Dow Jones futures climbed slightly Monday morning, while S&P 500 futures and Nasdaq futures jumped, buoyed by Google and Nvidia stock. The Federal Reserve meeting and AI events from Nvidia and Microsoft headline the coming week.
The stock market rally had a mixed week. The Dow Jones and S&P 500 were little changed while the Nasdaq and small-cap Russell 200 retreated below their 21-day lines. Software stocks, which looked promising early in the week on Oracle earnings, sold off Friday on Adobe guidance.
A trio of big events are on tap for the coming week. The Federal Reserve will meet Tuesday-Wednesday, with policymakers giving their latest projections for Fed rate cuts on Wednesday afternoon.
Nvidia will hold a four-day GTC Conference starting Monday, with a new AI chip and a slew of other AI announcements. Microsoft willhold its "New Era Of Work" event on March 21, showcasing AI features and more.
The Fed rate outlook will have a huge impact on financial markets, but the Nvidia and Microsoft events are key for the AI rally as well, especially after Adobe rocked AI software plays.
Nvidia and Microsoft are huge players in artificial intelligence. Their unveilings, announcements and partnerships could have a big positive or negative impact on tech companies including, but not limited to: Advanced Micro Devices, Super Micro Computer, Arm Holdings, Arista Networks, ServiceNow, Oracle, Google parent Alphabet and many more.
GOOGL stock jumped Monday morning on a report that Apple could use Google's Gemini AI engine in the iPhone.
Microsoft, Oracle, Google and ServiceNow stock offered buying opportunities during the week, but had backed off by Friday's close. Arista Networks has a new base while ARM is working on one.
The current pullback and the big upcoming events offer reasons for investors to hold off on new buys in the very short term.
Nvidia stock, ARM and ServiceNow are on IBD Leaderboard. Microsoft stock is on the IBD Long-Term Leaders list. Nvidia, Arista Networks, ServiceNow, Microsoft and ARM stock are on the IBD 50. Nvidia, NOW, SMCI and Arista stock are on the IBD Big Cap 20. Arista Networks was Friday's IBD Stock Of The Day.
The video embedded in the article discussed the weekly market action and analyzed ServiceNow, Arista Networks and East West Bancorp.
Dow Jones Futures Today
Dow Jones futures rose 0.25% vs. fair value. S&P 500 futures climbed 0.85% and Nasdaq 100 futures jumped 1.25%, led Google, Nvidia and Tesla.
Crude oil futures rose slightly.
China industrial production grew 7% in January-February vs. a year earlier, beating forecasts for 5%. Retail sales climbed 5.5%, slightly topping views for 5.2%.
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 seemed poised to set fresh record highs after Tuesday, but the major indexes pulled back for weekly losses thanks to Friday losses
The Dow Jones Industrial Average closed fractionally lower in last week's stock market trading. The S&P 500 index dipped 0.1%. The Nasdaq composite sank 0.7%, falling below its 21-day moving average and the 16,000 level. The small-cap Russell 2000 sank 2.1% as market breadth was poor.
The market rally is in the midst of a pullback or pause that started with Nvidia's March 8 downside reversal.
The Nasdaq is back to about where it was on Feb. 12, while the Russell 2000 has dropped below its late December peak. That could let new bases and bullish pullbacks to form. But a number of breakouts or buy signals from the past couple of weeks have struggled or failed.
The 10-year Treasury yield shot up 21.5 basis points to 4.3%, surging toward 2024 highs on hot inflation reports heading into the Fed meeting.
U.S. crude oil futures jumped 3.9% to $81.04 a barrel last week. Copper prices soared 5.9% to the highest close in 11 months due to supply issues.
Time The Market With IBD's ETF Market Strategy
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF 1.6%, including Friday's 2.8% gap down below the 50-day line. Microsoft and ServiceNow are two major IGV holdings. The VanEck Vectors Semiconductor ETF fell 3.2% in a pullback to the 21-day line. Nvidia stock dominates SMH, with AMD a top component as well.
SPDR S&P Metals & Mining ETF retreated 3.5% last week but copper miners had a huge week and some steel plays shined. The Global X U.S. Infrastructure Development ETF dipped 0.4%. U.S. Global Jets ETF sank 2.2%. SPDR S&P Homebuilders ETF edged up 0.4%. The Energy Select SPDR ETF jumped 3.8% and the Health Care Select Sector SPDR Fund slipped 0.7%. The Industrial Select Sector SPDR Fund slipped 0.2%.
The Financial Select SPDR ETF advanced 0.5% to a two-year high. The SPDR S&P Regional Banking ETF retreated 3.45%.
Reflecting more-speculative story stocks, ARK Innovation ETF slumped 4.1% last week and ARK Genomics ETF tumbled 6.35%.
This Fed Rate-Cut Surprise May Fool Everyone
Fed Meeting
The Fed will conclude its two-day policy meeting on Wednesday. Policymakers will release their "dot plot" of Fed rate forecasts. In late 2023, they forecast three rate cuts. But with inflation coming in higher than expected recently, there's speculation that the central bank could signal just two Fed rate cuts.
Fed chief Jerome Powell will provide further color on the Fed's views on rate cuts and inflation in the post-meeting news conference.
Nvidia GTC
Nvidia CEO Jensen Huang will kick off the four-day GTC conference late Monday with a keynote address. Expect Nvidia to show off its latest AI accelerator, as well as data center hardware, PC gear, software and much more. Nvidia has AI partnerships with Super Micro, ServiceNow, Oracle and many others.
Nvidia stock edged up 0.35% to 878.37 during the week, with some big daily swings after an ugly downside reversal from record highs on March 8.
Shares rose modestly Monday morning.
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Microsoft 'New Era Of Work'
Microsoft will discuss AI innovations, along with what's new with Windows and Surface computers, at its "New Era" event.
The Dow giant hit a record Thursday as Microsoft said Copilot for Security, a generative AI cybersecurity tool, will launch April 1. Shares cleared a short consolidation that was almost long enough to be a flat base. Investors could treat 420.82 as a legitimate buy point. But shares fell back Friday in the Adobe-led software retreat. MSFT advanced 2.5% to 416.42 for the week.
Microsoft is at forefront of monetizing AI tools for end customers, so its success is key for the AI ecosystem. As the Adobe sell-off showed, investors are looking for evidence that software makers can turn AI hype into real revenue.
AI Stocks Near Buy Points
Oracle stock soared 11.7% last week to 125.54, gapping up Tuesday after the software giant beat earnings views and gave a bullish outlook for AI demand. Shares then eased slightly the rest of the week. ORCL stock has a 127.42 buy point from a nine-month base. The stock also could forge a high handle, letting moving averages catch up.
ServiceNow stock has a new flat base with a 815.32 buy point. Shares flashed aggressive entries following Oracle earnings, but sold off Friday following Adobe earnings. Shares fell 1.8% to 743.91.
Arista stock has a flat base with a 292.66 buy point. Shares rose 1.7% to 277.73 last week after testing the 10-week line intraday Monday.
Google stock rallied 3.5% to 140.14 last week, topping the 50-day line Thursday before falling back on Friday. Thursday's high of 143.59 would offer an early entry. GOOGL stock has an official 153.78 consolidation buy point, according to MarketSurge analysis. However, the RS line has lagged considerably for months amid fears that Microsoft-backed OpenAI will threaten Google's search dominance.
Google stock jumped 4% Monday morning as Bloomberg reported that Apple is in talks to build the Gemini AI engine into the iPhone. That should push shares back into a buy area.
ARM stock is several weeks into a possible base after skyrocketing on earnings in early February. Shares sank 3.4% to 126.97 last week, finding support at the 21-day moving average. The end of the IPO lockup period appeared to have little impact. A potential future buy point is 164, but investors could view the 150 level or even a downward-sloping trendline for an aggressive entry.
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What To Do Now
The market rally is getting a much-deserved break. That could be healthy, creating a number of buying opportunities and giving the major indexes a little room to run.
But in the meantime, a sideways market is very challenging for investors. Stocks will flash buy signals when the market or sector is on the upswing, but then fizzle as the market reverts to the mean. That's been especially true recently, where the indexes' modest weekly action belie some big daily swings.
The upcoming Fed meeting and the Nvidia and Microsoft AI events offer even more reasons for investors to eschew new buys in the very short term. They could look to take some profits and should cut losers, but overall it's time to be holding.
Be careful about getting too concentrated in a particular sector or theme.
It's an important time to be keeping your watchlists up to date. Have a broad list of stocks as well as a small group of names that are actionable or nearly so. While there may be some fake-out breakouts in the short term, investors want to be ready as the market makes its next move higher.
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