Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures, with Apple (AAPL) and Nvidia (NVDA) in focus.
Nvidia’s next-generation Blackwell AI chips reportedly will be delayed for months due to a design flaw, potentially affecting Microsoft (MSFT), Google-parent Alphabet (GOOGL), Meta Platforms (META) and other big buyers.
Warren Buffett’s Berkshire Hathaway (BRKB) reported solid second-quarter earnings on Saturday, while also disclosing it nearly halved its Apple stock stake.
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Palantir Heads Into Earnings As Tech Stocks Remain Under Pressure
Indexes, Key Stocks Sell Off
The stock market rally suffered sharp, broad losses last week as recession fears erupted on weak economic data, including Friday’s July jobs report, as well as Amazon.com (AMZN) warning of consumer headwinds.
Fed chief Jerome Powell signaled Wednesday that rate cuts were coming. By Friday, markets expected 50 basis points in September and at least 100 basis points in rate cuts by year-end.
The Russell 2000 and Dow Jones tumbled to key support along with many non-tech leaders. The S&P 500 and Nasdaq broke well below key levels.
Amazon.com (AMZN) plunged on earnings, while Nvidia and other chip stocks suffered big or massive losses. Tesla (TSLA) tumbled to key support, wiping out much of its recent gains.
The silver lining? The market fear gauge, a contrarian indicator, spiked to the highest level in more than a year.
Apple stock edged higher last week and held above a key level. Meta Platforms also climbed, but came well off highs. Ollie’s Bargain Outlet (OLLI), Neurocrine Biosciences (NBIX) also showed resilience, while MercadoLibre (MELI) teased buy points on Friday.
But investors should be extremely wary about new buys while reducing exposure as they cut losers.
Dow Jones Futures Today
Dow Jones futures open at 6 p.m. ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures. Market reaction to Buffett’s Apple sales and Nvidia AI chip delays will be key.
Bitcoin fell solidly below $60,000 on Sunday, continuing a retreat amid a risk-off shift in financial markets.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Key Earnings Ahead
Palantir Technologies (PLTR), Super Micro (SMCI), Caterpillar (CAT), Embraer (ERJ) are notable earnings reports this week, along with drug giants Eli Lilly (LLY) and Novo Nordisk (NVO).
But all of those stocks look damaged. Palantir and Super Micro stock are important because they’re artificial intelligence plays. Caterpillar and Embraer will offer more insight into the industrial and aerospace markets, respectively. Eli Lilly and Novo are the leaders in weight-loss drugs.
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Stock Market Rally
The stock market rally had a terrible week, especially given Wednesday’s bullish gains on AI optimism and the Fed meeting. Thursday’s sell-off was a big market expectations breaker, with the heavy losses continuing Friday.
The Dow Jones Industrial Average slumped 2.1% in last week’s stock market trading. The small-cap Russell 2000, which hit a 30-month high Wednesday afternoon, finished down 6.7%. Both tested their 50-day lines Friday but closed above that key level.
The S&P 500 index lost 2.1% and the Nasdaq composite 3.35%, both skidding below their 50-day lines and undercutting the prior week’s lows. The Nasdaq entered traditional intermediate correction territory.
The Russell 2000 and Dow, both with more “real economy” components than the tech-heavy Nasdaq, were big winners in July as the market priced in Fed rate cuts. But with the focus shifting to recession fears, those indexes are tumbling back. So are banks, industrials and aerospace stocks.
Defensive growth plays in the discount retailer, insurance and medical space held up, along with defensive utilities and consumer staples.
While the indexes closed off Friday lows, they were still down sharply. Weekly charts show no real bounce.
The 10-year Treasury yield plunged 40 basis points for the week to 3.795%, nearly undercutting the late December low. The two-year yield crashed 52 basis points to 3.87%. It was the biggest weekly decline for both since March 2023. The yield spread is the least inverted it’s been in two years.
U.S. crude oil futures tumbled 4.7% to $73.52 a barrel last week, hitting a two-month low on Friday.
Market Fear Spikes
The CBOE Volatility Index, or VIX, shot up Friday to its highest levels since March 2023. The market fear gauge topped the peaks in October 2023 and April 2024.
Excessive fear can signal at least a short-term market bottom, but it doesn’t have to happen right away and it doesn’t have to last. Also, market fear could go a lot higher if recession worries continue to swell.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) dived 7.8% last week. The iShares Expanded Tech-Software Sector ETF (IGV) skidded 5.4%, with Palantir stock a member.
The VanEck Vectors Semiconductor ETF (SMH) plunged 9.1%, with Nvidia stock the No. 1 holding.
SPDR S&P Metals & Mining ETF (XME) skidded 7.7% last week. The Global X U.S. Infrastructure Development ETF (PAVE) lost 4.9%. SPDR S&P Homebuilders ETF (XHB) stepped down 4.7%. The Energy Select SPDR ETF (XLE) gave up 4.1% and the Health Care Select Sector SPDR Fund (XLV) edged up 0.6%, with Eli Lilly stock a big holding.
The Industrial Select Sector SPDR Fund (XLI) sank 2.8%, with Caterpillar stock a major member.
The Financial Select SPDR ETF (XLF) experienced a 3% decline, while the SPDR S&P Regional Banking ETF (KRE) saw a significant 9.2% sell-off.
In the realm of more speculative stocks, the ARK Innovation ETF (ARKK) plummeted by 9.9% last week, reaching its lowest levels since November. Similarly, the ARK Genomics ETF (ARKG) plunged by 9.7%. It is notable that Tesla stock is a major holding across Ark Invest’s ETFs.
Nvidia recently informed Microsoft and another key cloud customer that its Blackwell artificial intelligence chips will face a delay of at least three months due to design flaws. This setback could impact the AI efforts of major companies like Microsoft, Google, and Meta. The delay in Nvidia’s next-gen chip could also potentially boost Advanced Micro Devices (AMD), which was at risk of falling behind in chip performance.
Warren Buffett’s Berkshire Hathaway reported a 15.5% increase in after-tax operating profit, reaching $11.6 billion. The rise was primarily driven by strong performance in insurance underwriting and interest income from the company’s substantial cash holdings. Buffett also made headlines for selling nearly half of his massive stake in Apple stock, sparking speculation about potential further reductions in holdings.
In terms of stock performance, TSLA stock declined by 5.5% to 207.67 last week, positioning itself between the 50-day and 200-day lines. The stock has dropped by 23% since reaching a 10-month high on July 11.
Overall, the stock market witnessed significant damage last week, with key indexes showing signs of distress. Investors are advised to reduce exposure, particularly after the recent market turmoil. It is essential to remain cautious and vigilant, as the market requires time for repair and stabilization. Consider revising watchlists and staying updated with market trends and leading stocks for informed decision-making. content in your own words.