Dow Jones futures rose slightly overnight, along with S&P 500 and Nasdaq futures. Deckers and Intuit reported key results after a tough trading day.
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The stock market rally retreated Thursday, with the Nasdaq and S&P 500 reversing from their record highs while the Dow and Russell 2000 fell toward the 50-day line. Stronger-than-expected economic data sent Treasury yields higher.
Nvidia (NVDA) kicked off another quarter of booming earnings and bullish guidance. But the magnitude was so anemic that NVDA stock seemed to be the only stock rising.
Even other AI stocks have pulled back or hit record highs, including chipmakers. Taiwan Semiconductor (TSM), Super microcomputer (SMCI), Advanced microsystems (AMD) and Broadcom (AVGO), as well as software such as Microsoft (MSFT) and ServiceNow (NOW). All stocks except Taiwan Semi were at buy points or early entries early Thursday.
Arista Networks (ANET) stumbled on fears that Nvidia poses a competitive threat.
In the meantime, Exterior decks (BRIDGE), Intuition (INTU), Working day (WDAY) and Ross Stores (ROST) reported Thursday evening. Deckers and Ross Stores surged while Intuit and Workday fell.
Nvidia stock appears in the IBD rankings. Stock reservation is done on SwingTrader. Microsoft and Synopsys stocks are among IBD’s long-term leaders. Nvidia and Arista Networks are on the IBD 50. Super Micro, Nvidia and Deckers stocks are on the IBD Big Cap 20.
Dow Jones Futures Today
Dow Jones futures were just above fair value. S&P 500 futures rose 0.1% and Nasdaq 100 futures climbed 0.1%. Workday and Intuit stocks are giants on the Nasdaq 100. Both are members of the S&P 500 along with DECK stock.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading during the next regular trading session.
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Earnings
Deckers earnings beat easily after the close. Sales of Hoka running shoes increased by 34%. DECK stock jumped in late trading, signaling a breakout Friday. The specialty shoe maker climbed 1.3% to 904.65 during Thursday’s regular session. Deckers stock has a buy point of 916.65 cups with handle.
Workday’s earnings beat views, but the software company lowered its full-year sales forecast. WDAY stock plunged overnight. Shares of the customer and financial management software maker edged up 0.4% to 260.90 on Thursday, closing just above the 50-day line.
Intuit’s earnings comfortably beat expectations in the fiscal third quarter, but implied earnings expectations for the fourth quarter were weak. INTU stock fell sharply during extended trading. The maker of Turbo Tax fell 1.2% Thursday to 662.26, trading slightly below a flat-base buy point of 671.01. Intuit stock issued an early buy signal on May 15 as it broke through a downtrend line.
Ross Stores’ profits beat forecasts, with ROST stock solidly up after hours. The discount clothing retailer edged up 0.3% on Thursday to 131.86, on 200-day trading. Ross Stores is still in a downtrend and below its 50-day line.
Stock market rally
The stock market rally began with the Nasdaq and S&P 500 hitting record highs, led by Nvidia. But a flash reading of the PMI shortly after the open indicated that economic activity was accelerating, reviving doubts about the Fed’s rate cuts. The Nasdaq and S&P 500 reversed lower while the Dow Jones and Russell 2000 suffered steep losses.
The Dow Jones Industrial Average fell 1.5% in Thursday’s stock trading, partly due to new Boeing (BA) misfortunes. The Dow Jones is back near the 50-day line. The S&P 500 index fell 0.7% and the Nasdaq composite index fell 0.4%.
Losers crushed winners on the NYSE and Nasdaq. The small-cap Russell 2000 index fell 1.7%, testing the 50-day but closing above that level.
The Invesco S&P 500 Equal Weight ETF (RSP) fell 1.4%, slightly above the 50-day mark.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) fell 1%.
U.S. crude oil prices fell 0.9% to $76.87 a barrel, down 4% so far this week.
The 10-year Treasury yield rose 4 basis points to 4.47%. The yield reached 4.31% intraday on May 16.
AND F
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) slipped 0.9%. Microsoft and Intuit stocks are among IGV’s largest holdings, with Workday also a member. The VanEck Vectors Semiconductor ETF (SMH) rose 1.4%. Nvidia stock is SMH’s No. 1 stock, with AMD, Taiwan Semiconductor and Broadcom also major components.
The SPDR S&P Metals & Mining ETF (XME) fell 1.2% and the SPDR S&P Homebuilders ETF (XHB) lost 0.8%. The Energy Select SPDR ETF (XLE) fell 0.9% and the Health Care Select Sector SPDR Fund (XLV) fell 1.1%.
The SPDR Industrial Select Sector Fund (XLI) slipped 1.2% and the SPDR Financial Select ETF (XLF) fell 1.4%. The Innovator IBD 50 (FFTY) outperformed, down just 0.14%.
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Nvidia Stock, AI Plays
Nvidia shares rose 9.3% to 1,037.99, rising from a low to a record high. The relative strength line also made a new high, reflecting NVDA stock’s outperformance versus the S&P 500 index. At this point, investors could wait to see if Nvidia consolidates or maintains the gap for a few days .
Nvidia’s profits soared 461% and revenue soared 262%. The AI chip leader reported the fourth consecutive quarter of triple-digit growth for both on Wednesday evening. Guidance for the current quarter was also strong.
Nvidia hasn’t really improved AI games. Taiwan Semiconductor, which makes Nvidia’s chips, hit a record high but closed only 0.6% higher. TSM stock is extended from a buy point.
Broadcom stock edged up 0.1% after an early intraday entry. AMD stock reversed lower for a 3.1% decline after hitting some short-term highs to start.
Super Micro stock, up 11.1% early, closed down 3%, below the 50-day line.
Microsoft stock fell 0.8%, falling a buy point for a third consecutive session, according to MarketSurge analysis. ServiceNow stock fell 1.7% after reporting an early trendline entry.
Meanwhile, Arista Networks fell 8.6% after Nvidia expressed optimism about its networking business, which could hurt Arista’s Ethernet business. ANET stock rebounded from its 10-week line to close down 4.8% at 301.32. Shares closed below a 307.74 cup buy point, but above the 21-day line.
What to do now
Thursday was disappointing given Nvidia’s powerful move, with the narrowing of scope being a concern. Investors should be quick to cut back on new or add-on purchases from last week that don’t work.
However, the market recovery has been strong in recent weeks. Maybe the major indexes and stocks just need another break. This could allow stocks to build handles and moving averages to catch up.
So work on your watchlists while updating your release plans. Medical products, including biopharmaceuticals and other products, are a large area to watch. They are not part of AI, although they are relatively insulated from the slowdown fears hitting consumer and commodity names.
Read The Big Picture every day to stay in tune with 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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