Stock futures saw a modest uptick on Sunday night, with Dow Jones futures, S&P 500 futures, and Nasdaq futures all making gains, spotlighting the upcoming earnings report from Nvidia.
Last week, the stock market reached unprecedented heights, with the Dow Jones, S&P 500, and Nasdaq hitting record levels. Several stocks broke out or displayed other buy signals, propelling the Dow Jones above the 40,000 mark for the first time.
Nvidia (NVDA) is scheduled to announce its earnings on Wednesday evening. The outcome and guidance from the leading AI chip manufacturer are poised to significantly influence other players in the artificial intelligence sector, extending beyond dedicated AI firms. Thus, Nvidia’s performance this week carries substantial implications for the broader market rally.
Last week, Nvidia’s stock broke out into a buy zone. Other AI-centric companies such as Broadcom (AVGO), Microsoft (MSFT), Super Micro Computer (SMCI), and arguably Advanced Micro Devices (AMD) are all nearing buy points.
In addition to Nvidia, several companies are slated to report earnings next week, including PDD Holdings (PDD), Palo Alto Networks (PANW), Modine Manufacturing (MOD), Toll Brothers (TOL), Synopsys (SNPS), Deckers Outdoor (DECK), and Williams-Sonoma (WSM).
Pinduoduo’s parent company, PDD, and luxury home builder Toll Brothers are already within the buy range. Modine Manufacturing, Synopsys, Deckers, and Williams-Sonoma are also nearing buy points. Palo Alto is in the process of establishing a new base, with Monday night’s results potentially impacting other cybersecurity firms like CrowdStrike (CRWD).
Nvidia’s stock is featured on the IBD Leaderboard, while AVGO and Nvidia are highlighted on SwingTrader. Microsoft and Synopsys are listed on the IBD Long-Term Leaders roster. Nvidia and PDD stock hold positions on the IBD 50, while Nvidia, Broadcom, and SMCI stock are included in the IBD Big Cap 20.
Current Stock Futures Movement
Dow Jones futures saw a 0.1% increase compared to fair value, while S&P 500 futures and Nasdaq 100 futures advanced by 0.2%.
The 10-year Treasury yield experienced a slight decline, settling at 4.41%.
It’s important to note that overnight movements in Dow futures and other indices may not necessarily translate to corresponding movements during regular stock market hours.
Stock Market Performance: Dow Jones Exceeds 40,000
The stock market rally gained momentum from indications of cooling inflation and other economic data suggesting a slowdown. Following a significant surge on Wednesday, market activity tapered off towards the end of the week as investors awaited Nvidia’s earnings report.
Last week, the Dow Jones Industrial Average climbed by 1.2%, reaching just above the 40,000 milestone. The S&P 500 index saw a 1.5% increase, while the Nasdaq composite surged by 2.1%. The small-cap Russell 2000 extended its winning streak to five weeks, while other major indexes have seen gains for the past four weeks.
Various sectors, including homebuilders, financials, healthcare, energy, aerospace, specialty footwear, restaurants, and global e-commerce companies, exhibited strength during this period.
The 10-year Treasury yield decreased by 8 basis points to 4.42%, although it rebounded from weekly lows of 4.32%.
Last week, U.S. crude oil futures rose by 2.3% to $80.06 per barrel.
ETF Performance
Among growth-oriented ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) surged by 3.5%, with major components including Microsoft and Palo Alto. The VanEck Vectors Semiconductor ETF (SMH) rallied by 3.1%, primarily driven by Nvidia, AMD, and Broadcom. Synopsys is featured in both SMH and IGV.
The SPDR S&P Metals & Mining ETF (XME) recorded a nearly 4% increase, while the Global X U.S. Infrastructure Development ETF (PAVE) saw a slight decline of nearly 1%. The U.S. Global Jets ETF (JETS) climbed by 1.7%, while the SPDR S&P Homebuilders ETF (XHB) dipped by 0.3%. The Energy Select SPDR ETF (XLE) and the Health Care Select Sector SPDR Fund (XLV) gained 1.2% and 1.9%, respectively.
Conversely, the Industrial Select Sector SPDR Fund (XLI) experienced a marginal decline of 0.3%, while the Financial Select SPDR ETF (XLF) rose by 1.5%.
Reflecting a focus on speculative growth stories, the ARK Innovation ETF (ARKK) surged by 5.9% last week, while the ARK Genomics ETF (ARKG) jumped by 6.6%.
Nvidia Earnings Outlook
Nvidia is set to report its earnings on Wednesday night. Analysts anticipate a remarkable surge in Nvidia’s earnings by 413% to $5.59 per share, with sales projected to increase by 242% to $24.57 billion.
However, even if Nvidia surpasses expectations and provides optimistic guidance, the question remains whether such results will meet investor expectations.
Last week, NVDA stock climbed by 2.9% to reach $924.79. Shares cleared a cup-with-handle buy point at $922.20 on Wednesday, subsequently undergoing a slight pullback to test that entry level on Friday.
