Dow Jones futures tilted lower overnight, along with S&P 500 futures and Nasdaq futures. The Federal Reserve will conclude its two-day meeting on Wednesday afternoon, with the Fed’s rate-cut outlook in focus.
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The stock market rally had modest gains Tuesday, battling back from initial losses, especially the Nasdaq.
Nvidia (NVDA) initially retreated following its big AI event, but reversed slightly higher. Many other artificial intelligence stocks pared losses or turned positive as well. However, Advanced Micro Devices (AMD) retreated solidly while Super Micro Computer (SMCI) tumbled on plans for a share offering.
Early Wednesday, Broadcom (AVGO) will hold an AI investor meeting as the Nvidia GTC conference continues. Micron Technology (MU) will release fiscal Q2 results Wednesday night, with AI implications as well. On Thursday, Microsoft (MSFT) will hold its own AI event.
Woodward (WWD), CyberArk Software (CYBR), CrowdStrike Holdings (CRWD), Arista Networks (ANET), Ares Management (ARES), Cadence Design Systems (CDNS), Synopsys (SNPS), JFrog (FROG), TransDigm (TDG), DraftKings (DKNG), Neurocrine Biosciences (NBIX), Archrock (AROC), Dexcom (DXCM), Royal Caribbean (RCL) and Microsoft stock are all worth watching.
Investors should be cautious until after the Fed meeting and Fed chief Jerome Powell’s news conference.
Nvidia and ARM stock are on IBD Leaderboard, with Dexcom on the Leaderboard watchlist. DraftKings stock is on SwingTrader. Microsoft, Cadence Design and Synopsys stock are on IBD Long-Term Leaders. Nvidia stock, Arm Holdings, CrowdStrike, DraftKings, Arista Networks, Ares, JFrog, Royal Caribbean, and Microsoft are on the IBD 50. Nvidia, CrowdStrike, Arista Networks and Super Micro stock are on the IBD Big Cap 20. Woodward was Tuesday’s IBD Stock Of The Day.
The video embedded in the article reviewed Woodward stock, Synopsys and Arista Networks.
Chipotle Mexican Grill (CMG) jumped overnight on plans for a 50-for-1 stock split.
Fed Meeting
The Fed will release its latest “dot-plot” of policymakers’ rate projections at 2 p.m. ET. In late 2023, the dot plot pointed to three Fed rate cuts in 2024. There is speculation that policymakers could cut that to two rate cuts.
Fed chief Powell will give his news conference at 2:30 p.m. ET.
Markets are slightly leaning toward a June Fed rate cut, but it’s not a done deal.
Dow Jones Futures Today
Dow Jones futures were slightly below fair value. S&P 500 futures declined 0.1% and Nasdaq 100 futures fell 0.2%.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
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Stock Market Rally
The stock market rally showed resilience Tuesday, with the Nasdaq reversing slightly higher.
The Dow Jones Industrial Average rose 0.8% in Tuesday’s stock market trading. The S&P 500 index climbed 0.6% to an all-time closing high. The Nasdaq composite gained 0.4%. The Dow Jones and Nasdaq held support at the 21-day moving average, while the latter also held the 16,000 level.
Market breadth was strong.
The small-cap Russell 2000 advanced 0.5%, but is still below its 21-day line. Super Micro and a few other highflying stocks with a relatively large weighting likely weighed on the index Tuesday.
The stock market rally has largely been pausing in March, with the Nasdaq and Russell 2000 showing even longer patterns. That’s letting some bases form. Even better, the 50-day moving average is closing the gap vs. the Nasdaq, giving the market a little more room to run if there’s another advance.
It was positive to see Nvidia and Microsoft, two huge AI leaders, show resilience. A lot of leading tech stocks are at key levels, and could look quite strong or weak with just a couple of days. Meanwhile, several other areas of the market are showing strength, notably commodities and energy.
The Fed rate-hike outlook and Powell’s commentary are sure to swing stocks and Treasury yields Wednesday afternoon. It’s essentially an earnings report for the entire market. The S&P 500 could be up — or down — 1% or 2% very quickly after the Fed moves, perhaps with big whipsaw moves. Don’t be surprised to see a second-day Fed reaction that goes the other way.
The 10-year Treasury yield fell 4 basis points to 4.3%, ending a six-session win streak but still close to 2024 highs.
U.S. crude oil prices rose 0.9% to $83.47 a barrel, the highest close since late October.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) climbed 0.7%. Microsoft is a huge holding, with CrowdStrike also in the ETF. The VanEck Vectors Semiconductor ETF (SMH) dipped 0.2%, with Nvidia stock the dominant component but AMD also a key member. Synopsys and Cadence Design stock are in both IGV and SMH.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) slipped 0.6% and ARK Genomics ETF (ARKG) rose 0.4%.
SPDR S&P Metals & Mining ETF (XME) advanced 0.4%. The SPDR S&P Homebuilders ETF (XHB) bounced 1.8%. The Energy Select SPDR ETF (XLE) climbed 1.1% and the Health Care Select Sector SPDR Fund (XLV) climbed 0.7%.
The Industrial Select Sector SPDR Fund (XLI) rallied 0.9%. The Financial Select SPDR ETF (XLF) was up 0.5%.
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Nvidia Stock
Nvidia fell to 850.10 Tuesday morning, but closed up 1.1% to 893.98. Since hitting historically extended levels earlier this month, Nvidia has moved sideways. It sill hasn’t touched its 21-day line since its Feb. 21 earnings report and remains extended from its 50-day line. But it’s possible NVDA stock is working on a three-weeks-tight pattern.
Late Monday, Nvidia unveiled its new, much-faster AI chip and made a slew of announcements at its GTC conference, which runs through Thursday. The AI chip had been expected, but still impressed.
AMD stock sank 4.8% to 181.42, fully round-tripping a recent breakout. The chipmaker did bounce off its 50-day line somewhat. AMD stock is off just over 5% so far this week after skidding 7.9% last week. AMD had caught up to Nvidia’s AI chips, but will now lag the new Blackwell entry.
Broadcom stock edged up a fraction but closed below its rising 50-day line for the first time since early November. Broadcom’s AI news Wednesday will be important for AVGO stock and many other AI plays, including partner Arista Networks.
Super Micro Stock
Super Micro stock gapped down nearly 9% to 910.97, closing below its 21-day moving average for the first time in months. The AI server maker announced that it plans to sell 2 million Super Micro shares. But SMCI stock did close well off an intraday low of 863.
Investors who have held Super Micro from its January breakout might have used Tuesday’s slide as a trigger to sell some of their holdings. Breaking the fast-rising 50-day line decisively could be a strong sell signal.
Stocks To Watch
Cadence Design stock and Synopsys continued to bounce from their 10-week lines, breaking short downtrends Tuesday in strong volumes. Those two names are actionable, along with arguably Dexcom stock, which is right at a flat-base buy point.
Most of the others are stocks setting up.
Woodward stock is near a flat-base buy point, along with Arista Networks and Neurocrine Biosciences, according to MarketSurge analysis. Royal Caribbean stock is working on a handle to a short cup base.
Archrock stock is closing in on an ascending base buy point.
CyberArk, CrowdStrike and Ares stock have been finding support around the 10-week line. TransDigm stock and JFrog are pausing bullishly at their 21-day lines.
DraftKings stock, bouncing off its 21-day and 10-week lines, is close to forging a new base.
Microsoft stock is right around a buy point from a short consolidation, heading into its “Future of Work” event on Thursday.
What To Do Now
This is an important time to be watching vs. taking much action. The market rally had been looking tired, and has been taking a breather. Perhaps the key indexes and leading stocks will soon be ready for another run, or perhaps they’re about to stage a more significant pullback.
The Federal Reserve meeting is the next big test. The Microsoft AI event on Thursday, while perhaps less important than the Nvidia GTC conference and Fed meeting, will also be important, especially for AI software plays and key suppliers.
With the market and many leading stocks near possible turning points, investors need to be prepared. Get your watchlists up to date and have your exit plans ready. Stay engaged and remain flexible.
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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