Dow Jones futures were little changed after hours, along with S&P 500 futures and Nasdaq futures. Stock market gains on Wednesday rebounded, with the Nasdaq leading the decline. KB Home (KBH) late reporting.
X
in the meantime, Nvidia (NVDA) and Tesla (TSLA) stepped back after powering up on Tuesday. Advanced Micro Devices (AMD) and Google’s parent alphabet (Google) while the turbocharged artificial intelligence worked, fell below a critical level Palantir Technologies (PLTR) and AI stocks fell.
Fed Chairman Jerome Powell reiterated on Wednesday that another rate hike is likely, but did not change his outlook significantly from his comments after the Fed’s meeting a week ago. At best, Mr. Powell provided another trigger for the market downturn.
In hot tech and growth sectors, investors should look to the leaders to see which companies hold up best in early pullbacks. Nvidia stock looks much better than AMD stock at the moment despite Wednesday’s drop.
But sales were sluggish outside of mega-cap growth and AI. Investors may choose to buy in some non-tech areas. Chipotle Mexican Grill (CMG) a buy signal flashed on Wednesday.
C3.ai (AI) hosts Analyst Day on Thursday.
Tesla and Nvidia are on the rise IBD Leaderboard, Chipotle is on the leaderboard watchlist. CMG stocks are on SwingTrader. TSLA shares are IBD Big Cap 20. Chipotle was IBD Stock Of The Day on Wednesday.
The video in this article reviews Wednesday’s market performance, analyzes Chipotle, and compares AMD stock to Nvidia.
dow jones futures today
Dow Jones futures remained stable relative to fair value. S&P 500 and Nasdaq 100 futures fell.
Note that overnight trading such as Dow Futures does not necessarily translate into actual trading in the next regular stock market.
KB home earnings
KBH shares edged higher in extended trading after KB Home’s unexpectedly strong 1% earnings growth. Home builders also led the way. KB Home shares rose 1.9% to 52.01 on Wednesday on mixed entries.
Accenture (ACN) will report early Thursday morning. The IT consulting giant announced a partnership with AI on Wednesday. microsoft (MSFTMore), Google, Amazon (AMZN). ACN shares fell 1.3% to 313.20 on Wednesday, its third consecutive year of declines after a large gain since early May.
IBD experts analyze hot stocks during the stock market rally on IBD Live.
stock market rise
The Nasdaq bore the brunt of the sell-off as the stock market rally drove major indices down.
The Dow Jones Industrial Average fell 0.3% in stock market trading on Wednesday. The S&P 500 index fell 0.52%. The Nasdaq Composite fell 1.2%. Small-cap Russell 2000 fell 0.2%.
US oil prices climbed 1.9% to $72.53 a barrel.
The 10-year U.S. Treasury yield fell slightly to 3.72%. The odds of a rate hike in July hovered at 72%. Markets are pricing in the odds of a second rate hike this year still below 20%.
ETFs
Among Growth ETFs, Innovator IBD 50 ETF (FFTY) fell 0.6%, while the Innovator IBD Breakout Opportunity ETF (game) fell 0.2%. iShares Augmented Technology Software Sector ETF (IGV) fell 1.85%. VanEck Vectors Semiconductor ETF (SMH) fell 2.3%. Nvidia stock is the biggest component of his SMH, with AMD also making a big contribution.
A stock that reflects a more speculative story, the ARK Innovation ETF (Arkuk) fell 3.6%, while the ARK Genomics ETF (Argu) 2.7%. TSLA stock is the #1 holding across Ark Invest ETFs. The stock fell 5.5% after hours on Wednesday, but is still above the 10-day line. Tesla stock fell slightly overnight.
SPDR S&P Metals & Mining ETF (XME) rose 0.85%, while the Global X US Infrastructure Development ETF (pave) 0.9%. US Global Jets ETF (Jets) fell 0.1%. SPDR S&P Homebuilders ETF (XHB) rose by 0.5%. Energy Select SPDR ETF (XLE) rose 0.8%, while the Healthcare Select Sector SPDR Fund (XLV) was slightly higher.
Financial Select SPDR ETF (XLF) fell 0.1%. SPDR S&P Regional Banking ETF (KRE) fell 1.5%.
Top 5 Chinese stocks to watch right now
NVIDIA vs. AMD Stocks
Nvidia fell 1.7% from its trading low to 430.45 on Wednesday. AMD shares fell 5.7% to 112.13. But the real divergence is in the chart. NVDA shares fell after hitting all-time highs on Tuesday. It is still well above the 10th and 21st lines.
In contrast, AMD shares broke through the 21-day line on Wednesday and dipped below recent lows after falling to that level on Tuesday. This was AMD’s fifth drop in six sessions, four of which were above-average volumes. It all started on June 13th with a downside reversal when AMD unveiled an AI chip to compete with Nvidia.
Had AMD’s investors not started scaling up earlier, Wednesday’s losses would have been the place to make at least partial gains.
Nvidia stock and AMD have tended to trade off chip leadership in recent years, and that could be the case again. But at the moment, Nvidia is the leader and AMD is struggling somewhat.
Meanwhile, Google shares fell 2.1% on Wednesday with light trading. However, GOOGL shares fell below the 21-day line for the first time since May 5, according to Marketsmith. If we have a good day, things might change. But for now, GOOGL stock looks weaker than other big tech stocks.
CMG Stock
Chipotle shares rose 1.2% to 2,073.67 on Wednesday after Wedbush raised its price target to $2,300 from $2,200. Stocks rebounded moderately from the 21-day and 10-week lines, breaking the downtrend and clearing some of the short-term levels. The stock fell from its intraday high of 2,092.51, but both of these were reasons for an early entry. CMG stock is very closely traded. The buy point at 2,139.88 boasts a four-week tightness and has been on a flat base trajectory since Friday.
ai stock investor day
C3.ai will host an Investor Day event Thursday at 1:30pm ET. Will AI’s high-profile play perhaps provide some new financial guidance ahead of its opening? News and commentary on C3 could fuel or chill enthusiasm for AI.
AI shares fell 9.6% to 39.04, falling for the third straight day with above-average trading volumes. The stock is still more than double its early May low, with support at the 21st line.
PLTR shares tested the 21-day line on Wednesday and fell 7.3% to 14.64. This is also the third consecutive year of declines in above-average transaction volumes for Palantir.
market rise analysis
The stock market has fallen for three consecutive trades, and the Nasdaq pullback is clearly underway.
Wednesday’s decline was led by the Nasdaq and Nasdaq 100. This is a turnaround from Tuesday, when Tesla and Nvidia continued to climb the rankings. The Nasdaq, which just tested the 10-day moving average on Wednesday, is still 2% above the 21-day line and 7.1% above the 50-day line.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) fell 1% on Wednesday, not as bad as the Nasdaq or the Nasdaq 100.
Invesco S&P 500 Equal Weight ETF (RSP) fell only 0.1% and traded slightly higher for most of the session, similar to the Dow and Russell 2000.
Falling stocks overtook rising stocks on the Nasdaq market, but they weren’t wiped out. Meanwhile, winners slightly outnumbered losers on the New York Stock Exchange. The New York Stock Exchange hit new all-time highs, but the Nasdaq lagged behind.
Taken together, all this looks positive. The Nasdaq and Nasdaq 100 were boosted by big tech stocks, while the Dow, Russell 2000, RSP ETFs and various non-tech sectors were gaining momentum. Ideally, the Nasdaq would drop gradually over a period of days or weeks, and not extend it further, leaving the rest of the market only slightly lower or sideways. That would create new buying opportunities across multiple stocks and sectors.
Timing the Market with IBD’s ETF Market Strategy
what to do now
So far, the stock market rally has been in a normal and healthy rebound.
Investors may now look to external technology for new purchases. But a Nasdaq-led recession is still a market recession. A sideways to downward move is not the best environment to buy in the short term.
For now, investors will have to wait and see how the AI-powered big winners of 2023 react. Will they resist selling and find support at the 10th and 21st lines?
Also pay attention to stocks that are holding near the buy point. monday.com (Mundi), shockwave medical (SWAV) and rockwell automation (Korea).
What looks strongest when the pullback is heavily spent becomes what you want to target. Remember, big winners who look strong or have a following may falter, while more hard-hit companies like AMD may gain momentum. That’s it.
Read “The Big Picture” daily to stay on top of market direction and key stocks and sectors.
Follow Ed Carson on Twitter. @IBD_ECarson Stock market updates and more.
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