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Dow Jones Futures: Nvidia Soars as Earnings Outperform, Guide; Other AI Stocks Recover


Dow Jones futures fell slightly overnight, while S&P 500 futures rose and Nasdaq futures jumped. Nvidia (NVDA) spiked at the end of the year as demand for artificial intelligence boomed for its powerful chips, cutting edge multiple chips and AI. Fitch warned that the US government’s credit rating is under threat due to the debt ceiling conflict.




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ELF beauty (ELF), Snowflakes (SNOW) UiPath (ROAD) And splashing (SPLK) are also major income drivers.

The stock market rally fell for a second straight session, amid ongoing debt ceiling negotiations. Nasdaq remains above key levels, but the S&P 500 has returned to a sideways range after retreating from its 2023 high. The Dow Jones has tested its 200-day line and is currently down for the year.

Investors need to be cautious in the current context, ready to cut losses quickly.

Nvidia stock is out IBD Rankings, with ELF stock on the Charts watchlist. SNOW stock is on IBD 50.

AAA credit rating doubts about default risk

At the end of Wednesday, Fitch Ratings US government AAA credit rating on a negative clock. Fitch cites “an increase in political partisanship that is hindering the achievement of a resolution to increase or suspend the debt limit.” The credit rating agency added, “The administration’s failure to address medium-term fiscal challenges will result in a widening budget deficit and a growing debt burden signaling downside risks.” damage to the creditworthiness of the United States.”

On Wednesday, White House and Republican negotiators in the House continued negotiations on the debt ceiling. A default will occur in early June without an agreement to raise the debt limit.

House Speaker Kevin McCarthy said there was still “time” for a debt ceiling deal. But House lawmakers will be leaving town over Memorial Day weekend.

Dow Jones Futures Today

Dow Jones futures are down 0.2% from fair value. S&P 500 futures rose 0.4%. Nasdaq 100 futures rose 1.4%. NVDA stock is a key component of the S&P 500 and Nasdaq 100. AMD, Google and MSFT stocks also lifted the tech world overnight after Nvidia’s results.

Futures weakened slightly as Fitch put the US credit rating at negative.

At 8:30 a.m. ET Thursday, the Labor Department will release weekly jobless claims data.

Remember that action overnight in future index and other places that don’t necessarily translate into actual transactions the next time stock market meeting.

Nvidia’s earnings

Nvidia’s earnings down 20% from a year earlier and revenue down 13%, but both easily beat views. The graphics chip maker posted $11 billion in revenue in the second quarter, well above the consensus of slightly more than $7 billion.

“The computing industry is going through two simultaneous transitions – accelerated computing and artificial intelligence AI,” Jensen Huang, founder and CEO of Nvidia, said in the earnings report. .

NVDA stock jumped more than 20% in extended trading, signaling a step above its November 2021 record high of 346.47. Shares fell 0.5% to 305.38 on Wednesday, the fourth consecutive slight drop after hitting a 52-week high.

Nvidia’s rival Advanced micro-devices (AMD) also increased sharply overnight. Shares rose 0.15% to 108.28 on Wednesday. AMD stock closed near the edge of a buy zone after breaking out last week. But it is extended from the 50-day line.

Nvidia’s earnings are also good news for other AI games.

Palantir technology (PLTRESS) And C3.ai (artificial intelligence) both surged overnight. Google parents Alphabet (GOOGLE) And Microsoft (MSFT) increased modestly.

Other income

SNOW stock plunged overnight. Snowflake’s earnings top the views but the data analytics software company cut its full-year product sales forecast. Snowflake shares rose 1.1% on Wednesday to 177.14. SNOW stock, which has surged in the past month, could now test the 200-day and 50-day lines on Thursday.

ELF stock rose more than 10% in late trading. ELF Beauty collects crushing views again, with revenue growth accelerating for the fifth consecutive quarter, to 78%. Shares rose 1.7% to 86.45 on Wednesday, regaining the 50-day moving average. ELF stock has bounced back over the past few weeks after rallying 372% from a May 2022 low to an April 24 high of 97.03. The low-end cosmetics maker could make an entry with a bullish post-earnings move. It was on the right track to fake a flat sole by the end of the week, if it doesn’t reach new levels earlier.

PATH stock fell for a long time. UiPath earnings beat but the automation software maker guided Q2 revenue slightly lower. PATH stock has been operating on an 18.22-cup basis, but could cut its 50-day sugar on Thursday morning.

SPLK stock surged after hours. Splunk posted a surprise profit while revenue also topped. Database and security software rose 0.2% to 96.69 on Wednesday. Splunk stock heading towards consolidation 110.05 buy points after removing the 50-day and 200-day lines last week.


Join IBD experts as they analyze stocks that could act in the stock market rally on IBD Live


Stock market recovers

The stock market rally extended Tuesday’s heavy losses through late Wednesday morning, but has edged down somewhat to lows.

Republican negotiators in the House and White House have resumed talks to lift the US debt ceiling, with a possible national default as early as June. Earlier, House Speaker Kevin McCarthy said he “hopes we can make progress” on Wednesday. He said the two sides differ on spending limits.

Minutes of the Fed’s May meeting reinforced the market view that policymakers are still undecided on future moves. The late-afternoon rally cooled by the close as Microsoft warned China-backed hackers had infiltrated critical US network infrastructure.

The Dow Jones Industrial Average fell 0.8% on Wednesday stock market trading. The S&P 500 index fell 0.7%. The Nasdaq composite fell 0.6 percent. The Russell 2000 Small Cap Index fell 1.1%

U.S. crude oil prices rose nearly 2% to $74.34 a barrel, the highest since May 1, after U.S. crude inventories fell sharply.

Copper price fell 2.4%, the lowest in nearly 7 months.

The yield on the 10-year Treasury note rose 2 basis points to 3.72%. The yield on the two-year Treasury note rose 6 basis points to 4.34%.

The US dollar continued to rise, reaching its best level since mid-March. Treasury bond credits are stronger and foreign economic data is weaker. Another factor? Fear of debt-ceiling defaults is driving safe-haven inflows into the dollar.

ETFs

Among the growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) decreased by 0.5%. Microsoft stock is a major component of the IGV, with Splunk and AI stock also included in the ETF. VanEck Vectors Semiconductor ETF (SMH) retreat 1.5%. Nvidia stock is the big stock SMH is holding, along with AMD.

Reflecting more speculative stocks, the ARK Innovation ETF (ARKK) slipped 0.6% and the ARK Genomics ETF (ARKG) decreased by 1.5%. PATH stock is the #2 hold on Ark Invest ETFs. Cathie Wood’s Ark also owns some shares of NVDA and PLTR.

SPDR S&P Metals & Mining ETF (XME) fell 2.5% and the Global X US Infrastructure Development ETF (PAY THE ROAD RED) gave up 1.7%. US Global Jets ETF (jet plane) decreased by 1.9%. SPDR S&P Homebuilders ETF (XHB) decreased by 0.3%. Energy Select SPDR ETF (XLE) increased by 0.4% and the Healthcare Sector SPDR Fund (XLV) decreased by 0.7%.

Financial Options SPDR ETF (XLF), including banking giants but also finance like Berkshire Hathaway (BRKB) And Passport (DRAW), slips 1.3%, back below the 50-day line. SPDR S&P Regional Bank ETF (KRE) fell 1.8% after hitting resistance at the 50-day line on Tuesday.


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Analysis of market recovery

The stock market rally fell again on Wednesday. Major indexes pared losses for much of the afternoon, but paled in the final minutes following warnings about Microsoft’s cyberattack in China.

Nasdaq remains above February and April peaks.

The S&P 500 slipped below the 21-day line, although it did find some support near the 50-day line. However, last week’s move to 2023 highs looks like a failed breakout.

The Dow Jones Industrial Average fell to its worst level since late March, testing the 200-day line after falling below the 50-day line on Tuesday. The Dow is slightly negative for the year.

The Russell 2000 tested its 50-day line after reversing lower from the 200-day line in the previous session.

First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) fell 0.6% after falling 1.4% on Tuesday. QQEW, which hit a three-month high on Monday, just closed above the 21-day line after finding support near the 50-day line.

Invesco S&P 500 Equal Weight ETF (RSP) fell 1.1%, hitting its lowest level since late March. RSP fell back after breaking above the 200-day line late last week. Equally weighted S&P 500 ETFs have fallen for the year and are closer to their October lows than their early-February highs.

Chips are notable losers in Nvidia earnings and a weak follow Analog Devices (ADI) instruct.

But they should get a boost on Thursday thanks to strong results and great guidance from Nvidia.

Biotechnology in general has had a rough time, with Treatment of PTC (PTCT), Sarpeta therapy (SRPT) And argenx (ARGX) big loss.

More broadly, while some top stocks and groups rallied on Wednesday, others did not. And the vast majority have lost significant points since Monday.


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What to do now

The major indexes are falling again, with the S&P 500 and Dow Jones falling below key levels. Top stocks are struggling. A debt-ceiling deal could help the market rally, but don’t expect a major rally.

Stock futures are signaling a recovery in Nvidia’s earnings, but also point to a continued split between some growth stocks and the broader market.

Not many stocks can be bought, with recent buy signals stalling or failing.

Investors should have low to moderate exposure. Make sure to quickly cut losses and consider taking partial profits on the winners, especially if they are breaking below key levels or are at risk of a sharp rise.

At some point, the stock market rally will take a long time. But Wednesday is not that day.

But you want to be ready. Continue working on your watch list.

Read Big picture every day to stay in sync with market trends and top stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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