Dow Jones futures open Sunday night along with S&P 500 futures and Nasdaq futures. microsoft (MSFTMore), the parent company of Google alphabet (Google) and meta platform (meta), the Federal Reserve is set to hike rates again and is set to have a huge earnings week.
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Tesla (TSLA) continues to expand discounts and financing options to boost demand, despite the potential impact on margins.
The stock market rally has pushed the Dow Jones into a massive week-long rally, extending its longest winning streak in nearly six years. The S&P 500 also posted solid gains. However, the Nasdaq reversed after Thursday’s big Tesla-led decline. Growth stocks have suffered losses, often large losses, but generally still look healthy.
Meanwhile, bank stocks have rebounded sharply. Industrials, travel and some pharmaceutical stocks performed well or solidly.
The market could be taking a breather and there aren’t many setups at the moment. So it’s not the best time to increase your exposure.
Earnings from Microsoft, Google and Meta are looming large in the market’s gains. Not only do these three tech giants collectively boast his nearly $5 trillion market cap, but their performance, guidance, spending plans and comments will be critical to his cloud computing, artificial intelligence, digital advertising and more.
It’s not just the business of cloud software, Nvidia (NVDA) and other suppliers.that would be the key Amazon.com (AMZN) reported on August 3.
in the meantime, Service Now (now), general electric (GE), visa (V.), Chipotle Mexican Grill (CMG), boeing (BA), general motors (GM) are just a few of the other significant companies currently active.
Tesla, Nvidia, Meta Stocks Do Better IBD Leaderboard, has CMG stocks on its leaderboard watchlist. Microsoft stock is on the IBD’s long-term leader list.Tesla and NOW inventory IBD50. TSLA shares are IBD Big Cap 20.
A video embedded in the article discusses weekly market trends and analyzes shares of Dow giants Microsoft, Boeing and Visa.
Fed meeting
The Fed will hold two days of meetings this week, with a policy announcement scheduled for Wednesday at 2:00 p.m. ET. After the June moratorium, the Fed is overwhelmingly expected to raise rates by a quarter of a percentage point. But the real problem is the prospect of a rate hike this year. Fed policymakers expect two more rate hikes this year in June, but subdued inflation reports have raised investor expectations that another rate hike after Wednesday is slim.
Fed Chairman Jerome Powell’s comments at 2:30 p.m. ET are likely to provide clues about the rate outlook.
dow jones futures today
Dow Jones futures open at 6 p.m. 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 on the next regular stock market.
IBD experts analyze the hottest stocks on the rise on IBD Live.
stock market rise
The stock market rally this week started out generally solid, but then diverged.
The Dow Jones Industrial Average rose 2.1% in last week’s stock market trading, finally surpassing its 2023 high. The Dow Jones Industrial Average is on a 10-day winning streak, the longest since August 2017. The S&P 500 index rose 0.8%, but growth was slow. The Nasdaq Composite fell 0.6% after Thursday’s 2.05% drop. The small-cap Russell 2000 is up 1.5% and is nearing its 2023 high.
Invesco S&P 500 Equal Weight ETF (RSP) rose 1.35%, nearly doubling the rate of gain for the S&P 500 and just shy of its 2023 high.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) rose 0.9%, mirroring the Nasdaq 100’s 0.9% decline.
The 10-year U.S. Treasury yield climbed two basis points to 3.84%, but there were big daily moves.
US crude futures rose 2.3% to $77.07 a barrel, the fourth straight week of gains.
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ETFs
Among Growth ETFs, Innovator IBD 50 ETF (FFTY) fell 0.35% last week, while the Innovator IBD Breakout Opportunity ETF (game) rose 0.7%. iShares Augmented Technology Software Sector ETF (IGV) rose 0.1%, sharply narrowing its weekly gains. Microsoft stock and ServiceNow are big IGV holdings. VanEck Vectors Semiconductor ETF (SMH) fell 2% after jumping 5.4% the week before.
SPDR S&P Metals & Mining ETF (XME) rose 0.2% last week. Global X US Infrastructure Development ETF (pave) climbed 0.4% to an all-time high. US Global Jets ETF (Jets) rose 1.9%. SPDR S&P Homebuilders ETF (XHB) fell 1.5%. Energy Select SPDR ETF (XLE) rose 3.5%, while the Healthcare Select Sector SPDR Fund (XLV) rose 3.45% to its highest level since early January. Industrial Select Sector SPDR Fund (XLI) rose 0.9% to a new all-time high.
Financial Select SPDR ETF (XLF) surged nearly 3%, while the SPDR S&P Regional Bank ETF (KRE) jumped 7.5%.
A stock that reflects a more speculative story, the ARK Innovation ETF (Arkuk) fell 1.3% last week, while the ARK Genomics ETF (Argu) climbed. Tesla shares are the number one holding of all Ark Invest ETFs. TSLA shares fell 7.6% in a week of big downside trading, but are still comfortably above the 10-week line.
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Tesla discounts widen
Tesla is now expanding discounts on its Model 3 inventory in the U.S., with the EV sedan priced as low as $37,040 with zero mileage. That’s compared to his $40,240 starting price for build-to-order. A $7,500 federal tax credit keeps the price below his $30,000, and some state incentives further reduce costs.
Tesla, meanwhile, used to offer loans of up to 72 months, but now offers 84 months of auto loans.
During its second-quarter earnings call, CEO Elon Musk announced that Tesla will offer a one-time, free, fully self-driving switch from an existing Tesla to a new one purchased in the third quarter. This won’t give him $15,000 in FSD income, but it could give him a one-time increase in sales.
All of this points to further margin pressure in the third quarter.
Tesla’s earnings per share topped the list in terms of views, with revenue up 47% thanks to continued price reductions and easy year-over-year comparisons. However, operating profit fell by 2.6%, and profit margins fell further. Tesla shares posted above-average trading volumes last week, down 7.6% outside of the week. Even though the EV giant could have used a longer steering wheel or shorter base in a larger integration, this was ugly behaviour. TSLA stock will more than double in 2023.
Microsoft, Google, Meta Earnings
Microsoft’s results and Google’s results will be released on Tuesday night, while Meta’s results will be released on Wednesday night.
Microsoft and Google provide insights on cloud computing. Google and Meta, along with Snapchat’s parent company, to offer online advertising and social media tips snap (snap) will tap next week as well.
All three provide color on artificial intelligence. This is especially important because Microsoft is considered a leader in AI and has just announced pricing for various AI capabilities for enterprises. How soon will “AI” become a true growth engine for Microsoft? If Mr. Softy doesn’t see meaningful returns for some time, AI stocks, especially the more speculative ones, could see a general cooling.
Cloud-related comments from these three giants will be key for Amazon, which relies on Amazon Web Services for most of its profits. In addition to ServiceNow’s revenue, it could disrupt major software businesses such as: data dog (DDOG), dyna trace (DT), cloudflare (Net) and MongoDB (MDBs).
Meanwhile, the megacap guidance, especially on spending, is NVIDIA, broadcom (AVGO), Arista Networks (ANET) more.
market rise analysis
Equity market gains still look strong, with major indices just hitting 52-week highs, solid breadth and mixed leadership. The Nasdaq fell sharply on Thursday but ended the week finding support at the 10-day line.
An orderly pause or pullback would be healthy as the Nasdaq and S&P 500 are on the brink of extension.
A pause in the market will create new buying opportunities. Many leading stocks are extended. Many other companies are looking okay after big losses on Thursday, but it could take days or weeks to bounce back again.
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what to do now
Now is not the best time to increase your exposure. The Nasdaq took a hit, but it won’t be long before it’s extended again. There are not many stocks in which I have positions. And this week’s results, along with the Fed meeting, could disrupt the rally of individual stocks, sectors and markets.
Investors should keep an eye on their portfolios, which holdings are profitable, and which affiliates are expecting big returns. Consider holding various stocks until the end of the financial year or locking in all or part of the profits.
Stock market gains remain strong. Investors should watch how stocks react to earnings and other news this week. It doesn’t take long before many names start looking interesting again.
nasdaq 100 special rebalance
A special rebalancing of the Nasdaq 100 will take place before the market opens on Monday, reducing the dominance of the “Magnificent Seven” of Microsoft, Apple, Nvidia, Google, Amazon, Metaplatform and Tesla stocks. MSFT stocks and Nvidia will lose the most weight in the index.
A special rebalance probably won’t have much of an impact on these giants. This news has been out for basically two weeks.
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