Dow Jones futures rose slightly Monday morning, along with S&P 500 and Nasdaq futures, in the first market reaction to the Federal Reserve's favorite inflation report. Fed chief Jerome Powell seemed pleased with Friday's in-line data.
The stock market rally is coming off a solid, holiday-shortened week. Growth stocks, especially AI leaders such as Nvidia, fell back, though they generally held above support. The market shrugged that off, with robust breadth. Small caps led with strong gains, with the Dow Jones and S&P 500 right at record highs. The Nasdaq edged lower as many tech giants retreated.
Nvidia needs more time, but Microsoft, Meta Platforms and CrowdStrike are tech leaders pulling back bullishly.
Meanwhile, new AI chip IPO Astera Labs is pulling back from Tuesday's record high. A continued pause in Nvidia stock and AI plays could let ALAB stock forge a short IPO base.
Meanwhile, China EV makers Nio, Li Auto, XPeng and giant BYD reported March and first-quarter deliveries early Monday, meeting or exceeding low expectations. Tesla will likely release first-quarter deliveries on Tuesday, also with expectations low.
Nvidia and META stock are on IBD Leaderboard. Microsoft stock is on the IBD Long-Term Leaders list. Nvidia, Meta Platforms and CrowdStrike stock are on the IBD 50 list.
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Dow Jones Futures Today
Dow Jones futures rose 0.1% vs. fair value. S&P 500 futures advanced 0.1%. Nasdaq 100 futures climbed 0.15%. Futures are off overnight highs.
The 10-year Treasury yield rose slightly to 4.23%.
Copper futures climbed 1%, likely on stronger China economic data.
The official China manufacturing index rose to 50.8 in March from February's 49.1. That's the highest in a year and first reading above the break-even 50 level in six months. The services index rose to 1.6 points to 53, a nine-month high. That topped views.
The Caixin manufacturing index edged up 0.2 point in March to 51.1, the highest since February 2023 and just above forecasts for 51.
U.S. markets didn't trade Friday in observance of Good Friday. European markets and Hong Kong also were closed Friday and will remain shut on Easter Monday.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
PCE Inflation
The February PCE price index rose 0.3% vs. January, the Commerce Department reported Friday, just below views for 0.4%. PCE inflation came in at 2.5% vs. a year earlier, in line and just above January's 2.4%.
The core PCE price index, the Fed's top inflation gauge, advanced 0.3% vs. January as expected. Core PCE inflation came in at 2.8% vs. a year earlier, meeting estimates and down from January's upwardly revised 2.9%.
Fed chief Jerome Powell on Friday said it was "good" that there were no ugly surprises, adding that the PCE data "was more or less in line with want we want to see."
The odds of a June Fed rate cut rose to nearly 69% early Monday vs. about 64% on Thursday.
The PCE inflation data came as part of the income and spending report. Personal income grew 0.3%, shy of 0.4% forecasts. Consumer spending popped 0.8% vs. views for 0.5%.
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Stock Market Rally
The stock market rally saw modest-to-strong weekly gains outside of some growth plays.
The Dow Jones Industrial Average rose 0.8% in weekly stock market trading, setting a record close Thursday. The S&P 500 index gained 0.4%, just setting an intraday all-time high Thursday. The Nasdaq dipped 0.3%, just below peaks. For the quarter, the Dow gained 5.6%, the S&P 500 jumped 10.2% and the Nasdaq leapt 9.1%.
Market breadth was impressive during the week. The small-cap Russell 2000 jumped 2.5%, hitting a two-year high. The Invesco S&P 500 Equal Weight ETF gained 1.6%, setting a record high. The First Trust Nasdaq 100 Equal Weighted Index ETF rose 0.4% vs. the Nasdaq 100's 0.5% slide.
The 10-year Treasury yield fell 3 basis points to 4.19% for the week, dipping below the 200-day line.
U.S. crude oil futures climbed 3.15% to $83.15 a barrel last week, surging 16.1% in the first quarter.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF fell 0.8% for the week. Microsoft stock is a huge holding, with CrowdStrike also in IGV. The VanEck Vectors Semiconductor ETF retreated 1.2%. But these were inside weeks, giving up just a portion of the prior week's strong gains.
Reflecting more-speculative story stocks, ARK Innovation ETF climbed 1.3% last week and ARK Genomics ETF advanced 2.1%. Tesla stock is a major holding across Ark Invest's ETFs.
The Industrial Select Sector SPDR Fund edged up 0.6%, the Financial Select SPDR ETF rose 1.7% and SPDR S&P Homebuilders ETF climbed 1.2%, all to record highs.
SPDR S&P Metals & Mining ETF jumped 4% last week. U.S. Global Jets ETF ascended 3.3%, both to a multimonth best. The Energy Select SPDR ETF gained 2.15% to a 52-week high. The Health Care Select Sector SPDR Fund rose to 1.6%, just below all-time high levels.
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Nvidia Stock
Nvidia stock fell 4.2% last week to 903.56, ending a 92% run in an 11-week win streak. Shares haven't tested their 21-day moving average and are trading within a three-week range. After such a strong run, it makes sense for Nvidia to consolidate for a while. A new base could come in a couple of weeks, but NVDA stock could pause for an extended time, as it did for several months in late 2023.
Many other AI stocks may take their cue from Nvidia, especially chip plays. Longer pauses to forge bases and let moving averages catch up would be constructive.
Astera Labs Stock
Astera Labs came public at 36, soaring 72% in its March 20 debut. The AI chip IPO spiked to 95.21 on Tuesday before reversing lower. ALAB stock has continued to pull back. Shares rose 5.9% to 74.15 for the week.
It's a good idea to wait for an IPO stock to find its footing and forge some sort of consolidation over a few weeks. An IPO base can be very short, as little as two weeks and perhaps unofficially a couple days shorter than that. But they often form over several weeks, depending on market conditions.
Astera Labs enjoys rapid revenue growth from a relatively low base. It lost money in 2023, but is expected to turn a profit in 2024 with continued strong earnings growth in 2025.
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Stocks Near Buy Points
Microsoft stock is on a five-session losing streak, but the losses have been slim and the volume very light. Shares have drifted just below a 420.82 buy point, but are holding above the 21-day line. A rebound would be actionable.
Meta stock fell 4.7% to 485.58 last week, but on anemic volume. Shares fell slightly below the 21-day line. Shares are pulling back toward a fast-rising 10-week line, which might be roughly even with Meta on Monday. That would be the first real 10-week line test of 2024. A rebound from that level would offer a buying opportunity. Meta stock also could have a new base in a couple weeks.
CrowdStrike stock fell 2.1% to 320.59 in the latest week, finding support around the 21-day and 10-week lines. The cybersecurity leader has a messy consolidation, but investors could use a draw-the-line buy point around 338.45, or possibly use Wednesday's high of 333.84 as an early entry.
In truth, a number of software stocks are hovering near support levels and possible entries. Those include CrowdStrike peer CyberArk Software as well as Cloudflare, Monday.com, ServiceNow and HubSpot.
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Tesla Stock
Tesla stock rose 2.9% last week to 175.70, though it hit resistance at the 10-week line. Bulls are pinning hopes that Full Self-Driving will show big improvements, with CEO Elon Musk mandating FSD test drives before new purchases or after service visits. But in the short term, analysts continue to slash Tesla earnings and delivery estimates. That's largely due to weak EV demand generally. In China, competition continues to heat up, with smartphone maker Xiaomi making a big entry into the EV market Thursday.
Tesla will release first-quarter production and delivery numbers on Tuesday, April 2, with Q1 earnings later in the month.
Tesla released its analyst consensus forecast with an average for 443,000 deliveries or a median 431,125. Both are higher than some online estimates, perhaps reflecting some older analyst targets.
Tesla, as promised, raised Model Y lists prices in the U.S. and China. That move seemed aimed at spurring sales in March, but could chill demand to start the second quarter, especially in China.
What To Do Now
The stock market rally appears to be broadening out and rotating in a constructive way. While this story generally looked at tech names, investors can find actionable or promising stocks in the housing, financial, medical, travel and consumer sectors.
Eli Lilly, Medpace, Uber Technologies, ELF Beauty, Nextracker, XP, Royal Caribbean, East West Bancorp, Axon Enterprise, On Holding, M/I Homes and Warren Buffett's Berkshire Hathaway are just a few.
It's possible that tech growth leaders like Nvidia, Microsoft and Meta will consolidate for an extended period.
So cast a wide net, adding promising names to your watchlists. Use the long weekend to run your screens and do some research on some specific targets.
Don't forget defense. Several leading stocks flashed sell signals for recent buyers this past week. While a number of stocks are setting up or pulling back in seemingly bullish fashion, it wouldn't take much selling to start looking a lot worse.
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