Dow futures will open Sunday evening, along with futures for the S&P 500 and Nasdaq futures. nvidia (NVDAEarnings and a big speech from Fed Chairman Jerome Powell.
Palo Alto Networks (Banu) reported Friday night.
The stock market slipped into a correction last week, with major indices falling below their 50-day lines and blue chips breaking hard as Treasury yields rose to 15-year highs. Indices rebounded off Friday’s lows as the 10-year yield eased, but the picture was basically unchanged.
Friday could only be a short-term bounce. Investors should wait for continued strength. Nvidia’s earnings and Federal Reserve Chairman Paul Jackson Hole’s speech can be market catalysts, but in what way?
Investors should be on the defensive during a market correction, but look for stocks that are holding up relatively well. Arista Networks (Anita), Diamond Offshore (Do), commercial minerals (CMC), visa (Fifth), Boeing (Bachelor’s) and Google-parent the alphabet (Google) Six stocks to watch, along with Nvidia.
The video embedded in the article discussed a big week in the market and analyzed Google, Boeing, and DO stocks.
Palo Alto earnings
Palo Alto’s earnings beat views late Friday, while revenue just missed out. The cybersecurity giant was guided by earnings but was down slightly relative to revenue.
Friday night earnings reports are rare, so the timing spooked investors.
PANW stock jumped in after-hours trading. Shares rose 1% to 209.69 in the Friday session after falling as low as 201.07 for the day, testing an earlier buy point around 203. But Palo Alto stock was down 16.1% in August through Friday’s close.
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 does not necessarily translate into actual trading in the next regular stock market session.
stock market correction
The stock market corrected last week, with major losses for major indices and blue-chip stocks. Rising Treasury yields and mounting economic concerns in China were significant headwinds.
The Dow Jones Industrial Average fell 2.2% in last week’s trading on the stock market. The S&P 500 fell 2.1%. The Nasdaq Composite fell 2.6%. Small-cap Russell 2000 slid 3.4%.
The 10-year Treasury yield rose more than 8 basis points this week to 4.25%, even as Friday fell by about six basis points. For the week, the 10-year yield came within a fraction of the 15-year high of 4.331% set in October 2022. It hit its highest close since late 2007.
US crude oil futures fell 2.3 percent to $81.25 a barrel last week.
Exchange Traded Funds
Among the ETFs, the Innovator IBD 50 ETF (fifty) fell by 3.7% last week. iShares Expanded Technology and Software ETF (IGV) fell 1.5%. PANW stock is at IGV. VanEck Vectors Semiconductor Corporation (SMH) lost a small part. Nvidia stock is No. 1 SMH Holding.
SPDR S&P Metals & Mining ETFs (XME) rose 0.5% last week, with CMC stock gaining significantly. Global Infrastructure Development Fund X US (cradle) sank 2.6%. US Global Gates Foundation ETF (Planes) fell 4.7%. SPDR S&P Homebuilders ETF (XHB) fell 4.4%. Energy Defined Fund SPDR ETF (xle) fell 1.2%, snapping a five-week winning streak. SPDR Health Care Sector Selection Fund (XLV) declined 1.6%. SPDR Industry Selection Fund (XLI) fell by 2.4%, with BA stock taking a major share.
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It’s fair to say that expectations are high for Nvidia’s earnings on Wednesday night. Q1 results were excellent while Q2 guidance was amazing. Meanwhile, no fewer than five Wall Street analysts whacked Nvidia’s schedule last week, either refreshing the chip giant or raising a price target for NVDA stock.
So strong results and guidance may fail to lift Nvidia shares.
Nvidia stock actually rose 6% in the past week to 432.99, buoyed by a 7.6% gain on Monday. Stocks flirted with a strong entry, but then fizzled out to end the week below the 50-day line. Investors can use Tuesday’s high of 452.68 as an early entry. Nvidia stock is on track to have a new base next weekend.
Nvidia’s earnings will likely have a significant impact on the broader market, particularly in chip and AI gaming.
Jackson Hole speech to Fed Chairman Powell
Federal Reserve Chairman Jerome Powell will deliver a policy speech on Friday, August 25, at the annual Jackson Hole Symposium.
Fed Chair Powell will likely signal patience about further rate hikes, while the door remains open. With inflation still rising but declining, policymakers see less urgency in taking action. A big jump in Treasury yields means that market prices have tightened significantly in the past few weeks.
Another reason to wait and see? While US economic growth is strong, Europe and China are showing weakness and this could be a drag on US inflation and growth going forward.
Of course, Powell’s hawkish rhetoric could turn rate hike expectations upside down. Investors see little chance of a rate hike by the Fed in late September, with modest odds of a hike by the November 1st meeting.
Stocks near overbought areas
ANET stock rose 3.25% to 180.62 last week, regaining 178.36 buy points. strong Cisco (CSCOThe gains and orders boosted rival Arista Networks. Shares traded relatively narrowly after an earnings gap, with the RSI line still rising.
DO stock jumped 5% on Friday to 15.96, rebounding from the 21-day and 50-day lines and breaking the trend line in the emerging consolidation. Diamond Offshore is among the many oil exploration, machinery and service companies that are showing strength.
Google stock fell 1.9% on Friday to 127.46, closing above 127.10 Buy a cup with a handle after lowering that briefly. Investors can buy into the internet giant here, but going over the 132 area will clear most of the shelf off.
Visa stock found support at the 50-day line on Friday, also holding at 235.57 buy points from a flat base. Payments giant Dow Jones has been trading tightly in the buy territory for several weeks now, and now has a new flat bottom, or base-on-base pattern, with 245.37 buy points. A move above the Aug 10 high of 243.95 could be a good place to enter.
CMC stock rose 1.7% to 55.99 last week, operating at 56.49 points long from a cup-by-handle base, according to MarketSmith analysis. Trading metals have dealt with breaking the downtrend of the handle several times. Specialty steel play is trading around the 21-day line while the week 10 is about to catch up,
BA fell 3.8% to 226.76 last week, down to 221.68 Friday morning, up 8.6% from 223.91 flat-base buys. But Boeing stock found support at the 50 day / 10 week line and closed in a buy range. A move above the 21-day line, especially if it coincides with a market rally, could provide a place to buy stocks.
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The stock market is correcting. All major indices have fallen below their 50-day lines, especially the Nasdaq.
While Arista Networks, Boeing, Visa, Diamond Offshore and Google are in the buying territory, most of the leading stocks have suffered severe damage that could take days, weeks or months to repair.
The winners outperformed the losers on Friday, but the market breadth was bad, especially on the Nasdaq.
It was nice to see a rebound on Friday from the intraday lows, but the market was “expecting” a bounce. But we don’t know if that will last more than a day or two. The 50 day line will be the main resistance for the NASDAQ and many stocks.
Friday marks the first day of the stock market bull run. While the Nasdaq and S&P 500 fell on Friday, they closed in the upper half of their range, so today qualifies as a “pink” recovery day for those indices. The Dow Jones index closed slightly higher.
The market’s attempt to rise continues until the indices cross their lows on Friday.
A follow-up day could come later next week, though it could take weeks. Nvidia’s earnings or Paul Jackson Hole speech could be the trigger for a confirmed new market rally or another correctional drop.
The 10-year Treasury yield is a major driver of the stock market right now. Despite Friday’s sharp drop, the 10-year yield has been up for five straight weeks, up 43 basis points.
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What are you doing now
Investors should not get excited about Friday’s rebound. One day does not make a trend. Investors should significantly reduce exposure over the past two weeks. If you are still feeling too exposed, you can use the market bounce as an opportunity to sell further.
For those inclined, a short market bounce can create shorting opportunities.
The market could see a short correction, with Nvidia and Fed Chair Powell reviving bullish sentiment. Or the sale may intensify.
Don’t try to guess what the market will do. Pay attention to what the market is doing and be prepared. Keep your watchlists updated, focusing on stocks that show relative strength. These names can change dramatically during debugging.
Read the big picture every day to stay in sync with market trend, leading stocks and sectors.
Please follow Ed Carson on Twitter at @employee For stock market updates and more.
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