilted higher Monday morning, along with S&P 500 futures and Nasdaq futures. Federal Reserve chief Jerome Powell's annual Jackson Hole speech on Friday looms large.
Palo Alto Networks, Cava Group and TJX Cos. are key earnings on tap with the stocks around buy areas.
The stock market rally had its best week of 2024, buoyed by positive inflation and economic data. The major indexes staged a follow-through day on Tuesday with a subsequent FTD on Thursday.
Nvidia made a huge move last week, offering an early entry. Meta Platforms and Arista Networks, also AI plays, have forged new bases and are close to buy points.
Meanwhile, Tesla had a strong move in the latest week, regaining key levels. But its chart has flaws.
Nvidia stock is on Leaderboard, with Cava on the Leaderboard watchlist. Cava stock is on SwingTrader. Nvidia and Arista stock are on the IBD 50.
Dow Jones Futures Today
Dow Jones futures were steady vs. fair value. S&P 500 futures and Nasdaq 100 futures rose a fraction.
The 10-year Treasury yield fell to 3.86%. Crude oil futures fell less than 1%.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
AMD Buys Server Maker ZT Systems
Early Monday, Advanced Micro Devices said it would buy server maker ZT Systems for $4.9 billion to expand its data center AI capabilities. AMD stock rose modestly before the open. Nvidia stock turned fractionally higher while AI server maker Super Micro Computer fell slightly.
Fed Chief Powell At Jackson Hole
Federal Reserve chief Jerome Powell will speak on 10 a.m. ET Friday at the Kansas City Fed's Jackson Hole Economic Policy Symposium. The keynote address will cover the economic outlook.
Powell is likely to give signals that the central bank is poised to begin Fed rate cuts in a gradual way. With recent economic data once again favoring a soft landing scenario, markets are pricing in a quarter-point rate cut on Sept. 18, with 75-100 basis points for the full year.
If Powell surprises and hints that Fed rate cuts are not a done deal, the market reaction could be significant.
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Stock Market Rally
The stock market rally continued its comeback from the Aug. 5 lows, with the Dow, S&P 500 and Nasdaq all boasting their best weekly gains of 2024.
The Dow Jones Industrial Average gained 2.9% in last week's stock market trading. The S&P 500 index leapt 3.9%. The Nasdaq composite soared 5.3%. The small-cap Russell 2000 popped 2.9%.
All these indexes are above their 50-day moving averages.
A market pause wouldn't be a surprise. After strong gains from the Aug. 5 low, a pause or pullback would be normal from a technical standpoint. On the news front, markets may be hesitant ahead of Fed chief Powell's Jackson Hole speech. Nvidia earnings will soon follow.
A pause in the indexes also would let many stocks fill out bases and forge handles.
The 10-year Treasury yield fell five basis points to 3.89%, while the two-year yield climbed 10 basis points to 4.06%. Recession fears have eased, reducing aggressive Fed rate-cut bets, but cooling inflation is continuing the general downtrend in long-term Treasury yields.
U.S. crude oil futures fell 19 cents to $76.65 a barrel last week.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF rose 2.4% last week. The iShares Expanded Tech-Software Sector ETF popped 3.7%. The VanEck Vectors Semiconductor ETF sprinted 9.7%. Nvidia stock is the No. 1 holding in SMH.
Reflecting more-speculative story stocks, ARK Innovation ETF jumped 6.3% last week and ARK Genomics ETF rebounded 7.1%. Tesla stock is a significant holding across Ark Invest's ETFs, but Meta stock is an even-bigger holding. Cathie Wood also has built up a significant Nvidia stake.
SPDR S&P Metals & Mining ETF and the SPDR S&P Homebuilders ETF advanced 2%. The Energy Select SPDR ETF gained 1.2% and the Health Care Select Sector SPDR Fund was up 1.9%. The Industrial Select Sector SPDR Fund rebounded 2.2%. The Financial Select SPDR ETF rallied 3.2%.
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Palo Alto Earnings
Palo Alto earnings are due Monday night. EPS is seen falling 2%, with revenue growth slowing for a fourth straight quarter.
PANW rose 0.8% to 334.11 last week, pulling back somewhat Friday. That followed the prior week's 8.5% gain in an upside reverse. Palo Alto stock has a 380.84 buy point, but investors could use the June 28 high of 345.90 as an early entry.
Palo Alto's earnings and guidance will key for other cybersecurity plays, with Fortinet and CyberArk Software near buy points.
TJX Earnings
TJX earnings are set for early Wednesday. The off-price retailer's EPS and sales growth are set to slow for a second straight quarter. TJX stock has a new flat base with a 115.34 buy point, edging up 0.7% to 111.45 last week. A strong move off the 50-day line would offer an early entry.
TJX earnings and guidance will be important for discount retailers, including peer Ross Stores, which reports Thursday night.
Cava Earnings
Cava earnings are due Thursday night, with EPS seen tumbling vs. a year earlier. Traffic and same-store sales are key. CAVA stock jumped 9.6% last week to 98.96, after the prior week's big 11% upside reversal gain. The Mediterranean-themed eatery on Friday cleared a short consolidation that was one day from being a cup base. Investors could still use 98.69 as a buy point, though looming earnings raise the risks.
Nvidia Stock
Nvidia stock spiked 18.9% to 124.58, its best weekly gain since May 2023. The AI chip leader moved back above a $3 trillion market cap.
Shares reclaimed the 50-day line late in the week, offering an early entry. NVDA stock has an official buy point of 136.15 or 140.76. Keep in mind that Nvidia earnings are due on Aug. 28.
Nvidia stock is the No. 1 performer in the S&P 500 index this year, up 152%.
Meta Stock
Meta stock gained 1.9% to 527.42, near the July 8 record high. The Facebook and Instagram parent now has a cup base with a 542.81 buy point, according to MarketSurge analysis. Shares had already flashed some early entries recently.
Meta stock is up 49% in 2024, also a leading S&P 500 stock this year.
Arista Stock
Arista stock leapt 5.4% to 353.89, rising from the 50-day line, though on light volume. The networking giant was the first notable AI hardware play to regain its 50-day after the market's early August sell-off. ANET stock now has consolidation with a 376.50 buy point. Investors could use a trendline as an early entry, using Thursday's high of 358.68 as a specific trigger.
Arista stock is up 50% this year.
Tesla Stock
Tesla stock surged 8.1% to 216.12 last week, regaining the 21-day, 50-day and 200-day lines and clearing a steep downtrend. Investors could have used that as an early entry, but largely because this is TSLA stock. The EV giant could certainly go on another run, but many other stocks have better-looking charts and stronger fundamentals right now.
What To Do Now
The stock market rally has made a big comeback and offered a number of buying opportunities in the past week. Investors should be taking advantage, adding exposure gradually as long as the market continues to act well.
The market may be "due" for a pause or pullback, especially with Fed chief Jerome Powell on the horizon, so you don't want to suddenly jump from lightly to fully invested.
Take the weekend to build up your watchlists and there are lot of stocks to watch.
While growth stocks such as Nvidia and Meta are shaping up again, defensive growth and even traditional defensive plays are still acting well. Beyond chips and software, medicals broadly, aerospace, banks, insurers and gold stocks are all showing strength.
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