Dow Jones futures tilted lower Sunday night, along with S&P 500 futures and Nasdaq futures. Nvidia (NVDA) earnings are in focus after Federal Reserve Chairman Jerome Powell said at Jackson Hole that “the time has come” for Fed rate cuts.
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Nvidia Earnings Are A Key Test For The Stock Market Rally. Here’s What To Expect.
The stock market rally had another solid week, mostly or entirely from Friday’s Jackson Hole-related gains. The S&P 500 is near record highs while the other indexes are making progress. Many leading stocks are breaking out or setting up.
Investors should be looking to add exposure, but Nvidia earnings are due Wednesday night. Strong Nvidia results and guidance will be key for AI plays near buy points such as Broadcom (AVGO), Nvidia chipmaker Taiwan Semiconductor Manufacturing (TSM) and Arista Networks (ANET).
Meanwhile, Birkenstock (BIRK), Abercrombie & Fitch (ANF), PDD Holdings (PDD), Ollie’s Bargain Outlet (OLLI), Salesforce (CRM) and the storage plays NetApp (NTAP), Pure Storage (PSTG) and Nutanix (NTNX) all report earnings this week.
Pinduoduo and Temu parent PDD reports before Monday’s open. PDD stocks is setting up in a cup-with-handle base.
Nvidia stock is on Leaderboard. Broadcom stock is on SwingTrader. Nvidia and PDD stock are on the IBD 50. Arista stock is on the IBD Big Cap 20. Broadcom was Thursday’s IBD Stock Of The Day.
Dow Jones Futures Today
Dow Jones futures fell 0.1% vs. fair value along with S&P 500 futures. Nasdaq 100 declined 0.1%.
The 10-year Treasury yield dipped to 3.79%.
Crude oil futures rose slightly.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
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Stock Market Rally
The stock market rally, after pausing for a few days, finished the weeks with a strongh Friday on Powell’s dovish Jackson Hole speech.
As expected, Fed chief Jerome Powell confirmed that rate cuts are coming: “The time has come for policy to adjust.” Powell didn’t push back on market expectations for 100 basis points in cuts this year.
The Dow Jones Industrial Average climbed 1.3% in last week’s stock market trading. The S&P 500 index popped 1.45%. The Nasdaq composite rose 1.4%. The small-cap Russell 2000 jumped 3.6%.
Friday was yet another subsequent follow-through day on all the major indexes, though the S&P 500 and Nasdaq had inside days.
The Nasdaq is in a mini-pause, holding just below 18,000 but regaining its 50-day line again Friday.
The Invesco S&P 500 Equal Weight ETF (RSP) hit a record Friday, climbing 2.1% for the week.
The stock market last week digested recent gains and made further progress, even with Thursday’s tech-led sell-off. Leading stocks broke out or crafted less V-shaped bases and forged handles.
The year’s two main stock market drivers have been the ongoing AI boom and Fed rate-cut hopes. Fed chief Powell’s Jackson Hole speech confirming rate cuts suggests a favorable backdrop on that front. Will Nvidia earnings signal the same on AI?
U.S. crude oil futures fell 0.9% to $74.83 a barrel, but came way off midweek lows.
The 10-year Treasury yield sank nine basis points to 3.81%, hitting a 52-week closing low on Wednesday. The two-year Treasury yield, more closely tied to Fed rate policy, tumbled 15 basis points to 3.91%.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) popped 2.9% last week. The iShares Expanded Tech-Software Sector ETF (IGV) gained 1%. The VanEck Vectors Semiconductor ETF (SMH) climbed 0.7%. Nvidia stock is the dominant SMH holding, with Taiwan Semiconductor and Broadcom also key members.
SPDR S&P Metals & Mining ETF (XME) rallied 2.1% last week. The SPDR S&P Homebuilders ETF (XHB) soared 8.2%. The Energy Select SPDR ETF (XLE) dipped 0.15 and the Health Care Select Sector SPDR Fund (XLV) climbed 1.7%.
The Industrial Select Sector SPDR Fund (XLI) advanced 1.7%. The Financial Select SPDR ETF (XLF) was up 1.5%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) jumped 4.85% last week and ARK Genomics ETF (ARKG) rose 3.6%.
Time The Market With IBD’s ETF Market Strategy
Nvidia Earnings ‘Wildcard’
The AI chip giant reports Wednesday night. Nvidia earnings are expected to soar 141% vs. a year earlier with sales up 113% to $28.73 billion. Those would be the fifth straight quarter of triple-digit gains for both.
Nvidia earnings are “the most important” event for the tech sector in years, Wedbush analyst Dan Ives wrote in an investor note.
Rosenblatt Securities analyst Hans Mosesmann expects another beat-and-raise Nvidia earnings report. But he says the “wildcard” is whether it has enough current-generation Hopper AI processors to meet demand.
Analysts will want confirmation and details about delays to Nvidia’s next-generation Blackwell processors. Also, are customers waiting on the next-gen AI chip, or are they buying up even more of the current Hopper line?
Nvidia Stock
Nvidia stock rose 3.8% to 129.37 last week, thanks to Friday’s 4.55% gain. Shares are trading in a short-term range after a big run from the Aug. 5 low of 90.69. NVDA stock has a 140.76 cup-base buy point. Investors could use this past week’s highs as an pseudo-handle entry, ideally after Nvidia earnings.
Taiwan Semiconductor Stock
Taiwan Semiconductor stock fell 1.9% to 171.26 for the week, though shares rose 2.9% Friday to just reclaim the 50-day line. TSM stock has a 193.47 cup-base buy point, but is on track to have a handle with a 175.45 entry after Monday. On a weekly chart, Taiwan Semi stock already has a cup-with-handle base with that 175.45 buy point.
Taiwan Semiconductor makes chips for Nvidia, Broadcom and many others.
Broadcom Stock
Broadcom stock edged up 0.4% to 166.36, holding above the 50-day. AVGO stock would be actionable above the Aug. 20 high of 168.37.
The chip and software giant has a 185.16 buy point, according to MarketSurge. Investors could treat this as a lopsided double-bottom base with a 177.10 entry. After Nvidia earnings, Broadcom has its own results on Sept. 5.
Arista Stock
Arista stock inched 0.3% higher to 355.06 last week. Shares now have a 358.68 handle buy point. Nvidia is a growing rival in the AI networking space, while Arista uses a lot of Broadcom products, so the chip giants’ earnings reports will be important for ANET stock.
Nvidia, Arista Networks Square Off In AI Networking Battle
What To Do Now
The market rally continues to make progress, with at least some quality stocks flashing buy signals each day.
Investors could have added further exposure Friday as Powell backed rate cuts at Jackson Hole. Keep doing so if the market continues to act well.
Several AI stocks are setting up, including Nvidia, Broadcom and Taiwan Semi. Investors may want to be a little cautious about adding further AI exposure before Nvidia earnings.
They should definitely be on your radar though, along with dozens of other promising or leading stocks.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.
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