Dow Jones Futures: Market Rally Powers Up On Rate-Cut Hopes; Two Risks Could Be Toxic Mix
Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures. Netflix (NFLX), Taiwan Semiconductor (TSM), ASML (ASML) and Goldman Sachs (GS) headline key earnings reports this coming week.
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The stock market rally had a big shake-up Thursday. But, ultimately, the major indexes hit record highs during the week, while the small-cap Russell 2000 skyrocketed to a multiyear high, fueled by Fed rate-cut hopes.
Nvidia (NVDA), Tesla (TSLA) and most of megacaps and chip stocks that fell back Thursday ended with weekly gains or at least healthy charts. Meanwhile, key sectors such as housing saw big gains after lagging for some time.
Weatherford International (WFRD), TopBuild (BLD), AppFolio (APPF) and Tencent (TCEHY) are in buy areas.
Key Earnings
Netflix stock, Goldman Sachs and ASML also are in buy range as they head into earnings. Taiwan Semiconductor stock is still flirting with a $1 trillion valuation. Goldman reports early Monday amid the ongoing flurry of bank earnings. ASML (early Wednesday) and Taiwan Semi (early Thursday) will be huge for the chip sector and artificial intelligence broadly. Netflix is due Thursday night.
The video embedded in the article discusses the big week of upcoming earnings, with Taiwan Semiconductor, ASML, Netflix and Goldman stock all analyzed.
Nvidia and Taiwan Semiconductor stock are on IBD Leaderboard. KB Home stock is on SwingTrader. Nvidia and Goldman stock are on the IBD 50. Nvidia stock is on IBD Big Cap 20. AppFolio was Friday’s IBD Stock Of The Day.
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.
Join IBD experts as they analyze leading stocks and the market on IBD Live
Stock Market Rally
The stock market rally rallied last week as investors raised rate-cut expectations following tame CPI inflation and Fed chief Jerome Powell’s testimony. Megacaps and hot chip plays, including Nvidia, Taiwan Semiconductor and Tesla, suffered big losses Thursday. But it was a broad advance for the week, despite a late Friday fade.
The Dow Jones Industrial Average leapt 1.6% in last week’s stock market trading, moving above 40,000 for the first time. The S&P 500 index climbed 0.9%. The Nasdaq composite advanced 0.25%.
The small-cap Russell 2000 spiked 6% to its best level since January 2022. The Invesco S&P 500 Equal Weight ETF (RSP) jumped 2.95%, just shy of the March 28 record high. Both had struggled at their 50-day moving averages for several weeks.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) gained 0.9%, in new-high ground.
The 10-year Treasury yield fell 8.5 basis points to 4.19%, hitting a four-month low on Thursday.
U.S. crude oil futures fell 1.1% to $82.21 a barrel last week.
Nasdaq Still Extended
On Wednesday, the Nasdaq closed 9% above its 50-day line, the most stretched since June 2023, raising the risk of a pullback. After Thursday’s tumble and Friday’s modest bounce, the Nasdaq is 6.9% above its 50-day, still extended.
With optimism high and the Nasdaq stretched, the risks of a pullback are elevated as tech earnings kick in. That could be a toxic mix.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) climbed 0.5% last week. The iShares Expanded Tech-Software Sector ETF (IGV) fell 1.9%. The VanEck Vectors Semiconductor ETF (SMH) advanced 1.7%. Nvidia and Taiwan Semi stock are the two largest holdings in SMH, with ASML a notable member.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) rallied 1.8% last week and ARK Genomics ETF (ARKG) soared 9%. Tesla stock is the No. 1 position across Ark Invest’s ETFs.
SPDR S&P Metals & Mining ETF (XME) bounced 3.8% last week. The Global X U.S. Infrastructure Development ETF (PAVE) leapt 4.5%. SPDR S&P Homebuilders ETF (XHB) spiked 10.8%. The Energy Select SPDR ETF (XLE) edged up 0.5% and the Health Care Select Sector SPDR Fund (XLV) gained 2.6%. The Industrial Select Sector SPDR Fund (XLI) popped 2.4%.
The Financial Select SPDR ETF (XLF) rose 2%, with Goldman Sachs stock a big component. The SPDR S&P Regional Banking ETF (KRE) surged 8.6%.
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Tesla Stock
Tesla stock tumbled 8.4% on Thursday, reversing from a nine-month high and snapping a big 11-day win streak. But TSLA stock only fell 1.3% to 248.23 for the week. The EV giant reportedly will delay the Tesla robotaxi event from Aug. 8 to sometime in October.
Nvidia Stock
Nvidia stock rose 2.7% to 129.28 for the week despite tumbling 5.6% on Thursday. Stepping back, NVDA stock has been consolidating for a few weeks, generally finding support around or above the 21-day line. A few more weeks could see a new base, with the 50-day line catching up.
Stocks In Buy Zones
Weatherford stock jumped 4.9% to 127.72, rebounding from the 50-day line and breaking out from a cup-with-handle base with a 127.20 buy point. Shares hit a record 130.61 intraday Friday before pulling back.
TopBuild stock spiked 14.6% last week to 431.91. The insulation installer vaulted above the 50-day line on Thursday, clearing a downward-sloping trendline. The official buy point is 452.87, according to MarketSurge.
AppFolio stock jumped 5% on Friday to 264.35, clearing a 256.73 buy point from a flat base. APPF advanced 4.7% for the week, the sixth straight weekly gain.
Tencent stock popped 3.8% to 50.47. The Chinese messaging and gaming giant topped a 50.89 buy point intraday on Friday after clearing an early entry Thursday. TCEHY stock has a cup-with-handle base.
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Market Rally Analysis
The Nasdaq is extended while earnings season is a big X factor over the next few weeks. Taiwan Semi and ASML in particular could swing techs in the coming week. But for now it’s a broad advance with a number of stocks flashing buy signals.
Keep in mind that not all stocks will take part. Restaurant stocks have suffered serious damage in the past week. Social media plays had a tough few days. Be willing to cut losers and laggards as new buying opportunities arise.
One downside to a broad market rally? Your watchlists need to be a lot bigger. So do your homework.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.
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