Dow Jones futures showed a modest increase on Sunday night, with S&P 500 and Nasdaq futures also trending upward. Investors are closely watching Nvidia’s (NVDA) upcoming earnings report, which could influence the market this week.
Market Setback and Growth Stocks Hit Hard
Last week, the stock market rally took a significant hit. While the S&P 500 reached record highs on Wednesday, the major indexes experienced sharp losses by Friday. The Dow Jones, Nasdaq, and Russell 2000 all broke key support levels, with growth stocks like Palantir Technologies (PLTR) and AppLovin (APP) taking the hardest blows.
Tesla (TSLA) saw a brief bounce but ended the week lower, with shares near their 2025 lows.
Dow Jones Futures and Market Action
On Monday, Dow Jones futures rose 0.4%, while S&P 500 futures gained 0.5%, and Nasdaq 100 futures advanced 0.5%. However, it’s important to note that overnight movements in futures don’t always predict actual trading during regular market hours.
Earnings Reports to Watch
This week, earnings reports from Axon Enterprise (AXON) and Cava Group (CAVA) are expected. Software giants Salesforce (CRM) and Snowflake (SNOW), with Snowflake stock near a buy point, will also report. However, all eyes are on Nvidia’s earnings report, which could be pivotal for the tech sector. Despite Nvidia’s stock trading sideways since mid-2024, it is not far from a potential buy point.
Berkshire Hathaway Earnings
Berkshire Hathaway reported a 71% increase in operating earnings, reaching $14.53 billion. The conglomerate did not buy back any stock in Q4, with only $2.9 billion in repurchases for 2024—its lowest since 2018. Berkshire’s cash holdings grew to a record $334.2 billion, and Warren Buffett also released his annual shareholder letter.
A Tough Week for Growth Stocks
The stock market experienced a difficult end to the week, with fresh economic data signaling slower growth and rising inflation. Growth stocks, especially those with high price-to-earnings ratios, saw significant losses.
The Dow Jones Industrial Average dropped 2.5%, falling below the 50-day moving average. Major stocks like Walmart (WMT), UnitedHealth (UNH), and Amazon (AMZN) weighed heavily on the index. The S&P 500 fell 1.7%, testing its 50-day line after reaching a record high earlier in the week. The Nasdaq Composite also fell 2.5%, dipping below both the 21-day and 50-day moving averages. The small-cap Russell 2000 plunged 3.7%, closing below its 200-day moving average for the first time since late 2023.
The Invesco S&P 500 Equal Weight ETF (RSP) and the First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) also faced losses as growth stocks faltered.
Growth ETFs Struggle
Several growth-focused ETFs faced heavy losses last week. The Innovator IBD 50 ETF (FFTY) plunged 12.15%, falling from a two-year high to undercut its 50-day moving average. The iShares Expanded Tech-Software Sector ETF (IGV) dropped 5.9%, with Salesforce being a notable holding. The VanEck Vectors Semiconductor ETF (SMH) lost 1.1%, despite earlier gains.
The ARK Innovation ETF (ARKK) tumbled 10.15%, while the ARK Genomics ETF (ARKG) fell 8.5%. Tesla remains the largest holding across Ark Invest’s ETFs.
Sector ETFs Show Mixed Results
Sector-specific ETFs had mixed performance. The SPDR S&P Metals & Mining ETF (XME) fell 3.9%, while the Energy Select SPDR ETF (XLE) rose 1%, and the Health Care Select Sector SPDR Fund (XLV) gained 1.1%. The Industrial Select Sector SPDR Fund (XLI) and Financial Select SPDR ETF (XLF) both dropped by 2%.
Nvidia Earnings Report Ahead
Nvidia’s earnings report, due Wednesday night, will be closely watched by investors. Focus will be on Blackwell AI chip production and demand. Concerns have emerged over whether demand for Nvidia’s chips will remain strong in the wake of China’s DeepSeek, which suggests reduced need for high-powered processors. Additionally, competition from custom AI chips from companies like Broadcom (AVGO) may affect Nvidia’s market position.
Nvidia’s stock dropped 3.2% last week, finishing at $134.40. On Friday, it fell 4.1%, dropping just below its 50-day moving average.
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