Dow Jones futures showed minimal movement Sunday night, along with S&P 500 and Nasdaq futures. While earnings season is tapering off, this week’s economic data, including inflation reports, will be closely watched.
The stock market has been recovering from the global sell-off on August 5, with a rally attempt underway. However, a follow-through day is needed to confirm the strength of this rally.
Stock Highlights:
Several AI stocks are demonstrating strength, including Meta Platforms (META), Palantir Technologies (PLTR), ServiceNow (NOW), Samsara (IOT), Arista Networks (ANET), and Nvidia chipmaker Taiwan Semiconductor (TSM). Despite Nvidia’s ongoing struggles, these stocks are showing promising performance.
A number of stocks have recently moved above their 50-day moving averages, including Eli Lilly (LLY), CAVA (CAVA), TradeDesk (TTD), On Holding (ONON), and Costco Wholesale (COST). These stocks may be presenting early buying opportunities, although ONON is scheduled to report earnings early Tuesday.
Nvidia, ServiceNow, and Eli Lilly are featured on the Leaderboard. CAVA and Costco have joined the SwingTrader, while Palantir, Samsara, Arista Networks, and ServiceNow are included in the IBD 50 list. Palantir and Arista are also on the IBD Big Cap 20. Samsara was named Friday’s IBD Stock Of The Day.
Dow Jones Futures Update:
Dow Jones futures fell slightly compared to fair value, while S&P 500 futures were flat and Nasdaq 100 futures increased by 0.2%. It’s important to note that overnight futures movements do not always translate into actual trading results in the regular session.
Elon Musk and Donald Trump Event:
Former President Donald Trump announced on August 6 that he will have a conversation with Tesla CEO Elon Musk on Musk’s X platform. The interview is scheduled for 8 p.m. ET on Monday. Trump, a supporter of Musk, is expected to discuss electric vehicle policies, including his stance on eliminating EV subsidies and his encouragement for Chinese EV makers like Tesla rival BYD (BYDDF) to establish U.S. factories. Bitcoin and cryptocurrency topics are also likely to be covered.
Stock Market Performance:
The stock market began last week with significant declines due to yen-carry-trade unwinding, Nvidia AI chip delays, and recession fears. Despite this, indexes rebounded and initiated a rally attempt starting Tuesday as the yen stabilized and positive U.S. economic data eased concerns.
For the week, the Dow Jones Industrial Average fell 0.6%, the S&P 500 lost a fraction, and the Nasdaq Composite dipped 0.2%. The Russell 2000 retreated 1.35%. The Dow Jones recovered to close just above its 50-day moving average, while the Russell 2000 faced resistance at this level. The S&P 500 and Nasdaq have not yet surpassed their 10-day lines, let alone the 21-day or 50-day averages.
A follow-through day is needed to confirm the rally attempt, which could occur in the coming week. Not all confirmed rallies succeed, so caution is advised.
Crude Oil and Treasury Yields:
U.S. crude oil futures surged 4.5% last week to $76.84 per barrel, ending a four-week losing streak. Treasury yields also saw a rebound, with the 10-year yield rising 15 basis points to 3.94%. It briefly dipped to 3.67% on Monday and surpassed 4% intraday on Thursday. Markets are anticipating a rate cut for the September 18 meeting, with uncertainty over whether it will be 25 or 50 basis points.
Upcoming Economic Data:
This week’s economic reports include the July Producer Price Index (PPI) on Tuesday, the Consumer Price Index (CPI) on Wednesday, July retail sales and industrial production reports on Thursday, along with weekly jobless claims, August regional manufacturing reports from the Philadelphia and New York Fed, and the August Housing Market Index.
These reports could either validate the current rally or push indexes back toward recent lows.
ETF Performance:
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) rose 2.2% last week, and the iShares Expanded Tech-Software Sector ETF (IGV) climbed 2.8%. The VanEck Vectors Semiconductor ETF (SMH) gained 2.9%, with Nvidia and Taiwan Semiconductor as top holdings.
The SPDR S&P Metals & Mining ETF (XME) declined 0.8%, while the Global X U.S. Infrastructure Development ETF (PAVE) fell 0.1%, and the SPDR S&P Homebuilders ETF (XHB) retreated 2.9%. The Energy Select SPDR ETF (XLE) gained 1.1%, and the Health Care Select Sector SPDR Fund (XLV) sank 0.6%, with Eli Lilly being a major component.
The Industrial Select Sector SPDR Fund (XLI) climbed 1.25%, and the Financial Select SPDR ETF (XLF) advanced 0.8%. The ARK Innovation ETF (ARKK) edged up 0.6%, while the ARK Genomics ETF (ARKG) fell 1.4%. Tesla, a significant holding in ARK Invest, fell 3.7% last week, dipping below its 200-day line but recovering from its lows.
