Major indexes on the stock market today dropped sharply at the open but quickly trimmed losses and kept those deficits on the mild side. Facebook-parent Meta Platforms got hit hard while fellow Magnificent Seven player Nvidia managed to erase some of its losses after getting rocked earlier.
After hours, database and cloud management software giant Oracle jammed higher, up more than 14% to as high as 130.72 during extended-hours trading after reporting a 3-cent beat on fiscal third-quarter earnings to $1.41 a share. Sales of $13.3 billion came in a hair beneath expectations of $13.31 billion.
Please check out this IBD tech story on details on Oracle's latest results.
The Dow Jones Industrial Average erased an early 0.6% loss and pushed 0.1% higher, or 47 points, to 38,769.66. The Dow is just 1% below an all-time peak of 39,282. A weekly chart on Investors.com highlights recent support at a key technical level, the 10-week moving average, which moves in similar fashion with the 50-day line on a daily chart.
Dow Jones industrial stock UnitedHealth helped the cause, rising more than 12 points, or 2.6%. Nike was the second-best performer on the Dow industrials, up nearly 2 points, or 2%. But Relative Strength Ratings for both companies are poor at 27 and 20, respectively. Their 3-month RS ratings are even worse, at 11 and 15 each.
Volume fell on both exchanges vs. Friday, indicating selling pressure eased. On the Nasdaq, turnover shrank more than 9% to 4.92 billion shares.
Please read the paragraphs later in this story regarding the recent pick-up in distribution days, which can signal a pending stock market top after a long price run.
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An Insurer Breaks Out
Meanwhile, some insurers showed uncommon strength amid Monday's pullback.
Arch Capital Group, a member of IBD's property and casualty insurance industry group, rallied 3.1% to 90.31. It surpassed an 88.77 entry in a relatively shallow cup with handle. The 5% buy zone from 88.77 goes up to 93.21. Buying within the 5% range helps keep a new buyer from getting whipsawed out during a normal price pullback.
Inside the cup base, the decline of 20% from intraday price high to low is normal. Any cup with a depth of greater than 33% means that a stock must work harder to rise back to the cup's left-side high. That makes it prone to a future sharp decline and a breakout failure. Within Arch Capital's base, however, the stock posted three weekly declines in above-average volume and only one up week in active turnover.
You'd prefer to see more up weeks in heavy trade than down weeks as a growth stock builds a new chart pattern. Why? It often indicates burgeoning demand among large fund managers. Plus, the stock has risen considerably since it built a series of early-stage bases from July 2021 through October 2022.
Arch Capital got some airplay in Monday's IBD Live. Its strong record of profit and sales growth in recent quarters will be tested with tough year-over-year comparisons in the coming quarters. Analysts polled by FactSet see earnings cooling off, down 5% this year to $7.99 a share. The Bermuda-based firm's earnings rocketed almost sevenfold from $1.36 a share in 2020 to $8.45 in 2023.
Meta came slightly off lows of the day but still fell 4.4%. Volume rose 8% above its 50-day average. But shares continue to hold an impressive gain of 37% since Jan. 1. The owner of the Instagram and Facebook social media platforms is seeking bullish buying support at the short-term 21-day exponential moving average, which can be programmed on MarketSurge.
Nvidia Stock Chart Analysis
Nvidia stock swung from a loss of almost 4% in the first 15 minutes of trading, but chipped that down to 2% by the close. Volume was heavy, 33% above usual levels. But that turnover was not massive as witnessed in Friday's sell-off. Around lunchtime on Wall Street, Nvidia bobbed mildly above and below the break-even level. Nvidia remains comfortably above the key 21-day exponential moving average, a sign of stock strength.
Nvidia is an artificial intelligence chip designer and leader in graphics processing units that handle accelerated computing tasks. It recently grew past $2 trillion in market value. The megacap tech may be due for a pullback after a nine-week rally. Shares remain well extended after moving past a 505.48 buy point in a flat base.
That base followed a double-bottom pattern, forming what might be viewed as a base-on-base ahead of Nvidia's breakout past 505.48 in the week ended Jan. 12. NVDA stock sports a hedged three-quarter position in Leaderboard.
Nvidia holds a best-possible 99 Composite Rating from IBD. However, this rating is best used for stock selection, not for timing buys or sells in the stock market. Wall Street overall sees Nvidia's earnings growing a stout 80% to $23.35 a share for the current fiscal year, which ends in January.
Sales, meanwhile are forecast by analysts to grow 238% in the current April fiscal first quarter of FY 2025 to $24.2 billion, 98% to $26.7 billion in the July Q2 quarter, 62% to $29.4 billion in Q3 and 42% to $31.4 billion in Q4, according to the latest data featured in the quarterly statistics field of Nvidia's weekly chart on MarketSurge.
Stock Market Today
The Nasdaq composite briefly undercut 16,000 and slipped to a morning low of 15,978, but bounced to close at 16,019. It was down 0.4% for the day.
Please see Monday's Big Picture column for further analysis of the day's stock market action.
Through Friday, the Nasdaq showed a 7.2% gain year to date, mildly trailing a 7.4% advance by the S&P 500. In 2023, the Nasdaq rose 43.4%, sharply beating the 500's 24.2% advance. The large-cap benchmark squeezed its own loss to around 0.1% and traded near its early Monday low of 5,101.
Among the day's worst industry groups, coal, computer hardware and peripherals, consumer electronics retail, fiber optic, building maintenance, leisure products and contract electronics manufacturing fell 2% or more on a price-weighted basis. So did the diversified medical and generic drugs groups. See the entire daily changes in all 197 IBD industry groups at IBD Data Tables.
Nasdaq-listed Costco Wholesale continued to sink after last week's negative reversal. The discount retailing giant got slammed in heavy volume last week after its February-ended fiscal second-quarter sales sharply missed analyst expectations. Earnings grew 12% to $3.71 a share, and the company's fiscal 2024 profit is seen rising 8% to $15.93 a share. Shares on Monday fell 1.6% in heavy trade and are testing key support at the 10-week moving average.
Finally, the small-cap Russell 2000 dropped 0.8%. The popular index, however, is not giving back much of its nearly 3.3% gain over the past two weeks.
Meanwhile, investors are bracing for a fresh round of inflation data as February numbers on U.S. consumer prices are due to hit traders' screens before the market open Tuesday. On Feb. 13, the stock market fell hard on the January Consumer Price Index report. Major indexes dropped in higher volume, a signature mark of pronounced professional selling.
According to Econoday, economists see the CPI index rising 3.1% year over year, matching the January increase. Core prices are expected to move 0.3% higher vs. January, slowing from 0.4% in January, and up 3.7% vs. a year ago vs. 3.9% last month.
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Meta Stock Analysis
Sessions with heavy institutional profit-taking, known as distribution days, have piled up recently. Over the past eight sessions, the Nasdaq has logged four distribution days. They include a 1.7% sell-off on March 5 and a 1.2% decline three sessions later on March 8.
Meta has certainly helped the tech sector of the stock market lead the advance since November. The social media giant is sharply past its breakout point at 326.20. But the stock is now approaching a possible new entry point if it tests the rising 10-week moving average.
The Menlo Park, Calif.-based firm has notched excellent year-over-year increases in earnings — up 31%, 168% and 203% in the past three quarters— and sales — up 11%, 23% and 25%. Wall Street thinks Meta's bottom line will rise 45% in the first quarter to $4.89 a share, according to MarketSurge, on a 26% increase in sales to $36 billion.
Meta reports its first-quarter results on April 24. In its fourth-quarter report, Meta announced its first-ever cash dividend for shareholders and boosted its share buyback plan.
Please check out this IBD Stock Spotlight column for more details on the chart action in Meta Platforms.
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Falling In Sympathy?
Other tech stocks making notable moves included Marvell Technology. The stock gapped lower at the open and ended the day down 4.1% to 72.36 in lighter yet still above-average turnover.
The member of IBD's fabless semiconductor industry group shot out of a seven-month base-on-base pattern with a 73.53 proper buy point on March 1. Gains quickly amassed over the next four sessions as Marvell rallied 16.6% from this proper entry. That was short of IBD's offense-type sell rule, which is to snatch at least short-term profits when the gain from the breakout reaches 20% to 25%.
However, Marvell shares recently took a nosedive, falling nearly 5% on Monday after dropping 11% on Friday in massive turnover. The poor action triggered a defense-type sell rule, or to lock in at least a small gain or avoid a loss when a growth stock loses much of its double-digit gain.
Marvell reported fiscal fourth-quarter results late Thursday, and the numbers did not meet IBD's stock selection criteria in terms of earnings growth, or a minimum 25% on a year-over-year basis. Meanwhile, sales growth should be 20% or more for small and midcap stocks, at least 10%-15% growth for large and megacap names. Earnings in the microprocessor designer came in flat at 46 cents a share on a 1% rise in sales to $1.43 billion.
Mutual fund sponsorship in Marvell dipped in the fourth quarter to 2,291 funds vs. 2,320 in the third quarter, according to MarketSurge data.
Outside tech, leisure products chain and midcap stock Academy Sports & Outdoors also made a negative round trip of recent gains from a 68.50 buy point in a five-week flat base. Academy, down nearly 2.6% on Monday in above-average turnover, slid lower for a sixth straight session.
Also, retail sector leader Abercrombie & Fitch — up sharply from an initial breakout past a 28.39 early buy point in May — still possesses a huge gain of more than 300%. However, shares in the apparel chain, these days targeting a middle-aged, wealthier customer audience vs. teenagers and young adults back in the 1990s and 2000s, sank more than 3% at one point and registered a fourth drop in a row in heavy trade. The stock closed off 1.8% at 116.54. Watch for a potential test of the 50-day line.
Outside The Stock Market
Outside stocks, bitcoin surged again, rising 3% to a record of $71,568 initially. Then the digital currency accelerated the gain to 4.7% to $72,452. The iShares Bitcoin Trust, a new spot Bitcoin price tracker, jumped nearly 4% and reached new highs. It is extended from a seven-week cup with handle with a buy point at 30.23, gaining nearly 38% since the Feb. 26 breakout.
Trading was fairly quiet in U.S. government bonds, but Econoday on Investors.com shows a full slate of Treasury auctions of bonds of various durations.
The benchmark 10-year bond yield edged up 1 basis point to 4.10%.
Elsewhere, crude oil futures on the Nymex reversed from early losses to edge up 9 cents to $78.10 a barrel. In recent weeks, crude rallied above $80 for the first time since the week of Nov. 6.
Please follow Chung on X/Twitter: @saitochung and @IBD_DChung
