Dow Jones futures opened Sunday evening, along with S&P 500 futures and Nasdaq futures, after the major indexes posted strong weekly gains, hitting all-time highs.
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Sometimes, the stock market is quite simple. Two broad factors have driven the market’s rally since late October: expectations of a Fed rate cut and the continued boom in artificial intelligence.
In the past week, the Federal Reserve reaffirmed its forecast of three rate cuts in 2024. Meanwhile, Nvidia (NVDA), Broadcom (AVGO) and Microsoft (MSFT) had encouraging AI events, while Micron Technology (MU) reported surprising profits and strong guidance thanks to AI tailwinds.
Nvidia, Broadcom and Micron stocks posted weekly gains, along with many other AI plays. Microsoft stock made modest gains to new highs, but is still viable.
But there was broad-based strength, with many sectors posting big gains while a diverse group of stocks showed buy signals, including financials.
Uber Technologies (UBER), Eli Lilly (LLY), Crowd Strike Holdings (CRWD) are the leading stocks to form in a messy consolidation.
Investors can still take advantage of some viable names using additional buyers, perhaps looking ahead to extended AI leaders like Nvidia stock.
Nvidia and Uber stocks are on the IBD leaderboard. Microsoft stock is on IBD’s long-term leaders. Nvidia and CrowdStrike stocks are on the IBD 50. Broadcom stocks, CrowdStrike and Nvidia are on the IBD Big Cap 20 list. Uber was Friday’s IBD Stock of the Day.
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.
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Stock market rally
The stock market rally had a strong week on a dovish Fed and bullish AI prospects. The major indexes advanced strongly, all touching record highs, though they eclipsed Thursday’s intraday highs.
The Dow Jones Industrial Average rose 2% in last week’s stock market trading. The S&P 500 index rose 2.3 percent. The Nasdaq Composite rose 2.85 percent.
The small-cap Russell 2000 rose 1.6 percent, hitting a 23-month closing high on Thursday before pulling back on Friday.
The Nasdaq decisively cleared trading through early February, while the Russell 2000 is above a range from late December to late February. This meant that several leading stocks broke or flashed other buy signals.
Meanwhile, the S&P 500 and Nasdaq haven’t been extended above the 50-day line, although it won’t be long before that happens.
Nvidia and other major AI stocks such as Micron, Broadcom and Microsoft led the major indexes slightly.
The yield on the 10-year Treasury fell 9 basis points to 4.22 percent, retreating after touching highs around 2024 on Monday.
U.S. crude futures rose 5 cents last week to $80.63 a barrel, retreating from 2024 highs.
ETFs
Among developing ETFs, iShares’ Expanded Tech-Software Sector ETF ( IGV ) rose 2.9 percent, with a large holding of Microsoft stock and CrowdStrike also in IGV. VanEck Vectors Semiconductor ETF ( SMH ) rebounded 4.5%. Nvidia is the dominant SMH holding, with Broadcom stock and Micron also being key members.
The SPDR S&P Metals & Mining ETF ( XME ) gained 2.5% last week. The Global X US Infrastructure Development ETF ( PAVE ) gained 3.2 percent. The US Global Jets ETF (JETS) rose 3.4%. The SPDR S&P Homebuilders ETF (XHB) jumped 4.8%. The Energy Select SPDR ETF ( XLE ) rose 0.9%, near a 52-week high. Healthcare Select Sector SPDR Fund (XLV) rose. The Industrial Select Sector SPDR Fund ( XLI ) gained 2.6%.
The Financial Select SPDR ETF ( XLF ) rose 1.5% and the SPDR S&P Regional Banking ETF ( KRE ) rose 1.3%.
Reflecting a more speculative stock story, the ARK Innovation ETF ( ARKK ) gained 1.5% last week and the ARK Genomics ETF ( ARKG ) fell just over 1%.
Time the Market with IBD’s ETF Market Strategy
Stock close to buy points
Uber stock has been consolidating for several weeks, which investors can see as a de facto flat base with an 82.14 buy point. Shares rose 5.5 percent this week to 80.23, rebounding from a 10-week line. Investors can use Thursday’s high of 81.23 as a slight initial entry.
Eli Lilly stock also has a false flat base, with an 800.78 buy point. LLY stock has recently been finding support at its 21-day moving average. Shares rose 2.1 percent to 770.30.
CrowdStrike stock rose 3.8% last week to 327.58, bouncing off a 10-week line. Cybersecurity stocks are trading strongly around the 21-day line, but with some big exceptions. Shares fell on February 21 in reaction to the big one. Palo Alto Networks (PANW) Sailed off, but quickly bounced back. Shares tested the 50-day line again on March 5, just before earnings. Shares rose on March 6 after the results, but profits fell. A move above the February 15 high of 338.45 could serve as an entry.
The hot buzzword for cybersecurity stocks is no longer AI.
AI Stocks
Nvidia’s stock jumped 7.34 percent to 942.89, its 11th straight weekly gain, following a record close on Friday. Late Monday, the AI ​​chip leader unveiled its latest AI processor. The speed of the Blackwell chip is very fast but the price will be aggressive. Several more analysts raised NVDA stock price targets to 1,000 or higher.
Broadcom stock rose 9.55 percent to 1,353.47, roaring above its 50-day and 10-week lines. AVGO may have been a short-lived buying opportunity, but it has now been extended. Broadcom rallied at its own AI event on Wednesday.
Micron stock rose 18.2 percent to 110.21, a record high. The memory chip giant reported a surprise profit and gave higher guidance, citing AI-related growth.
Microsoft stock rose 3 percent to 428.74, a record high. The Dow tech giant unveiled the Surface AIPC and demonstrated Copilot functionality at its “New Era of Work” event on Thursday. MSFT stock is still in range from a non-flat base to a 420.83 buy point. It is also within the range of the 10-week line.
What should be done now?
The market rally had a strong week on big positive news, with several stocks across sectors showing buy signals.
Investors could take advantage of these opportunities, especially if they have recently reduced exposure. But this is not the time to aggressively increase exposure. Gradually make new purchases, looking beyond a handful of AI names.
Don’t buy extended stocks, even hot AI plays.
Be sure to work through these watchlists for viable stocks and setups. You want to find the best possible names ahead of time and be ready to pounce when they trigger your entries.
Read The Big Picture every day to stay in tune with market direction and leading stocks and sectors.
Please follow Ed Carson on threads @edcarson1971 and on X/Twitter. @IBD_ECarson.
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