Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures. Nvidia earnings loom large this coming week, with debt-ceiling talks restarting Friday night after pausing hours earlier.
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The stock market rally strengthened this past week on debt-ceiling deal optimism and easing bank fears, with gains led by AI-infused tech leaders such as Nvidia (NVDA), Advanced Micro Devices (AMD), ServiceNow (NOW), Google parent Alphabet (GOOGL), Snowflake (SNOW) and Palantir Technologies (PLTR).
The Nasdaq composite and S&P 500 hit 2023 highs, with the Nasdaq 100 setting its best levels in more than a year. The White House and congressional leaders appeared to be moving toward a debt-ceiling deal while concerns about regional banks waned.
On Friday, GOP negotiators suspended debt-ceiling talks, saying President Biden’s White House was being unreasonable. At around the same time, a report came out stating that Treasury Secretary Janet Yellen told bank execs that more bank mergers may be needed. That hit regional bank stocks Friday, though they rose strongly for the week.
The major indexes took the debt-ceiling setback and Yellen’s comments in stride Friday, partly because around the same time Fed chief Jerome Powell signaled he favors a rate pause next month.
Investors also remain confident in a debt-limit deal. Indeed, House Speaker Kevin McCarthy said Friday evening that debt-ceiling negotiations would resume later that night.
The stock market rally remains somewhat split, with narrow leadership. Still, investors can be adding exposure carefully, though not a lot of stocks are offering buying opportunities at the moment.
Tesla (TSLA) made a bullish move this past week amid its shareholder event, clearing some key levels. But TSLA stock faces further resistance.
Nvidia Earnings
Nvidia earnings Wednesday night will be a big deal for the market rally. NVDA stock is everything that’s going right with the market. It’s the leading megacap and AI stock in a market rally dominated by megacaps and AI plays. Nvidia shares leapt 10% last week and it’s significantly extended.
Nvidia stock pausing or pulling back modestly over several weeks would be healthy. But if Nvidia earnings or guidance disappoint, NVDA could be punished severely. That would have repercussions for rival AMD but also Google and a slew of “AI” plays that have been driving the market higher.
ServiceNow stock took off last week amid AI-related alliances with Nvidia and Microsoft (MSFT). SNOW stock gained on a report that it could buy an AI search firm. PLTR stock, long an AI play, vaulted 23% for the week after the prior week’s 28% spike on earnings. Google stock has leapt 14% so far in May.
Other Key Earnings
Snowflake, Elf Beauty (ELF), Palo Alto Networks (PANW) and Deckers Outdoor (DECK) also are notable companies with earnings this coming week.
SNOW stock is in a 10-month consolidation. ELF stock is consolidating at its 21-day line after a huge run. PANW stock is trying to hold its 50-day line within a new, volatile flat base. DECK stock had been a big winner but tumbled this past week below its 50-day line as On Holding (ONON) and Foot Locker (FL) dived on their results.
Nvidia stock is on IBD Leaderboard, with ELF stock on the Leaderboard watchlist. SNOW stock is on the IBD 50. NOW stock is on the IBD Big Cap 20.
The video embedded in the article discussed the weekly market action and reviewed three non-AI plays setting up: Life Time Group (LTH), Meritage Homes (MTH) and MercadoLibre (MELI).
Dow Jones Futures Today
Dow Jones futures open at 6 p.m. ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock Market Rally
The stock market rally advanced last week, with a big gap between leaders and laggards.
The Dow Jones Industrial Average climbed 0.4% in last week’s stock market trading. The S&P 500 index advanced 1.65%. The Nasdaq composite jumped 3%. The small-cap Russell 2000 bounced 1.9%.
The 10-year Treasury yield leapt 23 basis points to 3.69% this past week, hitting a two-month high.
The odds of a Fed rate hike next month briefly topped 40% during the week amid strong economic data and some hawkish comments from Fed officials. But with Powell saying “we can afford to look at the data,” the chance slipped back to about 20% on Friday.
U.S. crude oil futures climbed 2.2% to $71.55 a barrel for the week.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) surged 5.25%. NOW stock is a big IGV component. The VanEck Vectors Semiconductor ETF (SMH)…
Read More: Dow Jones Futures: Debt-Ceiling Talks Resume; Nvidia Earnings Key For Market