Dow Jones futures will begin trading on Sunday night, along with S&P 500 futures and Nasdaq futures.
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Last week's stock market gains generally receded. The S&P 500 and Nasdaq both hit new highs on Friday before falling during the off-market day.
Nvidia (NVDA) was the clear culprit on Friday, staging a bearish reversal after the AI chip leader's historic extension. This reversal hurt the overall market, but it particularly hurt similar AI stocks. Advanced Micro Devices (AMD), taiwan semiconductor manufacturing (TSM), arm holdings (ARM) and super microcomputer (SMCI).
Nvidia's comeback continued Friday night, but it could be a sudden change in personality after a big loss. This is definitely a wake-up call for complacent and euphoric investors.
It's time to carefully review your portfolio, especially if you're frequently exposed to AI plays.
square parent block (SQ) and Brazilian securities companies XP Co., Ltd. (XP) A buy signal flashed on Friday. draft kings (DKNG) has been successfully integrated.
Nvidia stock and Arm Holdings are on the IBD leaderboard, and SQ stock is on the watchlist. Taiwan Semiconductor Stock and Square Parent Block are listed on SwingTrader. Nvidia, DraftKings, and ARM stocks are included in the IBD 50. Nvidia, AMD and Super Micro stocks are included in the IBD Big Cap 20. XP was the IBD Stock Of The Day on Friday, and Square Wednesday was also selected.
The video embedded in the article discusses weekly market trends and analyzes stock prices for Nvidia, Square parent Block, and XP.
Dow Jones futures today
Dow Jones futures, along with S&P 500 futures and Nasdaq 100 futures, open at 6pm ET on Sunday.
Please note that overnight trades such as Dow futures do not necessarily translate into actual trades in the next regular stock market.
IBD experts analyze leading stocks and markets on IBD Live.
stock market rise
Stock market gains have paused and generally retreated after last week's big tech-led decline.
The Dow Jones Industrial Average fell 0.9% in stock market trading last week. The S&P 500 index fell 0.3% and the Nasdaq Composite Index fell 1.2%, both retreating from their record highs on Friday. The Nasdaq's distribution day fell three days a week.
The small-cap Russell 2000 gave up Friday's gains but rose 0.5% for the week, hitting a 23-month high. Along with sector ETFs, small-cap stocks reflect solid market breadth.
Heading into Friday, the Nasdaq was up, but Nvidia was up significantly. The bullish mood was close to excessive.So the suspension was not surprising
A market rebound could be constructive and create new opportunities to enter major stocks. Also, if NVIDIA's exit lasts more than a day or two, investors could become dangerously complacent.
The 10-year U.S. Treasury yield fell 9 basis points to 4.09%, falling for the third consecutive week. The two-year Treasury yield, which is more closely tied to Fed policy, fell 5 basis points to 4.48%. Fed Chairman Jerome Powell reiterated last week that there is no need to rush to cut interest rates. The jobs report and other economic indicators didn't change the picture, but they may allay fears that the Fed will cut interest rates less.
Last week, US crude oil futures fell 2.45% to $78.01 per barrel.
ETF
Among growth ETFs, the iShares Expanded Technology Software Sector ETF (IGV) was off Tuesday's lows, but fell 2.3%. The VanEck Vectors Semiconductor ETF (SMH) is up 2% for the week, despite reversing Friday's 3.9% decline led by top holding Nvidia. Taiwan Semiconductor and AMD are also giant SMH Holdings.
Last week, the SPDR S&P Metals Mining ETF (XME) rose 2.1%. The Global XUS Infrastructure Development ETF (PAVE) rose 0.8%. US Global Jets (JETS) closed flat. SPDR S&P Home Builders ETF (XHB) rose 0.35%. The Energy Select SPDR ETF (XLE) rose 1.2% and the Healthcare Select Sector SPDR Fund (XLV) rose 0.1%.
Industrial Select Sector SPDR Fund (XLI) rose 0.6%, extending its long winning streak. The Financial Select SPDR ETF (XLF) rose 0.8% and the SPDR S&P Regional Banking ETF (KRE) rose 4.1%.
Reflecting the speculative nature of stocks, the ARK Innovation ETF (ARKK) fell 0.8% and ARK Genomics (ARKG) fell 4% last week.
Timing the Market with IBD's ETF Market Strategy
nvidia stock
On Thursday, Nvidia stock closed 41.9% above its 50-day line, its highest level of growth since 2003. On Friday morning, the stock soared to $974 before reversing sharply to the outside bear market. The stock fell 5.55% to 875.28, the biggest volume of the session.
Nvidia stock rose 6.4% this week, marking its ninth straight week of gains.
It remains 32.5% above the 50-day line and 11.1% above the 21-day line, which has soared.
Nvidia stock fell slightly on Friday night.
Further Nvidia withdrawal will have a major impact on the AI sector. Of course, this would include AMD, Taiwan Semiconductor, Arm Holdings, and Super Micro Computer, all of which reversed their declines on Friday. All were down slightly on Friday night, along with NVIDIA.
All eyes will be on ARM stock as the IPO lockup period ends on Tuesday.
Also, the following software plays are feeling the effect. ServiceNow (now), Palantir Technologies (PLTR), cloudflare (NET) and data dog (DDOG), along with dozens of other AI plays. ServiceNow and Cloudflare were seeing positive entries Friday morning before the Nvidia-led market reversal.
Given Nvidia's size and clear leadership in AI, its exit could have a significant impact on the market rally, as Friday's action showed.
Clearly, NVDA has been a big winner this year alone, following a huge rally in 2023. NVDA stock could quickly recover and resume its sprint to $1,000. Stocks could move sideways or rise at a slower pace, as they did in the months following the extreme rally in late May.
Perhaps ideally, NVIDIA would gradually retreat to the 21-day line or even build a new base.
But if Friday signals a change in Nvidia's personality, even in the short term, the losses for AI stocks could be significant.
AI stocks: tech giants, cloud giants and chipmakers vie for dominance
Stocks near the purchase point
Square's parent block rose 4.6% to 80.74 on Friday. SQ stock officially has a high handle entry at 83.29, but the stock has broken the downtrend of the handle and surpassed the initial buy point at 80.29. If you go back a few years, there's a lot of overhead resistance going back a little over 80 years.
XP stock rose 5.9% for the week to 25.31, rebounding from its 200-day moving average on strong volume. The stock traded just above the 50-day mark on Friday, suggesting an aggressive entry. The official buy point for XP stock is 27.02 points from a cup-with-handle base. Due to the consolidation of Brazilian securities companies, the line of relative strength has been delayed for several months.
DraftKings stock fell 4.1% to 41.74 last week. Stock prices have been consolidating in recent weeks from a double-dip base to the 21-day line, just above the buy zone. Ideally, DKNG stock would build a new flat-based, base-on-base formation. If that happens, the gap with the 10-week line will further narrow.
what to do now
What happens next could largely depend on how Nvidia stock trades over the next few days.
Investors hoping for a big rally in AI stocks could choose to save some of their profits or ride out a potential decline. Investors in AI stocks, which haven't rallied much lately, may have a bigger decision to make.
Now is the time to be cautious about new purchases. But many sectors outside of AI are also doing well. So use this weekend to update your watchlist and cast your wide net.
Keep in mind that while AI stocks may be the most vulnerable, most stocks will fall in a market pullback.
Read The Big Picture every day to stay on top of market direction and key stocks and sectors.
Follow Ed Carson on thread @edcarson1971 and on X/Twitter. @IBD_ECarson For the latest stock market updates and more, visit Bluesky at @edcarson.bsky.social.
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