Dow Jones futures fell modestly overnight, along with S&P 500 futures and Nasdaq futures. Micron Technology (MU) tumbled Wednesday night on earnings, with big implications for AI and the broader chip sector.
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Nasdaq Edges Higher, Small Caps Lag In Mixed Session; FedEx, AMZN, Arm Holdings In Focus
The stock market rally saw modest gains on the major indexes, though overall breadth was negative.
Megacaps Tesla (TSLA) and Amazon.com (AMZN) broke out while Arm Holdings (ARM) and Chipotle Mexican Grill (CMG) are also in buy range. Nvidia (NVDA) erased modest losses, closing up fractionally.
Nvidia stock and Amazon are on IBD Leaderboard. Amazon stock is on SwingTrader. Nvidia and Arm stock are on the IBD 50.
The video embedded in the article reviewed Wednesday’s market action and analyzed FedEx (FDX), Arm Holdings and Amazon stock.
Dow Jones Futures Today
Dow Jones futures fell 0.3% vs. fair value. S&P 500 futures retreated 0.4%. Nasdaq 100 futures declined 0.5%. While Micron is NYSE-listed, its guidance weighed on many Nasdaq-listed techs.
The 10-year Treasury yield rose slightly to 4.34%.
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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Micron Earnings
Micron earnings topped fiscal Q3 views with revenue growth accelerating again, to 82%. The memory-chip giant guided slightly higher at the midpoint for Q4 EPS and in line for revenue.
Micron stock fell 8% overnight. Shares edged up 0.9% to 142.36 in Tuesday’s regular session. MU stock recently found support at the rising 21-day exponential moving average.
Micron earnings and guidance are important for AI plays such as Nvidia, Broadcom, TSM, Arm Holdings as well as memory plays like Western Digital (WDC). Generally these stocks fell 1%-2% after hours.
However, memory-exposed chip-equipment makers Applied Materials (AMAT), Lam Research (LRCX) and KLA Corp. (KLAC) were slightly higher overnight as Micron raised capital-spending plans.
Also late Wednesday, drone maker AeroVironment (AVAV) tumbled while denim giant Levi Strauss (LEVI) plunged.
Stock Market Rally
The stock market rally had a relatively quiet session on Wednesday, finishing near session highs.
The Dow Jones Industrial Average rose a fraction in Wednesday’s stock market trading. The S&P 500 index climbed 0.2%. The Nasdaq composite gained 0.5%.
Nvidia stock closed up 0.25% after falling more than 2% intraday. Shares fell slightly overnight in the wake of Micron’s results.
Market breadth was weak.
The small-cap Russell 2000 slipped 0.2%, falling further from its 50-day moving average.
The Invesco S&P 500 Equal Weight ETF (RSP) retreated 0.4%, below its 50-day. The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) dipped 0.4%, but continues to trade just below record highs.
All of these indexes and ETFs are showing little change for the week so far, except for RSP’s 1% decline. The Nasdaq is back up to 6.9% vs. the 50-day line, modestly extended.
Discount retailers look solid. Industrial, financial names and infrastructure names are pulling back, though many of the charts look fine. Software has fought its way back while internet plays are stepping up.
U.S. crude oil prices edged up 0.1% to $80.90 barrel. The 10-year Treasury yield rose 8 basis points to 4.315%.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) fell 0.6%. The iShares Expanded Tech-Software Sector ETF (IGV) edged up 0.1%. The VanEck Vectors Semiconductor ETF (SMH) declined 0.3%. Nvidia and Micron stock are huge SMH holdings.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) climbed 0.6% and ARK Genomics ETF (ARKG) slumped 2%. Tesla stock is the largest holding across Ark Invest’s ETFs.
SPDR S&P Homebuilders ETF (XHB) inched down 0.2%. The Energy Select SPDR ETF (XLE) lost 1%. and the Health Care Select Sector SPDR Fund (XLV) retreated 0.35%.
The Industrial Select Sector SPDR Fund (XLI) dipped 0.3%. The Financial Select SPDR ETF (XLF) gave up 0.6%.
Time The Market With IBD’s ETF Market Strategy
Amazon Stock
Amazon stock popped 3.9% to 193.61, clearing a 191.70 flat-base buy point. Wednesday morning, AMZN stock reclaimed an early, handle-like entry of 188.35.
AMZN stock now has a $2.01 trillion market cap, closing above $2 trillion for the first time.
On Wednesday, Bank of America said Amazon still has “runway” to improve its retail operations’ efficiency, raising its price target to 220 from 210.
Also helping: Rivian (RIVN) shot up 23% as the EV startup announced a joint venture with Volkswagen. Amazon is Rivian’s largest shareholder.
Meanwhile, Amazon plans to launch a Temu-like discount section, linking buyers directly to Chinese suppliers, The Information reported Wednesday. Temu is the international site of PDD Holdings (PDD), parent of Chinese e-commerce giant Pinduoduo.
PDD stock fell 1.3% to 138.28 dropping below the 50-day line after undercutting a buy point Tuesday.
Tesla Stock
Tesla stock jumped 4.8% to 196.37, clearing a 191.08 handle buy point from a two-month consolidation to its best close since March 1. The base forged above the 50-day line, but shares are still below a declining 200-day line. However, TSLA stock has seen quiet buying with its Accumulation/Distribution Rating at a strong A-.
On Wednesday, Stifel initiated Tesla stock with a buy rating and a 250 price target.
Tesla will likely release second-quarter deliveries on July 2. Analysts, as usual, are scrambling to cut delivery estimates this week.
Tesla Vs. BYD: EV Giants Vie For Crown, But Which Is The Better Buy?
Arm Stock
Arm stock rose 2.6% to 164.72, back above a 164 buy point from a 48%-deep consolidation, according to MarketSurge. Shares roughly doubled to 177.31 over two months as of June 18, then pulled back. The U.K. wireless chip design giant is still well above its 50-day line.
Arm stock fell slightly overnight following Micron earnings.
Chipotle Stock
Chipotle stock edged up 0.3% to 65.86 on Wednesday, rebounding from a morning test of the 50-day line. Shares closed over buy points at 64.80 and 65.20
CMG stock’s 50-for-1 split took effect before Wednesday’s open.
What To Do Now
The stock market rally continues to trend higher, which is evident on weekly charts.
Some AI hardware plays are flashing buy signals, such as ARM, but investors want to be looking at software, social media and a range of nontech sectors as well.
You can be making new buys, but there’s nothing wrong with holding significant exposure.
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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