Dow Jones futures begin trading Sunday evening, along with S&P 500 futures and Nasdaq futures. Earnings for Nvidia (NVDA) are in focus after Federal Reserve Chairman Jerome Powell said in Jackson Hole that “it’s time for the Fed to cut interest rates.”
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Nvidia’s earnings are a key test for the stock market rally, so let’s take a look at what to expect.
The stock market rally has been strong this week, with most or all of it reflecting Friday’s Jackson Hole-related gains. The S&P 500 is nearing an all-time high and other indexes are rising as well. Many major stocks are either surging higher or preparing to rise.
Investors should consider adding exposure, but NVIDIA is scheduled to report earnings on Wednesday evening. NVIDIA’s strong results and guidance will be key for AI stocks like Broadcom (AVGO), NVIDIA’s chipmaker Taiwan Semiconductor Manufacturing (TSM) and Arista Networks (ANET). Like NVIDIA, these three AI stocks are nearing buy points.
Meanwhile, Birkenstock (BIRK), Abercrombie & Fitch (ANF), PDD Holdings (PDD), Ollie’s Bargain Outlet (OLLI), Salesforce.com (CRM), and storage companies NetApp (NTAP), Pure Storage (PSTG), and Nutanix (NTNX) are also scheduled to report earnings this week.
The parent company of Pinduoduo and Temu released the PDD report before trading opened on Monday.
Nvidia shares are on Leaderboard. Broadcom shares are on SwingTrader. Nvidia and PDD shares are on the IBD 50. Arista shares are on the IBD Big Cap 20. Broadcom was Thursday’s IBD Stock Of The Day.
Dow Jones Futures Today
Dow Jones futures will begin trading at 6pm ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.
Remember that overnight movements in Dow futures or any other stocks do not necessarily translate into actual trading in the next regular stock market session.
IBD experts break down major stocks and markets on IBD Live.
Stock market rise
The stock market rally took a brief pause for a few days last week but finished strong following Chairman Powell’s dovish speech at Jackson Hole on Friday.
As expected, Fed Chairman Jerome Powell confirmed that a rate cut was coming: “It is time to adjust policy.” Powell made it clear that he does not want to see the job market weaken further, and did not upset market expectations of a 100 basis point rate cut this year.
The Dow Jones Industrial Average rose 1.3% on the stock market last week. The S&P 500 rose 1.45%. The Nasdaq Composite Index rose 1.4%. The Russell 2000, a small-cap index, rose 3.6%.
Friday continued to be a follow-through day for all major stock indexes, although the S&P 500 and Nasdaq had an inside day.
The Nasdaq is in a lull, hovering just below 18,000, but re-established its 50-day line on Friday.
The Invesco S&P 500 Equal Weight ETF (RSP) hit a new all-time high on Friday, gaining 2.1% for the week.
Stocks digested recent gains and posted further gains last week despite a tech-led sell-off on Thursday, as major stocks formed V-shaped bases lower to tighten handles and breakouts.
The two biggest drivers of the stock market this year have been the ongoing AI boom and the expectation of a Fed rate cut. Fed Chairman Powell’s speech in Jackson Hole confirming the rate cut paints a favorable picture on that front. Will NVIDIA’s earnings show a similar signal for AI?
U.S. crude futures fell 0.9% to $74.83 a barrel, but still well off mid-week lows.
The yield on the 10-year Treasury note fell 9 basis points to 3.81%, its lowest closing level in 52 weeks on Wednesday. The yield on the two-year note, which is more closely tied to the Fed’s interest rate policy, fell 15 basis points to 3.91%.
ETF
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) rose 2.9% last week. The iShares Expanded Tech-Software Sector ETF (IGV) rose 1%. The VanEck Vectors Semiconductor ETF (SMH) rose 0.7%. Nvidia shares dominate SMH’s holdings, with Taiwan Semiconductor and Broadcom also major holdings.
The SPDR S&P Metals & Mining ETF (XME) rose 2.1% last week, the SPDR S&P Homebuilders ETF (XHB) surged 8.2%, the Energy Select SPDR ETF (XLE) fell 0.15 and the Health Care Select Sector SPDR Fund (XLV) gained 1.7%.
The Industrial Select Sector SPDR Fund (XLI) rose 1.7%, while the Financial Select SPDR ETF (XLF) rose 1.5%.
Reflecting the more speculative story stocks, the ARK Innovation ETF (ARKK) rose 4.85% last week, while the ARK Genomics ETF (ARKG) gained 3.6%.
Timing the Market with IBD’s ETF Market Strategy
Nvidia’s earnings ‘wild card’
The AI chip giants report their financial results on Wednesday night. Nvidia’s profits are expected to increase 141% year over year, while revenue is expected to rise 113% to $28.73 billion. This marks the fifth consecutive quarter of triple-digit profit growth for both companies.
Wedbush analyst Dan Ives wrote in a note to investors that Nvidia’s earnings are the “most significant” event for the tech industry in years.
Rosenblatt Securities analyst Hans Mosesmann expects Nvidia to again beat or increase earnings expectations, but he said the “uncertainty” is whether there will be enough current-generation Hopper AI processors to meet demand.
Analysts are seeking confirmation and details about the delay of Nvidia’s next-generation Blackwell processors, and whether customers are waiting for the next-gen AI chips or buying more of the current Hopper line?
Nvidia stock
Nvidia shares rose 3.8% to 129.37 last week, including a 4.55% gain on Friday. The stock has been trading in a short-term range after rising significantly from a low of 90.69 on August 5. Nvidia shares have a cup base buy point of 140.76. Investors could use last week’s high as a pseudo-handle entry, ideally after Nvidia reports earnings.
Taiwan Semiconductor Corp.
Taiwan Semiconductor shares fell 1.9% this week to $171.26 but rose 2.9% on Friday to reclaim their 50-day line.TSM shares have a cup base buy point of 193.47 but are expected to gain handle after Monday with an entry at 175.45.On the weekly chart, Taiwan Semiconductor shares already have a cup base buy point of 175.45 with a handle base.
Taiwan Semiconductor makes chips for Nvidia, Broadcom and many other companies.
Broadcom stock
Broadcom shares rose 0.4% to 166.36, above its 50-day high. AVGO shares could trade above its Aug. 20 high of 168.37.
According to MarketSurge, the chip and software giant has a buy point of 185.16. Investors can view this as a disproportionate double bottom base with entry at 177.10. Following Nvidia’s earnings release, Broadcom will also report earnings on September 5th.
Arista stock
Arista shares rose 0.3% to 355.06 last week. The stock currently sits at a buy point of 358.68. The chip giant’s earnings report will be important for ANET stock, as NVIDIA is a growing rival in the AI networking space, while Arista uses a lot of Broadcom’s products.
Nvidia and Arista Networks collide in AI networking battle
What to do now
The market continues to rally, with at least some blue-chip stocks sending out buy signals every day.
Investors could have added further exposure on Friday after Powell backed a rate cut at Jackson Hole, and should continue to do so if markets remain strong.
Several AI stocks are gearing up, including Nvidia, Broadcom, and Taiwan Semiconductor. Investors may want to be a bit cautious about adding more exposure to AI ahead of Nvidia’s earnings release.
But they’re definitely worth keeping an eye on, along with dozens of other up-and-comers and heavyweights.
Read The Big Picture every day to stay on top of market direction, leading stocks and key sectors.
For stock market updates and more, follow Ed Carson on Threads at @edcarson1971 and on X/Twitter at @IBD_ECarson.
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