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Dow Jones futures will open Sunday night, along with S&P 500 futures and Nasdaq futures.
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The stock market rally largely resisted a big week of earnings and economic news. The Dow Jones and S&P 500 hit new all-time highs on Friday, while the Nasdaq rallied to a two-year high thanks to Metaplatforms (GOAL) and Amazon.com (AMZN).
Big Tech earnings for the week were mixed but generally positive, boosting the sector.
Market breadth was weak and small caps struggled. tesla (TSLA) broke a weekly losing streak, but will lead the S&P 500 losers in 2024.
It’s a stock-picking market, no doubt. But despite the weak breadth, there have been plenty of stocks to choose from.
Adobe (ADBE), Axon Company (AXON), MongoDB (MDB) and Synopsis (SNP) showed buying signals on Friday.
SNPS stock is listed on IBD Long-Term Leaders. Synopsys, Samsara and MDB shares are on the market. IBD 50. Synopsys and Axon shares are on the market. IBD large cap 20. Axon was Friday’s IBD Stock of the Day.
The video included in this article takes an in-depth look at the market action and discusses MongoDB, Axon, and SNPS stocks.
Earnings will remain elevated next week, with Caterpillar (CAT), Chipotle Mexican Grill (CMG), Eli Lilly (LYLY), ELF Beauty (ELF), Arms (ARM) and Pinterest (PAWS) among the many notable companies reporting.
Dow Jones Futures Today
Dow Jones futures open at 6 pm 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 leading stocks and the market on IBD Live
Stock market rally
The stock market rally ran into trouble midweek as Fed chief Jerome Powell largely ruled out a rate cut in March, and Google parent Alphabet (GOOGLE) weighing on the technicians. But then the major indices rebounded strongly.
The Dow Jones Industrial Average and the S&P 500 index rose 1.4% in trading last week, both setting all-time highs. The Nasdaq composite rose 1.1%, boosted by gains of more than 1% on Thursday and Friday.
Metaplatforms (GOAL) and Amazon.com (AMZN) made huge profits while ultimately microsoft (MSFT) rebounded in its results. Those difficult weeks compensated Google’s parent company Alphabet (GOOGLE) and Apple (AAPL).
Furthermore, these mega-cap tech earnings, guidance, and, crucially, capex plans were good news for peers, partners, and vendors, in particular. NVIDIA (NVDA) but also actions like MongoDB.
However, the breadth of the market weakened. Even as major indexes surged to highs, losers trounced winners on Friday.
The small-cap Russell 2000 fell 0.8% for the week, falling below the 21-day line but holding support at the 50-day line.
The Invesco S&P 500 Equal Weight ETF (RSP) and First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) both rose 0.4%, well behind the S&P 500 and Nasdaq 100. But the RSP and QQEW are near recent 52-week highs.
The Nasdaq closed 5.4% above its 50-day moving average on Friday and the S&P 500 rose 4.9%. The Nasdaq 100 is 6% above its 50-day index. These are starting to spread again or almost so.
The 10-year Treasury yield sank 13 basis points to 4.03%, despite Friday’s 17 basis point jump following the important jobs report. Regional bank fears weighed on long-term Treasury yields. But the two-year Treasury yield, more closely tied to Federal Reserve policy, was little changed.
While the Federal Reserve’s Powell appeared to close the door on a rate cut in March, he stressed that labor markets do not need to weaken before rate cuts occur. So that’s one reason Friday’s surprisingly strong jobs report didn’t dampen the Meta/Amazon-led rally.
US crude oil futures plunged 7.35% to $72.28 a barrel last week amid concerns about demand and hopes for a ceasefire between Israel and Hamas.
Amazon Partner Leads Three AI Stocks Near Points of Purchase
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (VAT) rose 1.4%, hitting a two-year high on Monday, with Adobe shares a big holding and Samsara also in the ETF. The VanEck Vectors Semiconductor ETF (SMH) advanced 1.6%. SNPS shares are found in both IGV and SMH.
Reflecting stocks with more speculative histories, ARK Innovation ETF (ARKK) rose 1.6%, breaking a five-week losing streak. The ARK Genomics ETF (ARKG) rose 0.2%. Tesla stock remains a major holding in Ark Invest ETFs.
The Global X US Infrastructure Development ETF (TO PAVE) jumped 3.4% and the Industrial Select Sector SPDR Fund (XLII) rose 1.9%, both to record levels. The Health Care Select Sector SPDR Fund (XLV) rose almost 2%, clearing a long consolidation.
SPDR S&P Metals & Mining ETF (XME) advanced 0.5% last week. US Global Jets ETF (JETS) rose 0.2%. SPDR S&P Homebuilders ETF (XHB) rose 1.7%. The Energy Select SPDR ETF (XLE) fell 0.9%.
The Financial Select SPDR ETF (XLF) rose 0.85%, but the SPDR S&P Regional Banking ETF (KRE) fell 7.2% due to new lending concerns.
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Stocks in buy zones
MongoDB shares rose 6.6% to 436.01 on Friday, breaking a 425.51 buy point in a two-month consolidation. That consolidation is right next to a failed cup-with-handle base, so breaking through the Nov. 30 high of 442.84 is also a big test for MDB stock. The database software company, with AI aspirations, benefited from Amazon’s strong fourth-quarter results.
Axon Enterprise shares rose 1.7% to 256.99 on Friday, extending Thursday’s move from the 10-week line and offering an early entry. The law enforcement products company is now expanding its body cameras to retail and healthcare workers.
Adobe shares rose 1.1% to 634.76 on Friday, just above a flat base buy point of 633.89. Shares rose 3.4% for the week, their fourth consecutive weekly gain.
Synopsys shares rose 2.2% on Friday to 552.05. The maker of electronics and chip design software has a 554.57 buy point from a cup-and-handle base, but Friday’s move offered an early entry. Shares rose 4.5% for the week, rebounding from the 50-day and 10-week lines. The 50 day line is a good place to start a position in a Long Term Leader.
samsara (IOT) shares rose 2.8% to 32.51 on Friday, retaking the 21- and 50-day moving averages and clearing a tight trend line. IOT stock has a consolidation buy point of 36.91, according to MarketSmith. Investors could use Friday’s move as an early entry. Decisively surpassing Friday’s high of 32.98 would also mean breaking the 10-week line.
This Internet of Things software company, an artificial intelligence play, is prone to counterfeits. Friday’s low could be an exit point.
Tesla Stock
Tesla shares rose 2.5% to 187.91, snapping a six-week losing streak. But it is down 24.4% in 2024, making it the S&P 500’s worst performer yet. TSLA stock hasn’t even touched its 10-day decline line in 2024.
The electric vehicle giant’s market capitalization is now $597 billion, less than half of any of the other Magnificent Seven stocks. But it still has by far the highest forward price-to-earnings ratio of those megacaps.
After Tesla’s weak fourth-quarter earnings and growth warning for 2024, Wall Street analysts now see this year’s earnings flat versus 2023 falling to $3.12 per share.
Tesla has already reduced prices in China and Europe, with discounts on Model Y inventory of more than 10% in the US. All this against the backdrop of sluggish demand for electric vehicles around the world and intense competition in China.
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What to do now
The stock market rally continues to push higher. The weak amplitude is something to take into account. However, the lead remains strong, even if many of the biggest winners are in the AI space.
Investors had some buying opportunities late in the week, while a few more stocks are establishing themselves. But many leaders stretch themselves, often greatly.
The expansion of the Nasdaq once again is a reason to be cautious about new purchases. But investors should have significant or strong exposure.
Keep working on those watch lists.
The weekend is also a good time to review your portfolio. Are there any stragglers to prune? With the big winners, are you looking to take profits or are you trying to find places to add shares? The answers will largely depend on your investing style.
Read the big picture every day to stay in sync with the market direction and leading stocks and sectors.
Follow Ed Carson on Threads at @edcarson1971X/Twitter on @IBD_ECarson and Bluesky in @edcarson.bsky.social for stock market updates and more.
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