Dow Jones Futures: Stock Market Awaits CPI Inflation; Tesla Rises As Nvidia Falls On Rival AI Chips
Dow Jones futures rose slightly after hours, along with S&P 500 futures and Nasdaq futures. The CPI inflation report looms Wednesday, along with key reports from Delta Air Lines (DAL) and Nvidia chipmaker Taiwan Semiconductor (TSM).
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The stock market rally generally edged higher Tuesday, with investors wary of big moves ahead of the CPI inflation report. Breadth was positive, but a number of leaders came under pressure.
Nvidia (NVDA) undercut recent lows Tuesday but also found key support. That came as Google parent Alphabet (GOOGL) announced a new in-house AI processor using Arm Holdings (ARM) designs, easing its dependence on Nvidia chips. Intel (INTC) also unveiled an AI chip to take on Nvidia. Google stock rose further into a buy zone. ARM stock initially bounced but reversed lower. Intel edged up after setting fresh 2024 lows.
Tesla (TSLA) extended gains on Elon Musk touting robotaxis. Tesla stock is coming up to key resistance.
Nvidia and ARM stock are on IBD Leaderboard. Arm Holdings and Nvidia stock are on the IBD 50. Nvidia stock is on the IBD Big Cap 20.
The video embedded in this article reviewed Tuesday’s market action and analyzed Nvidia stock, Royal Caribbean (RCL) and Nutanix (NTNX)
CPI Inflation Report
The Labor Department will release the consumer price index at 8:30 a.m. ET. Consumer prices are expected to rise 0.3%, along with CPI excluding food and energy.
Overall CPI inflation vs. a year earlier should rise 3.5%, picking up 3.2% from in February. Core CPI inflation is seen dipping to 3.7% from 3.8%.
Fed minutes for the March meeting will be released at 2 p.m. ET.
The March producer price index will be out Thursday morning.
These key economic reports come as the odds for a Fed rate cut in June have turned into a tossup.
Dow Jones Futures Today
Dow Jones futures rose a fraction vs. fair value. S&P 500 futures and Nasdaq 100 futures climbed 0.1%.
The CPI inflation report will be sure to swing Dow Jones futures and Treasury yields.
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 leading stocks and the market on IBD Live
Stock Market Rally
The stock market rally had a quiet session Tuesday, but the key indexes improved from slightly lower to flat or slightly higher.
The Dow Jones Industrial Average closed fractionally lower in Tuesday’s stock market trading. Meanwhile, the S&P 500 index climbed 0.1%. The Nasdaq composite rose 0.3%. The small-cap Russell 2000 also advanced 0.3%.
While the major indexes had a relatively quiet day, and winners outpaced losers, a number of leaders were hit, and not just Nvidia.
Royal Caribbean stock tumbled 3.7%, back below a buy point. Deckers Outdoor (DECK) sank 2.4%, closing below the 50-day line for the first time since late October. Cava Group (CAVA) caved 7.2% to its first 10-week line test of 2024.
But there were also a number of stocks that held up well or advanced.
U.S. crude oil prices fell 1.4% to $85.23 a barrel.
The 10-year Treasury yield fell six basis points to 4.365%.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) climbed 0.3%. The VanEck Vectors Semiconductor ETF (SMH) climbed 0.5%. Nvidia stock is the biggest SMH holding by far, with Taiwan Semiconductor also a big member. Intel also is in SMH.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) and ARK Genomics ETF (ARKG) both gained 1.1%. Tesla stock is a huge holding across Ark Invest’s ETFs.
SPDR S&P Metals & Mining ETF (XME) rose 1.1% and the Global X U.S. Infrastructure Development ETF (PAVE) fell 0.5%. U.S. Global Jets ETF (JETS) ascended 0.5%. SPDR S&P Homebuilders ETF (XHB) edged down 0.1%. The Energy Select SPDR ETF (XLE) closed fractionally higher and the Health Care Select Sector SPDR Fund (XLV) advanced 0.4%
The Industrial Select Sector SPDR Fund (XLI) dipped 0.2%. And the Financial Select SPDR ETF (XLF) retreated 0.6%.
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Nvidia Stock
Nvidia stock fell as low as 830.22 on Wednesday, hitting its lowest levels since March 1. But the AI chip leader found support around the 10-week line, paring losses to close down 2% at 853.54. A strong move off the 10-week line, the first such test since an early January breakout, would offer a buying opportunity. NVDA stock is due to have a flat base with a 974 buy point after this week.
Nvidia faces growing competition in the AI space. Even if its chips remain a step ahead, rival products will temper Nvidia sales and prices at the margin. Customers will want to diversify AI chip suppliers to avoid overreliance on Nvidia.
Google-Arm AI Processor, Intel Chip
Google held a big cloud-computing event on Tuesday. A highlight was a new AI processor using Arm designs.
Additionally, Google stock climbed 1.1% to 156.60, still in range of a 152.15 handle buy point.
ARM stock rose to 135.41 soon after the open, but reversed to close down 1.9% to 126.81. Shares have been finding support at the 21-day line, trading just above the 50-day but below the 10-week. The wireless chip design giant has a 164 consolidation buy point, according to MarketSurge. But a downward-sloping trendline or the 145 level might offer safer, earlier entries.
Meanwhile, Intel unveiled its Gaudi 3 AI chip to compete with Nvidia. Intel stock rose 0.9% after hitting 2024 lows intraday, continuing to trade below all its key moving averages.
Tesla Stock
Tesla stock rose 2.25% to 176.88 on Tuesday, after Monday’s 4.9% jump. Shares are rebounding from an 11-month low following Elon Musk’s promise of an Aug. 8 robotaxi unveiling. But it’s unclear what that will entail, given that Tesla’s Full-Self Driving isn’t ready to operate without a driver. TSLA stock is nearing the 10-week moving average, which has served as resistance in 2024.
Taiwan Semiconductor
Taiwan Semiconductor will release March and first-quarter sales figures early Wednesday. The foundry giant, which will report earnings next week, makes chips for Nvidia, Apple (AAPL), Broadcom (AVGO), Google and many others. It’s also a major chip-equipment buyer. So Taiwan Semi’s reports will have broad implications for the sector.
TSM stock rose climbed 1.8% to 145.40, extending Monday’s 1% advance but closing off highs. Taiwan Semi stock is working on a possible new base.
Delta Earnings
Before the open, Delta earnings are expected to rise 45% vs. a year earlier, while first-quarter revenue climbs 6%. That kicks off earnings for U.S. carriers.
Delta stock edged up 0.7% to 47.32 on Tuesday. DAL stock has a 49.20 cup-with-handle buy point.
What To Do Now
Investors need patience in a sideways market, waiting to see which way the major indexes and leading stocks decisively break. On Tuesday, the sideways market offered a “greatest hits” session, with some leading stocks tumbling, some reversing lower, some finding support and even a few making bullish moves.
Wednesday’s CPI inflation report may provide some clear direction for the market rally, but may not. Earnings season is looming, with the potential for big market, sector and stock moves up or down, or perhaps both.
Right now, investors should be working on their watchlists. Leading stocks are testing key support levels and forging bases across a range of sectors.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.
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