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Dow Jones futures were little changed early Friday, along with S&P 500 futures and Nasdaq futures. The February jobs report is approaching before the open.
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The stock market rally had a strong session, with the S&P 500 and Nasdaq hitting new all-time highs on Thursday.
NVIDIA (NVDA) rose sharply again, becoming the most widespread in decades. The fries were generally hot, with Taiwan Semiconductors (SST) Broadcom (AVGO) and Marvel Technology (MRVL) also running and extended. But monolithic power (MPWR) surpassed a short consolidation above a previous base. microchip technology (MCHP) made it through some early innings and flirted with an official breakout.
Some other stocks showed buying signals on Thursday.
However, the market rally already seems stretched again. Investors should be cautious.
Key gains
Broadcom and Marvell reported earnings after the close, along with Wholesale Costco (COST), Gap (GPS) and software manufacturers MongoDB (MDB), samsara (IOT) and Documents (DOCUMENT).
Winners: Samsara stock rose, indicating a gap out of a base. DocuSign and Gap stock will jump above their 50-day lines and move towards consolidation buy points.
Losers: Marvell pulled back solidly and MongoDB fell sharply, both on weak guidance. Costco shares fell solidly due to a loss in sales. Broadcom shares fell slightly.
On Friday, Taiwan Semiconductor reported that February sales rose 11.3% in local currency compared to a year earlier, and January-February revenue rose 9.4%. TSM shares rose nearly 4% pre-market. The chip foundry, which broke out of a brief consolidation on March 1, has already soared 11.4% this week. TSMC’s sales are also good news for customers like Nvidia and chip equipment makers.
The FDA has delayed a decision on Eli Lilly’s Alzheimer’s drug beyond the first quarter, the company said Friday. Eli Lilly shares fell.
Nvidia Stock Is Active Classification of IBD. Monolithic Power is on IBD’s Long-Term Leaders Watch List.
Jobs Report
The Labor Department will release the February employment report at 8:30 a.m. ET. Economists expect nonfarm payrolls to rise by a solid 190,000, but that number is well below January’s 353,000. The unemployment rate is expected to remain stable at 3.7%.
A strong jobs report could prompt the Federal Reserve to reduce its rate cut projections at its March 20 meeting.
Dow Jones Futures Today
Dow Jones futures lost 0.2% against fair value. S&P 500 futures were flat. Nasdaq 100 futures fell. Broadcom and Marvell are members of the Nasdaq 100.
The 10-year Treasury yield fell to 4.07%.
The jobs report is sure to move Dow futures and Treasury yields.
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 made a strong and broad advance on Thursday.
The Dow Jones Industrial Average rose 0.3% in trading on Thursday. The S&P 500 index gained 1% and the Nasdaq composite jumped 1.5%, both hitting new all-time highs. The small-cap Russell 2000 rose 0.8%, hitting a 23-month intraday high.
Within technology, chips are clearly at the forefront. Many software names have been damaged in recent weeks, but some could be reinstalling. Manhattan Associates (MANH) settled a short consolidation.
Meanwhile, the ample housing/building/infrastructure space looks solid. Manufacturers of medical products are emerging. Edwards Life Sciences (E.W.) broke out on Thursday, a day after dexcom‘s (DXCM) Advance.
Several trucking companies have done well, with ArcBest (ARCB) liquidate a short consolidation. ArcBest is the IBD Stock of the Day.
Many banking stocks have been showing buy signals, along with some energy plays.
However, the Nasdaq is already slightly up again, 5.1% above its 50-day moving average. Many of the big rally leaders are significantly stretched thin. Market sentiment is close to extreme optimism, which is understandable but worrying.
Those factors raise the risks of a market pullback, just in time for Friday’s jobs report. So far, those pullbacks have ultimately been modest and often very brief, but at some point that will change. Many leading stocks could suffer sharp declines in that scenario.
US crude oil prices fell 0.25% to $78.93 a barrel.
The 10-year Treasury yield fell 1 basis point to 4.09%, but far from initial lows of 4.05%.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (VAT) gained 1.2%, still recovering from Tuesday’s 3.8% drop. The VanEck Vectors Semiconductor ETF (SMH) rose 3.45% and is up 33.9% so far this year. Nvidia shares are by far SMH’s largest holding, with Taiwan Semiconductor, Broadcom, Monolithic Power, Microchip Tech and Marvell also as components.
Reflecting stocks with more speculative histories, the ARK Innovation ETF (ARKK) gained 1.15%. ARK Genomics (ARKG) added 1.1%.
The SPDR S&P Metals & Mining ETF (XME) jumped 2.6%, and the GlobalTO PAVE) rose 1.2%. SPDR S&P Home Builders (XHB) increased by 1.6%.
The Energy Select SPDR ETF (XLE) advanced 0.85%, and the Healthcare Select Sector SPDR Fund (XLV) rose 0.5%. The SPDR Select Industrial Sector Fund (XLII) rose 0.8%.
The Financial Select SPDR ETF (XLF) fell 0.15%. The SPDR S&P Regional Banking ETF (KRE) rose 0.1%.
Time the Market with IBD’s ETF Market Strategy
Nvidia Stock
Nvidia rose 4.5% to 926.69 on Thursday after Mizuho raised its price target to 1,000. Shares are up 12.6% so far this week. That would be the biggest win in a nine-week winning streak that began in early January.
The leader in AI chips is up 86.9% in 2024. It now has a valuation of $2.32 trillion.
Nvidia stock is now 41.9% up on its 50-day trail. That’s more widespread than during its 2023 run or the Covid rally. In fact, it is the most extended 50-day closing line since June 2003.
That increases the risk of a significant pullback or correction. That would likely lead to steep losses in a variety of chip stocks and other AI plays, and perhaps the broader market.
However, a setback is not inevitable.
On May 30, 2023, NVDA stock closed 40.4% above its 50-day line, following a huge gap in earnings. The stock continued to advance at a slower pace over the next few months before consolidating for the rest of the year.
A pullback is not yet underway: shares rose modestly early Friday and continue to advance toward 1,000.
Why this IBD tool simplifies your search for the best stocks
What to do now
The stock market rally is showing impressive strength, recovering from Tuesday’s sell-off. Short pauses and rapid recoveries limit buying opportunities, but investors with large exposure have been reaping the benefits.
The Nasdaq and especially Nvidia rise, while the sentiment is close to euphoria. So it’s time to be careful with new purchases again.
Depending on your exposure, concentration levels, and investment style, you might consider taking partial profits on some extended leaders. In any case, you must have your exit strategy in place.
Keep working through the watchlists and looking for those new setups.
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 @edcarson1971 and X/Twitter in @IBD_ECarson for stock market updates and more.
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