Dow futures: Debt ceiling talks resume; The key to Nvidia’s earnings is the market rally

Dow futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures. Nvidia’s earnings loom large this coming week, with debt-ceiling talks resuming Friday night after stalling for hours earlier.

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The stock market rally last week was bolstered by optimism about a debt ceiling deal and an easing of bank concerns, with gains led by AI-powered tech leaders such as nvidia (NVDA), advanced micro devices (AMD), service now (now), a parent from Google the alphabet (Google), snowflake (snow) And Palantir Technologies (PLTR).

The Nasdaq Composite and S&P 500 hit 2023 highs, with the Nasdaq 100 setting its best level in over a year. The White House and congressional leaders appeared to be heading towards a debt ceiling agreement while concerns about regional banks waned.

On Friday, GOP negotiators suspended debt ceiling talks, saying President Biden’s White House was unreasonable. Around the same time, a report came out that Treasury Secretary Janet Yellen told bank executives that more bank mergers might be required. This weighed on regional banking stocks on Friday, although they rose strongly during the week.

Major indicators took the debt ceiling setback and Yellen’s comments in stride on Friday, in part because it was around the same time that Federal Reserve Chairman Jerome Powell signaled he favored a rate pause next month.

Investors also remain confident in the debt reduction deal. In fact, House Speaker Kevin McCarthy said Friday night that debt ceiling negotiations would resume later that night.

The stock market rally remains somewhat divided, with a narrow lead. However, investors can add exposure carefully, even though not a lot of stocks offer buying opportunities right now.

Tesla (TSLA) made an upward movement last week amid the shareholder event, clearing some key levels. But TSLA stock is facing more resistance.

Nvidia earnings

Nvidia’s earnings Wednesday night will be a big deal for the market rally. NVDA stock is all in line with the market. It is the leading megacap and AI stock in a market rebound dominated by megacaps and AI plays. Nvidia stock jumped 10% last week and has been stretched significantly.

A pause for Nvidia stock or a modest decline over several weeks would be healthy. But if Nvidia’s earnings or guidance disappoint, NVDA could be severely punished. That would have ramifications for rival AMD, but also for Google and the slew of “artificial intelligence” plays that have driven the market higher.

ServiceNow stock took off last week amid AI-related alliances with Nvidia and Microsoft (MSFT). SNOW stock gained on a report that it might buy an AI search company. PLTR stock, which is a long game AI game, jumped 23% for the week after earnings soared 28% in the previous week. Google stock has jumped 14% so far in May.

Other major earnings

snowflake Elf Beauty (dwarf), Palo Alto Networks (Banu) And outdoor deckers (deck) is also one of the prominent companies that will achieve profits this coming week.

SNOW stock is in a 10-month consolidation. ELF stock is consolidating at the 21-day line after a huge wave. PANW stock is trying to hold the 50-day line within a volatile new flat base. DECK stock was a big gainer but last week it fell below the 50 day line as it is on hold (Onon) And foot locker (fl) retracted their results.

Nvidia stock is running IBD Leaderboard, with ELF arrows on the leaderboard watch list. ice stocks on defect 50. Stock now on IBD Big Cap 20.

The video embedded in the article discusses the weekly market action and presents three non-AI plays: life time group (LTH), Meritage Homes (MTH) And MercadoLibre (millie).

Dow jones futures today

Dow Jones futures open at 6 p.m. ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.

Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.

Join IBD experts as they analyze actionable shares in the bullish stock market on IBD Live

Stock market rise

The stock market rallied last week, with a huge gap between the leaders and the laggards.

The Dow Jones Industrial Average rose 0.4% in trading last week. The S&P 500 advanced 1.65%. The Nasdaq Composite jumped 3%. Small cap Russell 2000 rebounded 1.9%.

The 10-year Treasury yield jumped 23 basis points to 3.69% last week, hitting a two-month high.

Chances of a rate hike next month briefly exceeded 40% during the week amid strong economic data and some hawkish comments from Fed officials. But with Powell saying “we can afford to look at the data,” the chance slipped back to around 20% on Friday.

US crude oil futures rose 2.2 percent to $71.55 a barrel this week.

Exchange Traded Funds

Among the growth ETFs is iShares Expanding Technology and Software Sector Fund (IGV) increased by 5.25%. Stock now is a big IGV component. VanEck Vectors Semiconductor Corporation (SMH) increased by 8.5%. Nvidia stock is one of SMH’s main stocks, along with AMD stocks. Reflecting more speculative stories, the ARK Innovation ETF (ARK)ark(up 2.7% last week and ARK Genomics ETF)ARKG) gained 3%. Tesla stock is the number one stock held across Ark Invest ETFs. Cathie Wood’s Ark also owns some shares of PLTR.

SPDR S&P Metals & Mining ETFs (XME) fell 0.5%, its fifth consecutive weekly loss. US Global Gates Foundation ETF (Planes) climbed 4.1%. SPDR S&P Homebuilders ETF (XHB) by 1.2%. Energy Defined Fund SPDR ETF (xle) gained 1.4%. SPDR Health Care Sector Selection Fund (XLV) decreased by 0.7%.

SPDR Financial Selection Fund (XLF(Up 2.2% in the SPDR S&P Regional Banking ETF)KRE) rebounded 7.8%, even with Friday’s decline of 1.8%.

Top five Chinese stocks to watch now

Buy Tesla stock?

Tesla stock rose 7.2% last week to 180.14, rebounding from near the 21-day line and regaining the 50-day line for the first time since early April.

Investors responded well to Tesla Shareholders’ Day on Tuesday. CEO Elon Musk has confirmed that the Cybertruck will begin deliveries this year, while again hinting at a next-generation vehicle. Musk also said that Tesla will “try” some ads. Like any smart CEO in 2023, he made sure to mention “artificial intelligence” several times.

Meanwhile, Tesla has quietly introduced some new stock discounts on Model 3 cars in the US, following recent cuts on Model 3 and Y cars in Europe. Inventory discounts don’t get the headlines that official price cuts do, but they do hit profit margins in the same vein. The balance between production, delivery and pricing is Tesla’s main story in 2023.

Investors could look at Friday’s move above the 50-day moving average as an early entry for Tesla stock. But she will be very aggressive. Tesla is still facing the 200-day line, which is dropping towards 200. Just above that is the 207.89 buy point, just above the March 31 high. This is either from a seven-week consolidation or a three-month double-bottom buy point.

Tesla vs. BYD: EV Giants Vy for the Crown, But Which One is a Better Buy?

Market rally analysis

Show the rise in the stock market Last week’s strength, but progress is still narrow. The Nasdaq is booming, hitting a 2023 high, with the S&P 500 also doing so late in the week.

The Russell 2000, buoyed by bank stocks, also had a strong week, but far from its 2023 highs. The Dow Jones posted small weekly gains after cutting the 50-day line on Tuesday.

The tech boom has expanded from big stocks like Google and Nvidia to big chip and software names like AMD and ServiceNow and AI like Palantir. But most of them are now extended.

The Nasdaq 100 hit a 52-week high, up 3.5% for the week. First Trust Nasdaq 100 Equal Weighted Mutual Fund (QQEW), which had been struggling, was up 2.45%. It is close to its highest levels in 2023.

But the overall breadth is lackluster at best. Invesco S&P 500 Equal Weight Fund (RSP) jumped almost 1%, but then fell back below the 200-day line on Friday. The RSP is not much closer to the 2023 highs than the October bear market lows.

The losers edged ahead of the gainers on Friday after a modest positive expansion on Thursday. But new highs outweighed the losers for the second straight session.

In addition to chips, software and massive stocks, homebuilders, building materials, medical products and biopharmaceutical names are doing well. So are travel plays and some stock payments.

Shoe-related stocks fell last week due to ONON and Foot Locker. outdoor deckers, as well Dick’s Sporting Goods (DKS), will try to give their best.

Debt ceiling talks, banking concerns and recession risks remain the big issues facing the market rally. While Wall Street and political analysts still see a debt reduction deal as very likely, various headlines could swing the markets up and down over the next few days.

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What are you doing now

The stock market is trending higher, but the leadership is narrow and the market breadth is questionable. Several leading stocks have been extended.

In general, investors who have taken advantage of techniques that have eliminated buy signals in the last week or so have been rewarded, some handsomely. But overall exposure should remain modest. Consider taking partial profits on the big winners. You definitely have a game plan in place.

A healthy number of stocks are being created from a variety of sectors, and it can continue if market movement expands. So you’ll want to be ready.

Read the big picture every day to stay in sync with market trend, leading stocks and sectors.

Please follow Ed Carson on Twitter at @employee For stock market updates and more.

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