Dow Jones futures were little changed after hours, while S&P 500 futures and Nasdaq futures rose as NVDA stocks jumped late on results. The Nvidia (NVDA) earnings report has huge ramifications for other chip and AI stocks, as well as the emerging market rally attempt. Snowflake (SNOW), Splunk (SPLK) and NetApp (NTAP) also reported Wednesday evening.
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The attempted rally in the stock market pre-empted results on Wednesday, with an improvement in breadth. Government bond yields fell sharply due to weaker economic data and disappointing results or expectations of increased retail and consumer activity.
The market is gaining some momentum, but has not yet confirmed its rally attempt.
Nvidia shares traded sharply higher overnight based on earnings numbers. SPLK stock and Snowflake were also winners, while NetApp fell slightly.
Meanwhile, a slew of AI-related names also moved slightly to solid on Nvidia earnings. Some could give buy signals on Thursday.
That includes chip makers Broadcom (AVGO) and Marvell technology (MRVL) for software makers such as Serve now (NOW), Adobe (ADBE), Palantir Technologies (PLTR), C3.ai (AI) and Samsara (IOT) and server maker Super microcomputer (SMCI). Forget megacaps like Microsoft (MSFT), Metaplatforms (META) and Google parent company Alphabet (GOOGL).
In other news, Boeing (BA) has discovered a new production problem with the 737 Max that may have led to hundreds of incorrectly drilled holes. It’s the supplier’s job Spirit Aero Systems (SPR). Boeing says it has a solution. Short-term deliveries may be delayed, but the issue is reportedly not affecting any Max jets in service. BA shares fell modestly testing a buy point and 50-day line. Spirit Aero tumbled.
NVDA stocks and Meta are on the IBD Leaderboard. Microsoft stock is on the IBD Long-Term Leaders list. ADBE stock and ServiceNow are on the IBD 50. Google stock, Meta and ServiceNow are on the IBD Big Cap 20.
Dow Jones Futures Today
Dow Jones futures traded just above fair value, with Boeing shares acting as a drag. The S&P 500 futures rose 0.6%, while the Nasdaq 100 futures rose 1.1%. Nvidia stock is a major part of the Nasdaq 100 and S&P 500, along with companies like Broadcom, ServiceNow, Adobe, Microsoft, Meta, and Google.
Futures indicate that the S&P 500 and Nasdaq may test their 50-day lines during Thursday’s open.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading during the next regular trading session.
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Stock market rally
The attempted rally in the stock market had a solid session en route to Nvidia’s gains led by technology giants.
The Dow Jones Industrial Average rose 0.5% in stock trading on Wednesday. The S&P 500 index fell 1%. The Nasdaq composite rose 1.6%. The small-cap Russell 2000 climbed 1%.
US crude oil prices fell 0.9% to $78.89 a barrel, down 2.9% year-to-date this week.
Copper futures were up 1.4% and are now up 4.2% after a five-session winning streak.
Ten-year government bond yields fell 13 basis points to 4.2% and retreated from a fifteen-year high. Weaker-than-expected economic data and a downward revision to job growth in the 12 months ending March could ease pressure on Fed Chief Jerome Powell ahead of Friday morning’s big Jackson Hole speech.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) was up 1.3%. The iShares Expanded Tech-Software Sector ETF (IGV) gained 1.6%. The VanEck Vectors Semiconductor ETF (SMH) rose 2.2%. NVDA stock is the number 1 holding company for SMH.
Reflecting more speculative story stocks, the ARK Innovation ETF (ARKK) rose 2.3% and the ARK Genomics ETF (ARKG) rose 2.1%.
SPDR S&P Metals & Mining ETF (XME) was up 0.1% and the Global X US Infrastructure Development ETF (PAVE) was up 1%. The US Global Jets ETF (JETS) rose 0.6%. SPDR S&P Homebuilders ETF (XHB) rose 2.1%. The Energy Select SPDR ETF (XLE) fell 0.25% and the Health Care Select Sector SPDR Fund (XLV) rose 0.3%.
The Industrial Select Sector SPDR Fund (XLI) recovered by 1%.
The Financial Select SPDR ETF (XLF) advanced 1%. The SPDR S&P Regional Banking ETF (KRE) climbed 1.3%.
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Nvidia earnings
Nvidia’s revenue easily outpaced views, thanks to booming demand for data centers, reflecting the massive rise of AI. The chip giant also moved higher for the current third quarter, announcing a $25 billion share buyback from NVDA.
Expectations were extremely high for Nvidia’s results.
Shares of Nvidia rallied in overnight trading, albeit off Wednesday night’s highs, marking an all-time high.
Shares rose 3.2% to 471.16 during Wednesday’s regular session. Nvidia shares reached an all-time high of 481.87 on Tuesday, reversing a brief consolidation, but closed 2.8% lower to 456.68. That’s after a peak of 8.5% on Monday, thanks to flashing buy signals. The relative strength line, the blue line in the graphs shown, reached a new high on Monday.
AI stock response
Chipmakers Broadcom and Marvell were up solid in late trading. AVGO shares and MRVL rose modestly on Wednesday to about their 50-day moving averages. The AI ​​chips could provide buy signals, but Marvell’s earnings come out Thursday night, with Broadcom on August 31.
Software giants ServiceNow and Adobe moved higher in after-hours action. On Wednesday, NOW shares rose slightly, crossing the 50-day mark and breaking a trendline. ADBE shares are up slightly from their 21-day mark within a brief consolidation. Both Adobe and ServiceNow have generative AI partnerships with Nvidia.
Among the more volatile AI software, PLTR stocks, AI stocks and IOT rallied solidly in late trading. All three stocks were up 4%-5% on Wednesday, but well below their 50-day mark.
Wednesday night’s Snowflake and Splunk earnings could also impact software makers, along with AI leader Nvidia.
SMCI stocks popped into extended action. Super Micro shares rose 7.6% to hit the 50-day mark after a major profit sell-off this month.
On the mega caps side, MSFT shares rose modestly during the overnight action, signaling a possible 50-day test. Microsoft rose 1.4% on Wednesday, regaining the 21-day mark. META shares rose modestly late, possibly foreshadowing an aggressive entry, after rising 2.3% to close just before the 50-day mark.
Google shares rose slightly during extended trading. Shares rose 2.55% within a buy zone on Wednesday, while also topping an alternative entry. The internet giant announced upcoming security enhancements to Gmail and other Google Workspace products, some of which will use AI.
All three are big buyers of Nvidia AI chips.
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Other major income
SNOW stock rose solidly in volatile after-hours trading. Snowflake revenue dominated as the data analytics software maker lined up. Shares of Snowflake rose 2% on Wednesday to 155.70, just touching their 200-day line again.
SPLK shares rose overnight, signaling a rebound above the 50-day mark after Splunk’s profits easily outpaced views and sales also peaked. The maker of database and security software steered higher. Splunk shares rose 1.8% to 99.93 on Wednesday. Stocks have a flat-base buying point of 112.03.
NTAP shares fell slightly during extended trading after NetApp earnings slightly beat first-quarter expectations. The data storage giant lined up for the second quarter. NetApp shares rose 2 cents on Wednesday to 76.53, just below the 50-day mark. NTAP shares are on track to have a flat base after this week.
NetApp rival Clean storage (PSTG), which reports next week, was slightly higher in late trading. PSTG shares are already showing early entry from the 50-day line within their own flat base.
Analysis of the market rally
The attempted rally in the stock market made a strong move. Market breadth was strong on Wednesday after fallers trumped winners in the previous two sessions.
The market rally needs another day to confirm the uptrend. The Nasdaq’s gains were strong enough to qualify for an FTD, but volume was slightly below Tuesday’s level. The S&P 500 had higher volume, but solid price gains were not enough to meet FTD standards.
But given Wednesday’s rally, if the market staged a follow-up day from these levels, major indices would very likely revert to the 50-day line.
Several tech names showed aggressive signals on Wednesday, but Nvidia’s earnings made that very risky.
The energy sector still looks strong, along with the residential, industrial, construction and steel sectors to some extent, along with some medical sectors. Banks and consumers are generally struggling.
Fed Chief Powell’s Friday morning speech is likely to tip stock and government bond yields.
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What to do now
The attempted rally in the stock market is promising, but we’re only just getting to the “engaged to be involved” step.
Investors can try to take advantage of potential buying opportunities, but it’s a good idea to wait a few minutes or more after opening. An Nvidia-led AI rally could gain momentum on Thursday, or it could spiral out of control.
Add exposure gradually, to limit the risk of the market going down or falling in value on any given day.
Have your watchlists ready and don’t just think of technology growth names.
Read The Big Picture every day to stay up to date with market direction and key stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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