Dow Jones futures fell slightly Sunday night, along with S&P 500 futures and Nasdaq futures. Fed chief Jerome Powell testifies before Congress, with inflation data due later in the week. JPMorgan Chase (JPM) and other banks kick off earnings season.
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Banking Giants Kick Off Earnings Season Next Week
The stock market rally last week saw the S&P 500 and Nasdaq hit fresh highs, though the latter is increasingly extended. On the flip side, small caps retreated below a key level.
Still, more stocks flashed buy signals. Meta Platforms (META), Palantir Technologies (PLTR) and ASML (ASML) are in buy zones. Meanwhile, Tesla (TSLA) skyrocketed. Nvidia (NVDA) had a modest weekly gain, continuing to act well after pulling back from record highs.
French Election Results
Meanwhile, the left-wing New Popular Front won the most seats in France’s final round of parliamentary elections. Marine Le Pen’s far-right National Front, which led the first round, finished third. President Emmanuel Macron’s centrist alliance finished second. Traditional conservatives are a distant fourth, but still a factor.
No group is close to a majority. Some form of left-center pact, perhaps with the center-right, is in the offing.
Dow Jones Futures Today
Dow Jones futures fell 0.2% vs. fair value. S&P 500 futures lost 0.2% and Nasdaq 100 futures declined 0.2%.
The 10-year Treasury yield edged up to 4.29%.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Powell Testimony, Inflation Ahead
Fed chief Jerome Powell will testify before Congress on Tuesday and Wednesday. Investors will be looking for any shifts in Powell’s comments on monetary policy. But if the recent run of slowing economic data continues, then Powell’s prior comments will point to rate cuts later this year.
Markets now see a 77.9% chance of a Fed rate cut by the Sept. 17-18 meeting, with a 76.5% chance of two cuts this year.
The June CPI inflation report is due on Thursday, following the soft jobs report on June 5. PPI inflation data is on Friday.
Bank Earnings Due
JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C) report earnings on Friday. All are near buy points or early entries.
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Stock Market Rally
The stock market rally showed positive action on the major indexes. The Dow Jones Industrial Average climbed 0.7% in last week’s stock market trading. The S&P 500 index popped 1.95%. The Nasdaq composite jumped 3.5%.
However, the small-cap Russell 2000 sank 1%, sinking below the 50-day line.
The Invesco S&P 500 Equal Weight ETF (RSP) dipped 0.4% to 163.38, falling further below the 50-day line.
In contrast, the First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) climbed 1.6% to a record high. That reflects strength in growth stocks, especially tech growth names, beyond the megacaps. That significantly lagged the Nasdaq 100’s 3.6% spike.
The Nasdaq is now 8.3% above its 50-day line, increasingly extended. That’s how extended the tech-heavy index was on June 17, setting stage for two weeks of sideways action. The odds of a pause or pullback are elevated again. It doesn’t have to happen right away and it doesn’t have to be that large, but those risks are growing.
The 10-year Treasury yield fell seven basis points to 4.27% after spiking to 4.49% early in the week.
U.S. crude oil futures rose 2% to $83.16 a barrel for the week, up 10.1% in the last four weeks.
Copper futures jumped 6.1% for the week. Gold prices climbed 2.6% while silver leapt 7.4%.
Bitcoin plunged 10.7% to $56,458.26, but rebounded from a multimonth low of $53,700 early Friday.
Palantir Spearheads This Brigade Of Breakout Stocks
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) rose 1.4% last week. The iShares Expanded Tech-Software Sector ETF (IGV) climbed 2.3% to just below its late 2021 peak. PLTR stock is a member. The VanEck Vectors Semiconductor ETF (SMH) popped 3.5%. Nvidia stock is the largest SMH holding by far while ASML is also a key component.
Reflecting more-speculative stocks, ARK Innovation ETF (ARKK) rallied 4.55% last week and ARK Genomics ETF (ARKG) fell 1.1%. Tesla stock is the No. 1 holding across Ark Invest’s ETFs.
SPDR S&P Metals & Mining ETF (XME) popped 3.25% last week, buoyed by rising metal and coal prices. The Financial Select SPDR ETF (XLF) rose 1%. JPMorgan stock, Citigroup and Wells Fargo are all big members.
But elsewhere there was weakness.
The Global X U.S. Infrastructure Development ETF (PAVE) declined 1.1%. U.S. Global Jets ETF (JETS) descended 2.6%. SPDR S&P Homebuilders ETF (XHB) skidded 3.1%. The Energy Select SPDR ETF (XLE) retreated 1.15% and the Health Care Select Sector SPDR Fund (XLV) lost 0.9%. The Industrial Select Sector SPDR Fund (XLI) dipped 0.5%.
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Tesla Stock
Tesla stock skyrocketed 27.1% to 251.52 for the week, blasting above the 200-day line and much more. Q2 deliveries fell vs. a year earlier but beat lowered expectations.
Shares are now greatly extended from the 191.08 handle buy point. TSLA stock is right at a long-term trendline going back to its late 2021 all-time high. Ideally, Tesla would pause for a while.
Tesla earnings are due on July 23, with a robotaxi event slated for Aug. 8.
Nvidia
Nvidia stock rose 1.85% to 125.83 for the week, bouncing off the 21-day line. An aggressive investor could have used Wednesday’s action as a place to add a few more shares.
Nvidia stock may benefit from a longer break before its next move. Nvidia earnings are not scheduled until mid-August. However, Taiwan Semiconductor Manufacturing (TSM), a key chipmaker for Nvidia and other companies, will be reporting June sales on Wednesday and Q2 earnings on July 18.
Meta stock surged 7.1% to 539.91, surpassing buy points at 514.01 or 522.08. Meta earnings are set for July 31.
Palantir stock soared 7.5% to 27.23, breaking through a 26.57 handle buy point. It closed at its highest level since late 2021. Palantir earnings are expected in early August.
ASML stock rose 5.1% for the week to 1,074.48, bouncing back from the 21-day line and surpassing a 1,056.34 buy point. ASML earnings are due on July 17.
While the Nasdaq is extended and other market segments are drifting away from their 50-day lines, many leading stocks are performing well. There have been new buying opportunities emerging recently, despite caution for potential market pullbacks or rotations.
It is essential to monitor earnings season, with companies like JPMorgan, Citigroup, Wells Fargo, and Delta Air Lines reporting this week. Federal Reserve Chairman Powell’s updates on inflation will also be significant.
Nvidia, ASML stock, Meta stock, Palantir, and Citigroup are among the stocks to watch on various investor platforms. Stay updated with market trends and leading sectors by reading The Big Picture daily.
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