Dow Jones futures rose modestly Sunday night, along with S&P 500 futures and Nasdaq futures. AI tech titans Apple (AAPL), Microsoft (MSFT), Meta Platforms (META) and Amazon.com (AMZN) headline a massive week of earnings. The Federal Reserve this week is expected to signal that rate cuts are coming soon.
↑
X
These Magnificent Seven Stocks Have Earnings Due As Techs Sell Off
The stock market rally diverged last week, with small caps rising strongly and a large number of buying opportunities emerging from a variety of sectors. The Nasdaq tumbled below its 50-day line, though the S&P 500 regained that level on Friday.
Tesla (TSLA) and Google-parent Alphabet (GOOGL) tumbled on earnings, while the CEOs of Google and Meta Platforms voiced concerns that tech companies might be spending too much on artificial intelligence. That slammed Nvidia (NVDA).
So Apple, Microsoft, Meta Platforms and Amazon signals about AI capital spending and monetization will be huge this coming week.
For investors, the best buying opportunities and setups remain in nontech sectors.
The video embedded in this article reviews the upcoming Apple, Microsoft, Meta and Amazon earnings in depth, while also previewing Advanced Micro Devices (AMD), Arm (ARM), Arista Networks (ANET) and more.
Dow Jones Futures Today
Dow Jones futures rose 0.4% vs. fair value. S&P 500 futures advanced 0.4% and Nasdaq 100 futures climbed 0.6%.
The 10-year Treasury yield fell slightly to 4.17%.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Fed Meeting
The Federal Reserve meeting is on July 30-31, with markets expecting policymakers to leave rates steady. But the Fed statement at 2 p.m. ET, and Fed chief Jerome Powell’s talk at 2:30 p.m. ET may signal a readiness to cut rates.
Investors have fully priced in at least a quarter-point rate cut in late September, and see at least two and perhaps three cuts this year as likely.
So if Powell doesn’t give a clear green light for rate cuts on Wednesday, financial markets could react poorly.
Join IBD experts as they analyze leading stocks and the market on IBD Live
Stock Market Rally
The stock market rally diverged last week, though there was a broad bounce on Friday.
The Dow Jones Industrial Average rose 0.6% in last week’s stock market trading, rebounding from a slide to the 21-day line with Friday’s 1.5% jump. The S&P 500 index retreated 0.8%, but regained its 50-day moving average on Friday.
The Nasdaq composite fell 2.1% for the week, below its 50-day line even with Friday’s rebound.
The small-cap Russell 2000 leapt 3.5%, near recent multiyear highs.
The Invesco S&P 500 Equal Weight ETF (RSP) climbed 0.8%, just below record highs.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) skidded 1.65%, to below its 50-day line as tech weakness extends beyond megacaps.
The upcoming earnings from Apple, Microsoft and other Big Techs this week — along with the Fed rate outlook — will go a long way to determining whether the Nasdaq can find its footing or if it will fall into a full-fledged correction.
While megacaps and AI plays generally struggled, there were a number of breakouts or stocks reclaiming buy points or flashing early entries, including in housing/construction, industrial/aerospace, financial, energy as well as some medicals and even some software.
The 10-year Treasury yield fell four basis points to 4.2%. The two-year yield slumped 12 basis points to 4.39%, with the yield curve continuing to turn less inverted.
U.S. crude oil futures fell 1.89% to $77.16 a barrel last week, down 7.2% over three weeks.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) slipped 1.3% last week. The iShares Expanded Tech-Software Sector ETF (IGV) lost a fraction, with Microsoft stock a major holding. The VanEck Vectors Semiconductor ETF (SMH) gave up 3.2%, with Nvidia stock a dominant member and AMD also a key holding.
SPDR S&P Metals & Mining ETF (XME) rose 1% last week. The Global X U.S. Infrastructure Development ETF (PAVE) bounced 2.4%. U.S. Global Jets ETF (JETS) edged up 0.1%. SPDR S&P Homebuilders ETF (XHB) jumped 4.3%. The Energy Select SPDR ETF (XLE) dipped 0.2% and the Health Care Select Sector SPDR Fund (XLV) climbed 1.4%. The Industrial Select Sector SPDR Fund (XLI) rose 1.2%.
The Financial Select SPDR ETF (XLF) advanced 1.3% and the SPDR S&P Regional Banking ETF (KRE) jumped 5.75%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) fell 1.8% last week and ARK Genomics ETF (ARKG) soared 7.4%.
Tesla stock is the No. 1 holding across Ark Invest’s ETFs. TSLA stock tumbled 8.1% last week on an earnings miss and no positive surprises on moonshots from Elon Musk on the call.
Time The Market With IBD’s ETF Market Strategy
Big Tech AI Signals
Apple, Microsoft, Meta and Amazon each had a tough week, with only Apple stock above its 50-day line. They aren’t broken yet, but need some repair work.
For now, investors will look for signs that tech companies are monetizing generative AI, including Apple hints on production orders for the upcoming AI-enabled iPhone 16 and Microsoft’s Copilot efforts. Microsoft Azure and Amazon Web Services growth also are important.
Apple Intelligence will come in October in iOS 18.1, Bloomberg reported Sunday, later than the expected September launch.
Developers are set to gain access to Apple’s new AI features as early as this week. The question now is whether tech giants like Meta and Alphabet are willing to continue investing heavily in artificial intelligence.
Meta CEO Mark Zuckerberg and Alphabet CEO Sundar Pichai recently acknowledged concerns about over-investment in AI. However, they both emphasized that the risk of underinvestment in AI is even greater than spending too much.
Despite the pressure to maintain market position and revenue, tech firms are continuing to invest heavily in AI. For example, Microsoft-backed OpenAI recently launched a new AI-powered search engine, SearchGPT, to compete with Google.
While Apple stock remains above its 50-day line, Microsoft, Meta, and Amazon stocks dipped below their 50-day lines last week. Strong AI capital expenditures could potentially boost Nvidia stock, along with updates from AMD and Arm Holdings. Nvidia stock saw a 4.1% decline last week, falling below the 50-day line.
Arista Networks will be keeping an eye on capital spending plans from major customers Microsoft and Meta. Despite falling below its 50-day line last week, ANET stock found support near a previous buy point.
Looking ahead, investors should pay attention to non-tech sectors as the Federal Reserve and megacap tech companies dominate headlines. While there may be opportunities in industrials, construction, and aerospace sectors, reducing exposure to tech stocks is advisable.
Investors should evaluate their portfolios and watchlists as the market may see a revival in buying opportunities or potentially trigger a market slide. Key stocks like Nvidia, AMD, Apple, and Microsoft are highlighted on various investment platforms.
Stay updated on market trends and leading sectors by reading The Big Picture daily. For real-time stock market updates, follow Ed Carson on Threads and Twitter.
For more investment insights and tools, check out MarketSurge, IBD’s premium stock lists, and analysis. Keep an eye on growth stocks, potential buy points, and upcoming Fed meetings to make informed investment decisions. statement: “The cat sat on the mat.”
Rewritten statement: “The mat had a cat sitting on it.”