Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures. Nvidia (NVDA) earnings are in focus after Federal Reserve Chairman Jerome Powell said at Jackson Hole that “the time has come” for Fed rate cuts.
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Nvidia Earnings Are A Key Test For The Stock Market Rally. Here’s What To Expect.
The stock market rally had another solid week, with most or all of those reflecting Friday’s Jackson Hole-related gains. The S&P 500 is near record highs while the other indexes are making progress. Many leading stocks are breaking out or setting up.
Investors should be looking to add exposure, but Nvidia earnings are due Wednesday night. Strong Nvidia results and guidance will be key for AI plays such as Broadcom (AVGO), Nvidia chipmaker Taiwan Semiconductor Manufacturing (TSM) and Arista Networks (ANET). Like Nvidia, these three AI stocks are near buy points.
Meanwhile, Birkenstock (BIRK), Abercrombie & Fitch (ANF), PDD Holdings (PDD), Ollie’s Bargain Outlet (OLLI), Salesforce (CRM) and the storage plays NetApp (NTAP), Pure Storage (PSTG) and Nutanix (NTNX) are all reporting earnings this coming week.
Pinduoduo and Temu parent PDD reports before Monday’s open.
Nvidia stock is on Leaderboard. Broadcom stock is on SwingTrader. Nvidia and PDD stock are on the IBD 50. Arista stock is on the IBD Big Cap 20. Broadcom was Thursday’s IBD Stock Of The Day.
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.
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 paused for a few days this past week, with a strong finish Friday on Powell’s dovish Jackson Hole speech.
As expected, Fed chief Jerome Powell confirmed that rate cuts are coming: “The time has come for policy to adjust.” Powell made it clear he doesn’t want further job market weakness and didn’t push back on market expectations for 100 basis points in cuts this year.
The Dow Jones Industrial Average climbed 1.3% in last week’s stock market trading. The S&P 500 index popped 1.45%. The Nasdaq composite rose 1.4%. The small-cap Russell 2000 jumped 3.6%.
Friday was yet another subsequent follow-through day on all the major indexes, though the S&P 500 and Nasdaq had inside days.
The Nasdaq is in a mini-pause, holding just below 18,000 but regaining its 50-day line again Friday.
The Invesco S&P 500 Equal Weight ETF (RSP) hit a record Friday, climbing 2.1% for the week.
The stock market this past week digested recent gains and made further progress, even with Thursday’s tech-led sell-off. Leading stocks broke out or crafted less V-shaped bases and forged handles.
The year’s two main stock market drivers have been the ongoing AI boom and Fed rate-cut hopes. Fed chief Powell’s Jackson Hole speech confirming rate cuts suggests a favorable backdrop on that front. Will Nvidia earnings signal the same on AI?
U.S. crude oil futures fell 0.9% to $74.83 a barrel, but came way off midweek lows.
The 10-year Treasury yield sank nine basis points to 3.81%, hitting a 52-week closing low on Wednesday. The two-year Treasury yield, more closely tied to Fed rate policy, tumbled 15 basis points to 3.91%.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) popped 2.9% last week. The iShares Expanded Tech-Software Sector ETF (IGV) gained 1%. The VanEck Vectors Semiconductor ETF (SMH) climbed 0.7%. Nvidia stock is the dominant SMH holding, with Taiwan Semiconductor and Broadcom also key members.
SPDR S&P Metals & Mining ETF (XME) rallied 2.1% last week. The SPDR S&P Homebuilders ETF (XHB) soared 8.2%. The Energy Select SPDR ETF (XLE) dipped 0.15 and the Health Care Select Sector SPDR Fund (XLV) climbed 1.7%.
The Industrial Select Sector SPDR Fund (XLI) advanced 1.7%. The Financial Select SPDR ETF (XLF) was up 1.5%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) jumped 4.85% last week and ARK Genomics ETF (ARKG) rose 3.6%.
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Nvidia Earnings ‘Wildcard’
The AI chip giant reports Wednesday night. Nvidia earnings are expected to soar 141% vs. a year earlier with sales up 113% to $28.73 billion. Those would be the fifth straight quarter of triple-digit gains for both.
Nvidia earnings are “the most important” event for the tech sector in years, Wedbush analyst Dan Ives wrote in an investor note.
Rosenblatt Securities analyst Hans Mosesmann expects another beat-and-raise Nvidia earnings report. But he says the “wildcard” is whether it has enough current-generation Hopper AI processors to meet demand.
Analysts will want confirmation and details about delays to Nvidia’s next-generation Blackwell processors. Also, are customers waiting on the next-gen AI chip, or are they buying up even more of the current Hopper line?
Nvidia Stock
Nvidia stock rose 3.8% to 129.37 last week, thanks to Friday’s 4.55% gain. Shares are trading in a short-term range after a big run from the Aug. 5 low of 90.69. NVDA stock has a 140.76 cup-base buy point. Investors could use this past week’s highs as an pseudo-handle entry, ideally after Nvidia earnings.
Taiwan Semiconductor Stock
Taiwan Semiconductor stock fell 1.9% to 171.26 for the week, though shares rose 2.9% Friday to just reclaim the 50-day line.
The Taiwan Semiconductor (TSM) stock currently has a cup-base buy point of 193.47, but it is expected to form a handle with a 175.45 entry after Monday. On a weekly chart, Taiwan Semi stock already shows a cup-with-handle base with a buy point of 175.45.
Taiwan Semiconductor is known for making chips for companies like Nvidia and Broadcom.
Moving on to Broadcom stock, it saw a slight increase of 0.4% to reach 166.36, staying above the 50-day moving average. To be considered actionable, AVGO stock would need to surpass the high of 168.37 from August 20. MarketSurge suggests a buy point of 185.16 for Broadcom stock, which investors could also view as a lopsided double-bottom base with an entry point of 177.10. Broadcom will be releasing its earnings on September 5.
Arista stock, on the other hand, saw a 0.3% increase to reach 355.06 last week. It now has a handle buy point of 358.68. As Nvidia and Broadcom are competitors in the AI networking space, and Arista uses many Broadcom products, the earnings reports of these chip giants will be crucial for ANET stock.
The ongoing battle between Nvidia and Arista Networks in the AI networking field is a key development to watch.
Investors are advised to continue monitoring the market rally and capitalize on opportunities as quality stocks present buy signals. With Federal Reserve Chairman Powell endorsing rate cuts at Jackson Hole, adding further exposure to the market may be prudent if the positive momentum persists.
Several AI stocks, including Nvidia, Broadcom, and Taiwan Semiconductor, are showing promising setups. However, caution is advised before Nvidia’s earnings report. It is recommended to keep an eye on these stocks, as well as other potential leaders in the market.
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