Dow Jones futures were little changed after hours, as were S&P 500 and Nasdaq futures. Chipmaker Nvidia Taiwan Semiconductor (TSM) reports early Thursday, with huge implications for the chip sector.
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The stock market rally started slightly higher, but once again quickly headed lower, with the Nasdaq leading the decline.
Chip stocks were big losers on Wednesday. Blame disappointing results and directions from the semiconductor equipment giant ASML (ASML), as well as caution ahead of the Taiwan Semi results.
AI chip manufacturers Nvidia (NVDA), Broadcom (AVGO) And Arm holds (ARM) suffered significant, even significant, losses. As for chip gear makers, ASML stock fell, while Applied materials (HUGE), Search Lam (LRCX), KLA Corp. (CLUTCH) exceeded key levels.
AI server creator Super microcomputer (SMCI) reversed lower after triggering buy signals near the open.
In the meantime, You’re here (TSLA) maintained at 2024 low
Investors must recognize that the character of the stock market has changed.
Nvidia shares are in progress MII classification. KLAC stock is on the Long-term leaders in IBD list. Nvidia, ASML and Broadcom shares are on the stock market MII 50. Nvidia, ASML, Broadcom and SMCI shares are on the stock market IBD large cap 20.
Dow Jones Futures Today
Dow Jones futures were flat relative to fair value. S&P 500 and Nasdaq 100 futures rose slightly.
Remember that overnight action Dow Jones Futures and elsewhere does not necessarily translate into real exchanges during the next regular class sotck exchange session.
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Stock market rally
The stock market rally continues to come under increasing pressure, with Wednesday’s meager initial gains quickly turning into losses again.
The Dow Jones Industrial Average fell 0.1% on Wednesday stock market trading, at its worst levels since the end of January. The S&P 500 index fell 0.6% and the Nasdaq composite index lost 1.15%, both to their worst levels in two months. The small-cap Russell 2000 index fell 1% to its lowest level in two months.
All are well below their 50-day lines.
The most recent breakouts or buy signals have struggled or outright failed over the past few days.
Various indicators indicate that the market is oversold, but this has been true all week. THE CBOE Volatility Index is trading around 2024 highs, although it is not showing excessive pessimism.
But while the market may be “due” for some sort of rebound, it doesn’t have to happen immediately and doesn’t have to last.
US crude oil prices fell 3.1% to $82.69 per barrel.
The 10-year Treasury yield fell 7 basis points to 4.58%. But it’s still up 38 basis points in April alone.
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Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (VAT) fell by 0.6%. The VanEck Vectors Semiconductor ETF (SMH) fell 3.1%. Nvidia and TSM shares make up SMH’s largest holdings, with Broadcom, ASML, Applied Materials, Lam Research and KLA also being major constituents.
Reflecting more speculative stocks, ARK Innovation ETF (ARKK) fell 1.4% and ARK Genomics ETF (ARKG) lost 2.3%. Tesla stock is a major holding among Ark Invest’s ETFs.
SPDR S&P Metals & Mining ETF (XME) reversed for a decline of 0.15%. US Global Jets ETF (JETS) jumped 3.9% while United Airlines (UAL) have soared on profits. SPDR S&P Homebuilders ETF (XHB) lost 0.8%. The Energy Select SPDR ETF (XLE) fell 0.3% and the Healthcare Select Sector SPDR Fund (XLIV) fell slightly by 0.2%.
The Select Industrial Sector SPDR Fund (XLII) fell 0.5% and the Financial Select SPDR ETF (45) climbed 0.25%.
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Taiwan Semiconductor Profits
Taiwan Semiconductor’s profits are expected to be flat, although the foundry giant reported better-than-expected first-quarter sales last week, fueled by high-end AI chips.
TSMC makes chips for Nvidia, Apple (AAPL), Broadcom and many others.
Taiwan Semiconductor shares edged down 0.55% to 139.03, hitting resistance at the 21-day line after rebounding from its 10-week line on Tuesday. TSM stock is on track for a new base with a buy point of 158.40 after Friday’s close. But investors could use the April 10 high of 148.43 as an early entry.
Fight over AI chip stocks
Taiwan Semi’s results and directions will be key to AI chip leaders Nvidia, Broadcom and Arm.
Nvidia shares fell 3.9% to 840.35, falling below the 10-week line for the first time since early November. Stocks held the 50-day line. NVDA stock has a 974 buy point on a flat base.
Broadcom fell 3.3% to 1,284.61, falling below the 50-day line. AVGO stock has a new consolidation, with 1,403.98 as its value point of purchase.
ARM stock plunged 12% to 107.50, undercutting its consolidation lows and now well below the 50-day line.
Super Micro isn’t a chipmaker, but its AI servers are a home for AI processors from Nvidia and others. SMCI stock was in a buy zone following Tuesday’s 10.6% spike. On Wednesday, shares hit 1,020.33 intraday, breaking above a trend line, but reversed to close 1.7% lower at 960.14%, holding the 21- and 50-day lines.
Taiwan Semiconductor’s capital spending targets will be important for chip equipment giants.
ASML fell 7.1% to 907.61, trading below its 50-day line and flat base lows. The Dutch chip equipment maker missed sales and forecasts early Wednesday.
AMAT, Lam Research and KLA shares all fell about 5%, falling below their 50-day lines. Lam Research and KLA will report next week.
Tesla Stock
Tesla stock fell 1.1% to 155.45, extending its weekly loss to 9.1%. Shares have fallen to 2024 lows and are just above the late April 2023 low.
Tesla earnings are coming up on April 23, with a conference call of major importance. Analysts and investors want clarity on Tesla’s strategy.
On Wednesday, Tesla asked shareholders to approve the company’s reincorporation in Texas and approve a $55.8 billion wage package that was struck down by a Delaware court.
Market Rally Analysis
The stock market is not doing well. The major indexes have fallen significantly below their 50-day moving averages.
It’s possible that the market could rebound, if only briefly, triggering a few buy signals. But the major indexes and most major stocks would still need significant work.
Wait for real shows of strength, not just one good day and certainly not one strong opening.
Investors should have reduced their exposure amid market weakness. Even ignoring the major indexes, investors should reduce their exposure simply by cutting out losers and taking profits.
Tesla, Google, Metaplatforms (META) And Microsoft (MSFT) report earnings along with hundreds of others, creating the potential for major moves in stocks, sectors and markets.
Of course, upcoming profits could be a positive catalyst, so you need to be ready.
Stay engaged with the market and work on those watchlists. Focus on stocks that maintain key levels and show relative strength. Remember, just because a stock seems resilient today doesn’t mean it will be resilient in the future.
Read The big picture every day to stay in tune with the direction of the market and the main values ​​and sectors.
Please follow Ed Carson on the discussions at @edcarson1971 and X/Twitter on @IBD_ECarson for stock market updates and more.
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