Dow Jones futures edged lower Thursday morning, while S&P 500 futures and Nasdaq futures rose slightly. Braze and C3.ai headlined earnings overnight. AMD and Google parent Alphabet rebounded in a day two reaction to their AI news.
The stock market rally opened with decent gains Wednesday, but reversed lower by the close. Treasury yields and crude oil continued to tumble amid concerns that the economy is slowing too quickly.
Tesla pared gains, but was the only Magnificent Seven stock to advance.
Advanced Micro Devices unveiled its latest AI chip line, taking on Nvidia more directly in artificial intelligence. AMD CEO Lisa Su said the market for AI chips could top $400 billion by 2027. Google parent Alphabet unveiled its Gemini large language model as well as its latest in-house AI chip. All of these announcements are important for AI leader Microsoft.
But AMD stock reversed lower after regaining a buy point Wednesday morning. Nvidia stock, which nearly reclaimed its own buy point, also turned negative. Microsoft held a buy point. Google stock fell slightly, below key levels.
However, AMD and Google bounced Thursday morning.
Microsoft stock and Nvidia are on IBD Leaderboard and are on the IBD 50. Nvidia stock is on SwingTrader. MSFT stock is on the IBD Long-Term Leaders list. The video embedded in the article analyzed Ollie's Bargain Outlet stock, Trex and AMD.
Dow Jones Futures Today
Dow Jones futures fell 0.1% vs. fair value. S&P 500 futures climbed 0.1%. Nasdaq 100 futures rose 0.3%, buoyed by AMD and Google.
The 10-year Treasury yield rose slightly to 4.16%.
Crude futures advanced 1%.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Earnings
AI stock plunged late as C3.ai reported a smaller-than-expected loss but revenue came up short and so did revenue guidance. AI stock retreated 3% to 29.16 in Wednesday's regular session, holding above the 200-day line. A move above the Nov. 15 high of 31.83 would offer an entry into C3.ai stock, which is trying to build the right side of what would be a very deep consolidation.
BRZE stock leapt in extended action as Braze reported a smaller-than-expected loss and guided higher. The software maker fell 1.2% to 56.12 on Wednesday after hitting a 21-month high intraday. Braze stock is significantly extended from a buy point after running up from the bottom of a base starting Nov. 1.
Sprinklr earnings and revenue topped fiscal Q3 views, but gave in-line Q4 targets and signaled significant deceleration in fiscal 2025. CXM stock dived overnight, signaling a drop below a 16.68 cup-base buy point. Shares closed down 0.2% to 16.70, reversing from 17.14 intraday.
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Stock Market Rally
The stock market rally opened with decent to solid gains, but soon pared gains and turned lower as the session wore on.
The Dow Jones Industrial Average fell 0.2% in Wednesday's stock market trading. The S&P 500 index declined 0.4%. The Nasdaq composite retreated 0.6%. The small-cap Russell 2000 dipped 0.1%.
While many leading stocks held up, some aggressive-growth plays, including in the AI space, suffered big losses.
The 10-year Treasury yield fell five basis points to 4.12% following a weaker-than-expected ADP Employment Report. On Tuesday, the 10-year Treasury bond yield tumbled 12 basis points on surprisingly weak job openings. Friday's jobs report looms. Notably, the two-year Treasury yield rose 3 basis points to 4.6%.
The S&P 500 and Nasdaq have largely gone sideways over the past couple of weeks, despite the continued tumble in the 10-year Treasury yield. Some of that could reflect technical resistance at 2023 highs after big November gains. But it might signal concerns that falling Treasury yields now reflect recession fears vs. cooler inflation. Weak overseas economies don't help.
Trucking firms ArcBest and Old Dominion Freight Line reported weak November figures this week, a bad sign for economic activity. But rail data has looked stronger.
Meanwhile, U.S. crude oil prices fell 4.1% to $69.38 a barrel, the lowest close since June 27. Down 10.9% in the last five sessions, it's another sign of weakening demand.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF retreated 1%, with MSFT stock the No. 1 holding. The VanEck Vectors Semiconductor ETF gave up 0.8%. Nvidia and AMD stock are major SMH holdings.
Reflecting more-speculative story stocks, ARK Innovation ETF climbed 1.3% and ARK Genomics ETF edged up 0.4%. Tesla stock is still a huge holding across Ark Invest's ETFs.
SPDR S&P Metals & Mining ETF sank 1.2% and the Global X U.S. Infrastructure Development ETF advanced 0.35%. U.S. Global Jets ETF flew 1.9% higher. SPDR S&P Homebuilders ETF popped 1.2%. The Energy Select SPDR ETF slumped 1.5% and the Health Care Select Sector SPDR Fund edged up 0.1%.
The Industrial Select Sector SPDR Fund climbed 0.4%. The Financial Select SPDR ETF ceded 0.5%.
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AMD AI Chips
AMD formally unveiled its MI300X AI chip line at its AI event Wednesday. The chipmaker said the MI300X lineup will work as well or better than Nvidia's H100.
Nvidia has the more-advanced H200 AI chip coming, but AMD's AI offerings could chip away at its dominance and pricing.
AMD CEO Lisa Su now sees the AI accelerator chip market skyrocketing to above $400 billion by 2027, surging more than 70% annually over the next four years. That's more than double what AMD expected just in August.
In November, AMD forecast $2 billion in sales from AI chips in 2024, so expectations were high heading into Wednesday.
AMD stock fell 1.3% on Wednesday to 116.82. Before the MI 300X AI chip announcement, shares briefly reclaimed a 122.11 cup-with-handle buy point. Investors could choose to use the Nov. 29 high of 125.73 as a better handle buy point, though Wednesday's intraday high of 122.83 would serve as an early entry.
AMD stock climbed 2% early Thursday.
Nvidia stock fell 2.3% to 455, reversing lower. At the intraday high of 473.87, NVDA stock had moved back above the 21-day line and nearly reached the still-valid 476.09 double-bottom buy point. The AI chip leader is just above its 50-day line. It may be in the process of forging a new consolidation.
Microsoft, a huge Nvidia AI chip buyer, was at the AMD event. The Dow Jones tech titan this month unveiled its own AI chip. That will lessen its dependence on Nvidia GPUs and third parties such as AMD.
Microsoft, OpenAI and Meta Platforms all said they will use AMD's new AI chip.
MSFT stock fell 1% to 368.80, right at the 21-day line. Shares held a 366.78 cup-base buy point. The sideways action over the past few weeks has let moving averages catch up.
Google, like Microsoft and Amazon.com, unveiled its latest in-house AI chip on Wednesday. Meanwhile, its Gemini large language model will power the Bard chatbot and various AI monetization efforts.
Google stock dipped 0.7% to 130.02 on Wednesday. Shares are working on a 139.42 cup-with-handle buy point, but are below the 50-day line. However, GOOGL stock bounced nearly 3% early Thursday, signaling at least a test of its 50-day line.
Tesla Stock
Tesla stock edged up 0.3% to 239.37, well off highs but continuing to bounce off the 50-day line. The EV giant has a 278.98 double-bottom buy point, according to MarketSmith analysis. Investors could use a trendline around 250 or the Nov. 29 high of 252.75 as an early entry.
Meanwhile, Elon Musk's artificial intelligence venture, xAI, is raising $1 billion in funding.
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Market Rally Analysis
The sideways market action, at least on the S&P 500 and Nasdaq, can be frustrating. Investors want to see their stocks go up every day, and who wants to take a break after November's big run? Days when stocks open strong and close weak are discouraging, especially when investors buy near morning highs.
But the pause is probably healthy. Having a down week on major indexes, even if modest, would help a lot of leading stocks form handles, while others could gain relative strength as they build the right side of bases.
In a sideways market, stocks may flash a buy signal, but then give up gains or reverse lower. If you have hefty exposure, you can stand pat. You could take partial profits or take advantage of new buying opportunities, but those may be at the margin.
Having the patience to hold tight is important for investors, even active traders.
For now, focus on keeping your watchlists up to date. Some new stocks and sectors have been coming up, while some others will drop off. If and when the market rally goes on another leg higher, you'll want to be ready.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on X/Twitter at @IBD_ECarson, Threads at @edcarson1971 and Bluesky at @edcarson.bsky.social for stock market updates and more.
