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Dow Jones futures were little changed after hours, along with S&P 500 futures and Nasdaq futures. The Federal Reserve will conclude its two-day meeting on Wednesday afternoon, focusing on the prospects for a Fed rate cut.
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The stock market rally made modest gains on Tuesday, fighting off early losses, especially the Nasdaq.
NVIDIA (NVDA) initially pulled back after its big AI event, but pulled back slightly to the upside. Many other AI stocks reduced their losses or also turned positive. However, Advanced Micro Devices (amd) retreated solidly while super microcomputer (SMCI) collapsed in the face of stock offering plans.
early Wednesday, Broadcom (AVGO) will hold an AI investor meeting as the Nvidia GTC conference continues. Micron technology (MU) will release fiscal second-quarter results on Wednesday evening, with implications for AI as well. Thursday, microsoft (MSFT) will hold its own AI event.
wood (World Water Day), CyberArk Software (CIBR), CrowdStrike Holdings (CRWD), Arista Networks (A NETWORK), Ares Management (ARES), Cadence Design Systems (CDNS), Synopsis (SNP), JFrog (FROG), TransDigm (TDG), DraftKings (DKNG), Neurocrine biosciences (NBIX), arcrock (AROC), dexcom (DXCM), Royal Caribbean (RCL) and Microsoft stock is worth watching.
Investors should be cautious until after the Federal Reserve meeting and Fed Chief Jerome Powell’s press conference.
Nvidia and ARM shares are on the rise Classification of IBD, with Dexcom on the leaderboard watchlist. DraftKings stock is on SwingTrader. Microsoft, Cadence Design and Synopsys stocks are among IBD’s long-term leaders. Shares of Nvidia, Arm Holdings, CrowdStrike, DraftKings, Arista Networks, Ares, JFrog, Royal Caribbean and Microsoft are on the market. IBD 50. Shares of Nvidia, CrowdStrike, Arista Networks and Super Micro are on the market. IBD large cap 20. Woodward was Tuesday’s IBD Stock of the Day.
The video included in the article analyzes the actions of Woodward, Synopsys and Arista Networks.
Chipotle Mexican Grill (CMG) jumped overnight on plans for a 50-for-1 stock split.
Federal Reserve Meeting
The Federal Reserve will release its latest “dot plot” of policymakers’ rate projections at 2 pm ET. At the end of 2023, the dot plot pointed to three Fed rate cuts in 2024. There is speculation that authorities could reduce that figure to two rate cuts.
Fed chief Powell will hold his press conference at 2:30 pm ET.
Markets are leaning slightly toward a Fed rate cut in June, but it’s not a done deal.
Dow Jones Futures Today
Dow Jones futures were stable versus fair value. S&P 500 futures were down and Nasdaq 100 futures were little changed.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
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Stock market rally
The stock market rally showed resistance on Tuesday, with the Nasdaq pulling back slightly higher.
The Dow Jones Industrial Average rose 0.8% in trading on Tuesday. The S&P 500 index rose 0.6%. The Nasdaq Composite gained 0.4%. The Dow Jones and Nasdaq held support at the 21-day moving average, while the latter also held the 16,000 level.
The breadth of the market was strong.
The small-cap Russell 2000 advanced 0.5%, but is still below its 21-day line. Super Micro and a few other high-flying stocks with a relatively large weighting likely weighed on the index on Tuesday.
The stock market rally has largely stalled in March, with the Nasdaq and Russell 2000 showing even longer patterns. That is allowing some bases to form. Even better, the 50-day moving average is closing the gap against the Nasdaq, giving the market a little more room to run if there is another advance.
It was positive to see Nvidia and Microsoft, two great leaders in AI, show resilience. Many leading tech stocks are at key levels and could look quite strong or weak in just a couple of days. Meanwhile, several other areas of the market are showing strength, particularly commodities and energy.
The Fed’s rate hike prospects and Powell’s comment are sure to rock stocks and Treasury yields on Wednesday afternoon. It is essentially an earnings report for the entire market. The S&P 500 could rise – or fall – 1% or 2% very quickly after the Fed takes action, perhaps with large swings. Don’t be surprised if on the second day the Fed reacts in the opposite direction.
The 10-year Treasury yield fell 4 basis points to 4.3%, ending a six-session winning streak but still near 2024 highs.
US crude oil prices rose 0.9% to $83.47 a barrel, the highest close since late October.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (VAT) rose 0.7%. Microsoft is a huge holding company and CrowdStrike is also part of the ETF. The VanEck Vectors Semiconductor ETF (SMH) fell 0.2%, with Nvidia stock being the dominant component but AMD also a key member. Synopsys and Cadence Design shares are in IGV and SMH.
Reflecting stocks with more speculative histories, ARK Innovation ETF (ARKK) fell 0.6% and the ARK Genomics ETF (ARKG) rose 0.4%.
SPDR S&P Metals & Mining ETF (XME) advanced 0.4%. The SPDR S&P Homebuilders ETF (XHB) rebounded 1.8%. The Energy Select SPDR ETF (XLE) rose 1.1% and the Healthcare Select Sector SPDR Fund (XLV) rose 0.7%.
The SPDR Select Industrial Sector Fund (XLII) rose 0.9%. The Financial Select SPDR ETF (XLF) rose 0.5%.
Time the Market with IBD’s ETF Market Strategy
Nvidia Stock
Nvidia fell to 850.10 on Tuesday morning, but closed up 1.1% at 893.98. Since hitting historically long highs earlier this month, Nvidia has moved sideways. It has yet to touch its 21-day line since its February 21 earnings report and remains extended from its 50-day line. But NVDA stock may be running a tight three-week pattern.
On Monday night, Nvidia unveiled its new, much faster AI chip and made a series of announcements at its GTC conference, which runs through Thursday. The AI chip was expected, but it still impressed.
AMD shares sank 4.8% to 181.42, completely overcoming a recent breakout. The chipmaker bounced a bit off its 50-day line. AMD stock is down just over 5% so far this week after falling 7.9% last week. AMD had caught up with Nvidia’s AI chips, but will now fall behind Blackwell’s new entry.
Broadcom shares rose a fraction but closed below their 50-day rising line for the first time since early November. Broadcom’s AI news on Wednesday will be important for AVGO stock and many other AI companies, including its partner Arista Networks.
Super microstock
Super Micro shares fell nearly 9% to 910.97, closing below their 21-day moving average for the first time in months. The AI server maker announced that it plans to sell 2 million shares of Super Micro. But SMCI stock closed well below an intraday low of 863.
Investors who have held Super Micro since its breakup in January could have used Tuesday’s drop as a trigger to sell some of their holdings. Decisively breaking the 50-day fast-growing line could be a strong sell signal.
Actions to take into account
Shares of Cadence Design and Synopsys continued to bounce off their 10-week lines, breaking short downtrends on Tuesday on strong volumes. Those two names are actionable, along with possibly Dexcom stock, which is right at a flat base buy point.
Most of the others are actions being set up.
Woodward shares are near a flat-base buy point, along with Arista Networks and Neurocrine Biosciences, according to Market growth analysis. Royal Caribbean stock is working on a handle for a short cup base.
Archrock stock is approaching an ascending buy base point.
Shares of CyberArk, CrowdStrike, and Ares have found support around the 10-week line. TransDigm and JFrog shares are taking a bullish pause on their 21-day lines.
Bouncing off its 21-day and 10-week lines, DraftKings stock is about to forge a new base.
Microsoft stock is about to buy out of a short consolidation, ahead of its “Future of Work” event on Thursday.
What to do now
This is an important time to observe rather than taking too many actions. The market rally seemed tired and was taking a breather. Perhaps key indices and leading stocks will soon be ready for another run, or perhaps they are about to make a more significant pullback.
The Federal Reserve meeting is the next big test. Thursday’s Microsoft AI event, while perhaps less important than the Nvidia GTC conference and the Fed meeting, will also be important, especially for key AI software and vendors.
With the market and many leading stocks near potential turning points, investors need to be prepared. Update your watchlists and have your exit plans ready. Stay committed and flexible.
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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