Dow Jones futures will open Sunday night along with S&P 500 futures and Nasdaq futures. Nvidia’s earnings are looming next week, and negotiations over the debt ceiling will resume on Friday night after being suspended hours ago.
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Stock market gains were strengthened last week by optimism about a deal to reach the debt ceiling and easing bank fears, led by a rise in AI-infused tech leaders such as: Nvidia (NVDA), Advanced Micro Devices (AMD), Service Now (now), the parent company of Google alphabet (Google), snowflake (snow) and Palantir Technologies (PLTR).
The Nasdaq Composite and S&P 500 hit 2023 highs, while the Nasdaq 100 hit its highest level in over a year. The White House and congressional leaders appear to be moving toward a debt ceiling deal as concerns about local banks recede.
On Friday, Republican negotiators suspended negotiations on the debt ceiling, calling President Biden’s White House unreasonable. Around the same time, reports emerged that Treasury Secretary Janet Yellen told bank executives that more bank mergers might be needed. That hurt local bank stocks on Friday, but they have risen significantly this week.
Leading indices received well on Friday the debt ceiling pullback and Yellen’s comments, partly because Fed Chair Jerome Powell said he would support a rate cut next month around the same time. .
Investors remain confident in the debt-restriction deal. Indeed, House Speaker Kevin McCarthy said Friday night that debt ceiling talks would resume later that night.
The stock market rally remains somewhat fragmented and narrowly led. While there aren’t many stocks offering buying opportunities at the moment, investors can add exposure cautiously.
Tesla (TSLA) made a bull run during a shareholder event last week, clearing some key levels. But TSLA shares face more resistance.
Nvidia Earnings
Wednesday night’s NVIDIA earnings results are going to mean a lot to the upside of the market. NVDA stocks are everything that is doing well in the market. The company is a leading stock in Megacap and AI in a market rally dominated by Megacap and AI trends. Nvidia’s stock jumped 10% last week, a much wider range.
A pause or modest decline in Nvidia stock over the next few weeks would be healthy. However, should NVIDIA’s earnings or guidance fall short of expectations, NVDA could face severe penalties. That would affect not only rival AMD, but also Google and the many “AI”-related efforts that have boosted the market.
ServiceNow shares soared last week amid an AI-related partnership with Nvidia. microsoft (MSFTMore). SNOW stock rose after reports it may buy an AI search firm. PLTR stock, which has long been a hotbed of AI, is up 23% on the week, after a 28% surge in earnings the previous week. Google shares have soared 14% so far in May.
Other main income
snowflake, elf beauty (fairy), Palo Alto Networks (Panwoo) and deckers outdoor (deck) is also a notable company that will announce financial results this week.
SNOW shares are in a 10-month consolidation period. ELF stocks are firming on the 21st line after a big gain. PANW stocks are trying to hold the 50-day line within a new volatile sideways base. DECK stock, which had been winning big, plunged last week, falling below the 50-day line. On hold (Onon) and foot locker (Florida) examined the results in detail.
Nvidia stock is on IBD Leaderboard, with ELF stocks on the leaderboard watchlist. SNOW is in stock IBD50.Currently in stock IBD Big Cap 20.
A video embedded in the article discussed weekly market trends and reviewed three non-AI play setups. lifetime group (LTH), Meritage Homes (MTH) and Mercado Libre (Meri).
dow jones futures today
Dow Jones futures open Sunday at 6:00 pm ET along with S&P 500 and Nasdaq 100 futures.
Note that overnight trading such as Dow Futures does not necessarily translate into actual trading in the next regular stock market.
IBD experts analyze hot stocks during the stock market rally on IBD Live.
stock market rise
Last week’s rally in the stock market progressed with a wide gap between the leaders and the laggards.
The Dow Jones Industrial Average rose 0.4% in last week’s stock market trading. The S&P 500 index rose 1.65%. The Nasdaq Composite rose 3%. Small-cap Russell 2000 rose 1.9%.
Yields on 10-year Treasuries rose 23 basis points last week to 3.69%, the highest level in two months.
Strong economic data and hawkish rhetoric from some Fed officials pushed the odds of the Fed raising rates next month to over 40% at one point this week. But that probability returned to about 20% on Friday after Powell said he “has room to look at the data.”
US crude futures rose 2.2% for the week to $71.55 a barrel.
ETFs
Among growth ETFs, the iShares Expanded Technology Software Sector ETF (IGV) jumped 5.25%. NOW stock is a big component of his IGV. VanEck Vectors Semiconductor ETF (SMH) jumped 8.5%. Nvidia shares are SMH’s major holdings alongside AMD shares. A stock that reflects a more speculative story, the ARK Innovation ETF (Arkuk) rose 2.7% last week, while the ARK Genomics ETF (Argu) increased by 3%. Tesla shares are the number one holding of all Ark Invest ETFs. Kathy Wood’s Ark also owns a portion of PLTR shares.
SPDR S&P Metals & Mining ETF (XME) fell 0.5%, falling for the fifth consecutive week. US Global Jets ETF (Jets) rose 4.1%. SPDR S&P Homebuilders ETF (XHB) rose 1.2%. Energy Select SPDR ETF (XLE) rose 1.4%. Healthcare Select Sector SPDR Fund (XLV) fell 0.7%.
Financial Select SPDR ETF (XLF) up 2.2% SPDR S&P Regional Banking ETF (KRE) rebounded 7.8%, despite a 1.8% drop on Friday.
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Should you buy Tesla stock?
Tesla shares rose 7.2% last week to 180.14, rebounding from near the 21-day line and regaining the 50-day line for the first time since early April.
Investors reacted positively to Tesla Shareholder Day on Tuesday. CEO Elon Musk reiterated that Cybertruck will start delivering by the end of the year, while hinting at next-generation vehicles. Musk also said Tesla would “try” some kind of advertising. As wise as his CEO in 2023, he certainly mentioned “AI” a few times.
Meanwhile, Tesla has quietly offered new inventory discounts on its Model 3 vehicles in the US following recent discounts on its Model 3 and Y vehicles in Europe. Inventory discounts aren’t featured as heavily as official markdowns, but they still hit profit margins. Balancing production, delivery and pricing will be key for Tesla in 2023.
Investors may view a rise above Friday’s 50-day moving average as an early entry for Tesla shares. But it will be very aggressive. Tesla is still facing the 200-day line, and the 200-day line is dropping towards the 200th. Just above that is the buy point at 207.89, just above the March 31 high. This is due to either a 7-week consolidation or a 3-month double-dip buy point.
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market rise analysis
The Stock Market Rise Showed Strong last week, but progress still narrow. The Nasdaq surged to new highs for 2023 and the S&P 500 also hit highs later in the week.
The Russell 2000 index, supported by bank stocks, also had a strong week, but well short of 2023 highs. The Dow Jones posted a modest gain for the week after breaking below the 50-day line on Tuesday.
The technology rally has expanded from mega-cap stocks such as Google and Nvidia to large chip and software companies such as AMD and ServiceNow to AI-related companies such as Palantir. However, most have now been extended.
The Nasdaq 100 rose 3.5% for the week to a 52-week high. The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) surged 2.45%, albeit struggling. That’s close to the 2023 high.
But the overall spread remains lackluster at best. Invesco S&P 500 Equal Weight ETF (RSP) rose nearly 1%, but fell below the 200-day line on Friday. The RSP is no closer to its 2023 high than the October bear market low.
Losers led the risers on Friday after a slight gain on Thursday. However, the new highs surpassed the losers for the second session in a row.
Besides semiconductor, software and megacap stocks, stocks of homebuilders, building materials, medical products and biopharmaceuticals have also performed well. So are travel stocks and some payments stocks.
Last week, shoe-related stocks were in a heel market due to the influence of ONON and Foot Locker. Deckers Outdoor as well as dicks sporting goods (DKS), trying to move forward as best it can.
Debt ceiling talks, bank concerns and recession risks remain major issues for the market rally. Wall Street and political analysts still see a debt-strait deal as likely, but headlines could send the market up and down in the coming days.
Timing the Market with IBD’s ETF Market Strategy
what to do now
Equity markets are trending higher, but leadership is narrow and market breadth questionable. Many major brands will be extended.
Investors who have taken advantage of buy signals in tech stocks in the past week or so have generally benefited, with some earning huge rewards. However, overall exposure should be kept modest. Consider taking a portion of the big winner’s profits. I definitely have a game plan.
There is a healthy number of stocks being offered from various sectors, which could go higher if the market picks up more. So you’ll want to be prepared.
Read “The Big Picture” daily to stay on top of market direction and key stocks and sectors.
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