Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures. Apple will unveil the iPhone 16, headlining key AI events along with earnings from Oracle and Adobe. All three tech giants are close to buy points.
The stock market rally suffered its worst weekly losses in more than year, sending highly bearish signals. The S&P 500 went from the cusp of record highs to clearly below its 50-day line. The Nasdaq plunged below the low of its Aug. 13 follow-through day.
Investors are worried the economy is sputtering and that the Federal Reserve may be behind the curve. Meanwhile, the sell-off in artificial intelligence stocks, led by Nvidia, intensified.
A number of stocks holding up or showing strength crumbled in the past week, while others are just hanging on.
Tesla, which bucked the trend with a strong Thursday, gave it all back Friday and then some.
Investors should be scaling back exposure and largely steering clear of AI and tech names.
Nvidia stock is on IBD Leaderboard, though the position is hedged.
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Dow Jones Futures Today
Dow Jones futures open at 6 p.m. ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.
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 suffered sharp losses in a holiday-shortened week.
The Dow Jones Industrial Average slumped 2.9% in last week's stock market trading and the S&P 500 index tumbled 4.25%, their worst weekly losses since March 2023. The Nasdaq composite plunged 5.8%, its worst week since January 2022. The small-cap Russell 2000 shed 5.7%.
The S&P 500, which entered a power trend on Aug. 30 and seemed poised for record highs entering this past week, fell decisively below its 50-day line. The Russell 2000 also broke below that key level.
The Dow Jones fell from record highs to just above its 50-day.
The Nasdaq is leading the sell-off, plunging below its 50-day line on Tuesday and starting to near its 200-day line. On Friday, the tech-heavy index knifed below the low of its Aug. 13 follow-through day.
The Invesco S&P 500 Equal Weight ETF fell 3.1%, dropping below its 21-day line and testing its 10-week.
U.S. crude oil futures plunged 8% to $67.67 a barrel last week, the lowest price since June 2023. Gasoline futures dived 9.4% to a three-year low.
The 10-year Treasury yield plunged 20 basis points to 3.71%. The yield hit 3.65% Friday morning, undercutting its low from the Aug. 5 global sell-off. The two-year yield dived 27.5 points to 3.65%, as the yield curve finally stopped being inverted.
Despite a slew of weak economic reports, capped by Friday's jobs report, the odds of a half-point Fed rate cut on Sept. 18 are about 30% after briefly topping 50% early Friday. Fed Gov. Christopher Waller, a more hawkish member, backed a September rate cut but signaled he'd favor a smaller move for now. Expectations of a quarter-point rate cut heighten concerns that the Fed is behind the curve.
Investors do see 100-125 basis points of cuts before year-end.
This coming week's CPI and PPI inflation reports could give policymakers leeway to take bolder action this month.
Time The Market With IBD's ETF Market Strategy
ETFs
Among growth ETFs, the iShares Expanded Tech-Software After Worst Week In Over A Year, Here's What To DoSector ETF slumped 4%, with Adobe and Oracle big members.
The VanEck Vectors Semiconductor ETF dived 11.7%. Nvidia stock, the dominant SMH holding, plummeted 13.9% to 102.83 for the week after tumbling 7.7% in the prior week. The 100 level is a key area for NVDA and by extension the chip and AI sectors.
SPDR S&P Metals & Mining ETF plunged 9.8% last week. SPDR S&P Homebuilders ETF skidded 4.4%. The Energy Select SPDR ETF shed 5.8% and the Health Care Select Sector SPDR Fund gave up 2.1%.
The Industrial Select Sector SPDR Fund retreated 4.2%. The Financial Select SPDR ETF sank 3.2%.
Reflecting more-speculative story stocks, ARK Innovation ETF sold off 7.2% last week and ARK Genomics ETF gave up 8.15%. Tesla is a major component across Ark Invest's ETFs. Nvidia stock is also a key holding.
Apple To Unveil iPhone 16
Apple will show off its iPhone 16 smartphone at a Monday product launch event at 10 a.m. PT. This will be the first iPhone with AI tech, which the Dow tech giant has branded Apple Intelligence. There's hope that the AI-enhanced handset will trigger a huge wave of new iPhone upgrades.
Apple also should show off its latest Apple Watch smartwatches and new AirPods wireless earbuds.
Apple stock fell 3.6% last week to 220.82, back below its 50-day line. AAPL stock has forged a V-shaped cup-with-handle base with a 232.92 buy point. It's a base-on-base formation to a prior cup base.
The Apple iPhone event, and the AAPL stock reaction, will be key for iPhone chipmakers as well as AI plays generally.
What's On Tap: Apple To Unveil iPhone 16; Adobe, Oracle Earnings Due
Oracle, Adobe Earnings
Oracle earnings are due Monday night. The database software giant likely will discuss AI wins on the earnings call or at a conference later in the week.
ORCL stock just edged up 0.4% to 141.81, but held above its key moving averages. Oracle is working on a 146.59 consolidation buy point.
Adobe earnings are Thursday night, with the software maker's generative AI offerings in focus.
ADBE stock tried to clear a 580.55 cup-with-handle base on Tuesday, but reversed lower. Shares fell 1.9% for the week to 563.41, but held above their 21-day line.
The Oracle and Adobe earnings will offer hints about software makers' ability to generate revenue from costly AI investments.
Tesla Stock Round-Trips
Tesla stock rallied on Wednesday and especially Thursday, buoyed by robust China sales and the EV giant's FSD rollout plans. On Thursday, shares popped above their 50-day line and cleared a 238.22 short-term high. That offered an aggressive entry for TSLA stock, but the weak market added to the risks.
On Friday, Tesla plunged 8.45%, back below the 50-day line. Shares lost 1.6% to 210.73 for the week.
Tesla stock has a 271 cup-base buy point, according to MarketSurge.
Elon Musk's xAI has discussed a deal in which Tesla would share FSD revenue and other potential revenue in exchange for using the startup's AI models, The Wall Street Journal reported Saturday, citing sources.
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What To Do Now
The stock market rally is looking weak. While some sectors are holding up better than others, most are still heading down.
Investors should have slim or modest exposure. They should largely be out of tech aside from big long-term winners if they have conviction in those names.
Don't get excited by a strong open or even one strong session. After so much selling, the market may be "due" for a bounce, but it doesn't have to happen right away and it doesn't have to last.
Look for stocks holding key levels and showing relative strength. Those will mostly be in defensive and defensive growth sectors, along with a few traditional growth names.
The number of leading stocks that are still relatively healthy is a positive sign. However, just because stocks have been resilient so far doesn't mean they'll continue to do so. Tesla's quick round-trip is an obvious example. ServiceNow, Meta Platforms, DoorDash and Netflix also started to break key levels on Friday.
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