Dow Jones futures on Friday rose slightly earlier on Friday along with S&P 500 futures and Nasdaq futures ahead of Fed Chairman Jerome Powell’s big Jackson Hole speech.
The stock market’s rally attempt on Thursday turned out to be an ugly deal, with the major indexes all falling after hitting resistance near the 50-day line and closing near trading lows.
Nvidia (NVDA) virtually erased its initial big rally with its explosive earnings, while many other AI stocks, including MRVL stocks, fell to varying degrees. broadcom (AVGO), Adobe (Adobe), Palantir Technologies (PLTR), C3.ai (AI) and server manufacturers super microcomputer (SMCI).
MRVL stock fell slightly in pre-market trading as Marvel’s earnings outperformed past estimates. This followed a sharp reversal in trading on Thursday.
WDAY shares rose slightly overnight after Workday’s earnings peaked and software giants led the rally. Shares fell slightly on Thursday, trading just below the 50-day line in a short-term consolidation.
INTU shares fell slightly in extended trading. Intuit’s earnings hit record highs, and the TurboTax maker raised its dividend by 15%, but earnings prospects were modest. The stock fell slightly on Thursday and remained in the buying zone after rebounding from the 50-day line last Friday.
Fed Chairman Powell’s Jackson Hole speech
Fed Chairman Powell will deliver a policy speech at the Jackson Hole annual symposium at 10:05 am Friday.
Fed Chairman Jerome Powell is likely to signal patience, even though further rate hikes remain a possibility. He is also likely to backtrack on prospects for rate cuts. Inflation remains too high, but is trending downward, making action less urgent for policymakers.
The sharp rise in 10-year Treasury yields in recent weeks has meant that market rates have tightened significantly, further reducing the need for an official Fed rate hike.
But Powell could signal that the long-term trend will make it harder for inflation to return to 2%.
Powell’s speech will be important for rate hike expectations. Investors see a roughly 20% chance the Fed will raise rates in late September. But the odds of a rate hike before the Nov. 1 meeting have risen to 45%. Expectations of a Fed rate cut have been pushed back until next year.
dow jones futures today
Dow Jones futures rose 0.4% relative to fair value. S&P 500 futures were up 0.3% and Nasdaq 100 futures were up 0.2%.
The 10-year US Treasury yield climbed to 4.24%.
Oil rose more than 1%, returning to $80 a barrel.
Note that overnight trading such as Dow Futures does not necessarily translate into actual trading in the next regular stock market.
stock market rise
The stock market started higher, but the index quickly hit the 50-day resistance line and turned down, with the Nasdaq making the biggest move.
The Dow Jones Industrial Average fell 1.1% in stock market trading on Thursday. The S&P 500 index fell 1.35%. The Nasdaq Composite fell 1.9%. Small-cap Russell 2000 fell 1.3%.
US oil prices jumped 0.2% to $79.05 a barrel. Copper futures fell 0.95%.
The 10-year U.S. Treasury yield rose nearly 4 basis points to 4.23%. US dollar continues to rise.
Among Growth ETFs, Innovator IBD 50 ETF (FFTY) fell 1.6%. iShares Augmented Technology Software Sector ETF (IGV) gave up 2.3%, along with INTU shares and Workday’s key members. VanEck Vectors Semiconductor ETF (SMH) fell 2.6%. Nvidia shares are his major holdings in SMH, and Marvell and AVGO shares are also notable components.
SPDR S&P Metals & Mining ETF (XME) fell 1.5%, while the Global X US Infrastructure Development ETF (pave) gave up 1.2%. US Global Jets ETF (Jets) fell 1.7%. SPDR S&P Homebuilders ETF (XHB) fell 1.55%. Energy Select SPDR ETF (XLE) fell 0.7%, while the Healthcare Select Sector SPDR Fund (XLV) fell 0.8%.
Industrial Select Sector SPDR Fund (XLI) gave up 1.2%.
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NVDA shares surged to a record high of 502.66 shortly after the opening, following NVIDIA’s latest results and guidance on Wednesday night. But the stock quickly cut its gains, closing just 0.1% at 471.74.
The top AI chip companies were soaring toward earnings. Nvidia shares are up 8.9% this week.
AI stocks turn around and fall
Other AI stocks, on the other hand, turned modest, strong, or sharply negative. Many were near the key technical levels and were struggling outdoors, with days of downside after the initial gap was even higher.
MRVL shares surged from the 50-day line to reach 64.23 during the day, but reversed before Thursday night’s results, down 6.85% to 57.29.
AVGO shares fell 2.5% to 854.46 after trading at 909.86 after the opening. Broadcom’s earnings are due to be announced on August 31.
SMCI shares fell 5.4% to 262.50, reversing from 298.35 during the day.
ADBE shares fell 3.4% to 512.43, falling below the 21-day line but holding onto the 50-day line. The stock peaked at 539.67 on Thursday morning.
PLTR shares fell 7.6% to 14.14, reversing from intraday 15.72 as it hit resistance on the 21st.
AI shares rebounded from a 21-day morning high of around 33.67, dropping 11.6% to 28.83. C3.ai shares hit a three-month low.
market rise analysis
Thursday was the worst. Losses were one thing, but it was disheartening to see major indices and many of the leading stocks plummet from key resistance during the early market rally. Trading volumes rose on Thursday as the market rose in below-average trading.
It’s clear that Nvidia’s earnings expectations were very high in the market.
A follow-through date may still occur.
Nasdaq and S&P 500 rally attempts are intact as long as they stay above the August 18 lows. The Dow Jones broke the recent intraday lows on Thursday, thus zeroing the market up days count.
A speech by Fed Chairman Jerome Powell could be a trigger. But like Nvidia, it’s not clear which way it will go. It could also take time for the market to absorb the impact of Mr. Powell’s secular outlook.
The market correction could ultimately be longer and perhaps more severe than investors thought yesterday. This may be especially true for AI stocks and the tech sector as a whole.
Energy and some non-tech sectors are holding up.
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what to do now
Investors need to be defensive and ready to cut individual holdings if necessary.
Not a good time to buy new things. Instead, Thursday’s reverse decline from key levels in indices and major stocks provided some short-selling opportunities.
Investors should not get aggressive before the follow-through date as major indices face stiff resistance.
But be proactive and be flexible. Keep your watchlist up to date and ready to go.
Read “The Big Picture” daily to stay on top of market direction and key stocks and sectors.
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