Dow Jones futures fell overnight, along with S&P 500 futures and Nasdaq futures. Dow giant Salesforce.com (CRM) headlined earnings after the close.
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The stock market rally retreated as Treasury yields jumped for a second straight session. Nvidia (NVDA) edged higher Wednesday, extending its big run, but that only helped limit the Nasdaq and S&P 500 losses. Meanwhile, the Dow Jones, Russell 2000 and more suffered more technical damage amid anemic breadth.
Nvidia stock is closing in Apple (AAPL) for market valuation, with the $3 trillion mark and even Microsoft (MSFT) not far off.
Meanwhile, Salesforce, Pure Storage (PSTG), Nutanix (NTNX), Okta (OKTA), UiPath (PATH), C3.ai (AI) and American Eagle Outfitters (AEO) reported after the close. Salesforce, Nutanix and American Eagle sold off overnight while UiPath crashed. Okta rose modestly. AI stock and Pure Storage jumped.
Nvidia stock is on IBD Leaderboard and the IBD 50. Microsoft stock is on IBD Long-Term Leaders.
Dow Jones Futures Today
Dow Jones futures fell 0.7% vs. fair value, with CRM stock a notable drag. S&P 500 futures sank 0.4% and Nasdaq 100 futures lost 0.55%.
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 had a negative session, with Nvidia stock no longer overriding underlying weakness.
The Dow Jones Industrial Average fell 1.1% in Wednesday’s stock market trading, falling further below the 50-day line. The S&P 500 index sank 0.7%. The Nasdaq composite lost 0.6%.
Market breadth was terrible. Losers outpaced winners by nearly 3-to-1 on the Nasdaq and more than 5-to-1 on the NYSE.
The small-cap Russell 2000 tumbled 1.5%, below 50-day line The S&P MidCap 400 slumped 1.3%, now clearly below the 50-day.
The Invesco S&P 500 Equal Weight ETF (RSP), without Nvidia, Microsoft and other megacap techs dominating, fell 1.2% after closing just below the 50-day line.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) declined 1.1%, almost right on its 50-day.
Leading stocks are generally still doing well, though many did lose ground on Wednesday.
Select consumer names fared well. Abercrombie & Fitch (ANF) and Dick’s Sporting Goods (DKS) soared on earnings, while Cava Group (CAVA) erased big early losses to close strongly higher.
Meanwhile, American Airlines (AAL) tumbled on a second-quarter warning, hitting some rivals as well. UnitedHealth (UNH) comments about Medicaid reimbursements hit health insurers and weighed on the Dow industrials.
U.S. crude oil prices fell 0.75% to $79.23 a barrel.
The 10-year Treasury yield jumped 8 basis points to 4.62%, up 15 basis points so far this week.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) dipped 0.3%. Microsoft and Salesforce stock are big IGV holding, with Nutanix also in the ETF. The VanEck Vectors Semiconductor ETF (SMH) declined 1.7%, even with Nvidia stock as the No. 1 holding.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) fell 1.25% and ARK Genomics ETF (ARKG) slumped 3.8%. UiPath stock is a major Ark Invest holding.
SPDR S&P Metals & Mining ETF (XME) sank 1.6% and the Global X U.S. Infrastructure Development ETF (PAVE) retreated 1.4%. U.S. Global Jets ETF (JETS) gave up 2.3%, with American Airlines a major component. SPDR S&P Homebuilders ETF (XHB) stepped down 1.5%. The Energy Select SPDR ETF (XLE) gave up 1.8% and the Health Care Select Sector SPDR Fund (XLV) slipped 0.8%.
The Industrial Select Sector SPDR Fund (XLI) shed 1.4%. The Financial Select SPDR ETF (XLF) declined 0.8%.
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Salesforce Stock Dives
Salesforce earnings narrowly beat, but revenue fell short while the software giant guided lower. CRM stock plunged more than 15% in overnight trade. Shares edged up 0.7% to 271.62 in Wednesday’s regular session, some distance below a sliding 50-day line.
While Salesforce is NYSE-listed, it’s hitting software stocks, which are mostly Nasdaq listed. Many were already reeling from weak Workday (WDAY) results last week.
The IGV ETF, with Salesforce a big weight, fell solidly overnight.
Other Key Earnings
Nutanix earnings topped fiscal Q3 views, but the storage software firm guided low on Q4 revenue. NTNX stock fell sharply in extended action. Shares rose 2.1% to 73.29 on Wednesday, right around record highs. Nutantix stock is slightly extended from shallow double-bottom base.
Pure Storage earnings beat views, with the storage firming guiding up slightly on Q2 revenue but slightly lower for the full year. PSTG stock jumped overnight. Shares edged up 0.8% to 63 on Wednesday, hitting record highs. Pure Storage stock is extended from a double-bottom base.
UiPath earnings beating views, but guided low while announcing its CEO was exiting, sending PATH stock plunging 29% late. Shares fell 2.4% to 18.30 on Wednesday, a 2024 low.
Okta earnings topped views and the cybersecurity firm guided higher. Shares rose modestly in choppy extended trade. Okta stock inched up 0.2% to 96.36 on Wednesday, below the 50-day line.
C3.ai reported a smaller-than-expected fiscal Q4 loss and guided up on fiscal 2025 revenue. AI stock soared after hours. The AI software firm dipped 0.75% to 23.92 on Wednesday, below all its moving averages.
American Eagle earnings topped, but sales growth fell short. AEO stock tumbled overnight. Shares edged up 0.6% to 24.05, just edging above the 50-day line in a 17%-deep consolidation.
Nvidia Closes In On Apple Stock
Nvidia stock edged up 0.8% to 1,148.25, hitting a fresh all-time high and extending its four-session, post-earnings run to 20.9%. NVDA stock now has a $2.871 trillion market cap.
Meanwhile, Apple stock edged up 0.2% to 190.29, lifting its market cap to $2.918 trillion. AAPL stock is forging an improper handle within a cup base.
Nvidia isn’t far from the $3 trillion mark, with Microsoft not much past that at $3.189 trillion. MSFT stock dipped 0.3% to 429.17, continuing to hover just below a 430.82 flat-base buy point.
What To Do Now
The stock market rally is right at all-time highs, at least the S&P 500 and Nasdaq. A lot of that is Nvidia standing apart. However, a large number of leading stocks are still doing well. Investors who are in these names are in good position.
But the weak breadth is a concern. A divided market rally is more unstable, with the risk of sector rotation or simply leading groups joining the laggards.
Investors may want to be cautious about adding exposure. Standing pat is fine, taking care to cut holdings that are showing weakness. If you do choose to add exposure, be nimble, ready to exit positions that don’t work out.
The underlying market weakness could be short-lived, giving stocks opportunities to forge new entries or quickly build relative strength. So keep working on your watchlists.
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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