Dow Jones futures fell slightly Monday morning, along with S&P 500 futures and Nasdaq futures. Late Friday, Moody's warned on the U.S. outlook. Boeing won a big jet order at the Dubai Air Show.
The stock market rally rebounded powerfully Friday after Thursday's retreat, with the major indexes clearing October highs. Market breadth is still weak, but leading stocks did well, with more clearing buy points or setting up.
The chip sector is coming on, after software initially led the market rally.
Nvidia, Broadcom, Taiwan Semiconductor, KLA and Lam Research flashed buy signals on Friday.
Meanwhile, MercadoLibre, Roku and Datadog are recent earnings winners that may offer another buying opportunity for investors.
Investors should be looking for stocks setting up and taking advantage of buying opportunities.
Nvidia stock and Datadog are on IBD Leaderboard. Nvidia, Datadog and MELI stock are on the IBD 50. DDOG stock is on the IBD Big Cap 20. MercadoLibre was Friday's IBD Stock Of The Day.
The video embedded in this article reviewed the market action in depth and analyzed TSM stock, MercadoLibre and General Electric.
Moody's Cuts U.S. Outlook
Late Friday, Moody's Investors Service cut its U.S. outlook to negative from stable, citing high budget deficits and political polarization. Moody's reaffirmed, for now, its AAA rating on U.S. sovereign debt.
"In the context of higher interest rates, without effective fiscal policy measures to reduce government spending or increase revenues," Moody's expects deficits to "remain very large."
An increasingly divided country raises the risks that future governments will not tackle long-term issues, Moody's said.
In the short run, a 45-day government funding measure expires Nov. 17, with the risk of a government shutdown still high.
Boeing Orders
Emirates airline kicked off the Dubai Air Show with a order for 90 Boeing 777 jets worth $52 billion at list prices. Those jets will be powered by General Electric engines. Sister carrier flyDubai ordered 30 Boeing 787 Dreamliner jets.
Meanwhile, China could end a freeze on Boeing 737 Max sales to Chinese airlines when Joe Biden and Xi Jinping meet in San Francisco on Wednesday, Bloomberg reported Sunday night.
BA stock rose more than 3% early Monday.
Dow Jones Futures Today
Dow Jones futures fell 0.1% vs. fair value, even with Boeing stock providing a lift. S&P 500 futures declined 0.2% and Nasdaq 100 futures lost 0.2%.
The 10-year Treasury yield edged up to 4.65%.
Crude oil prices rose a fraction. Copper futures climbed more than 1%.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze leading stocks and the market on IBD Live
Stock Market Rally
The stock market rally snapped long winning streaks on the major indexes this past week, but they finished with solid gains Friday.
The Dow Jones Industrial Average rose 0.65% in last week's stock market trading. The S&P 500 index climbed 1.3%. The Nasdaq composite jumped 2.4%, up just over 2% on Friday. All the major indexes moved above their October highs, another bullish signal.
Market breadth was better Friday but still a concern for the week.
The small-cap Russell 2000 tumbled 3.15% for the week despite Friday's 1.1%% bounce.
The Invesco S&P 500 Equal Weight ETF gained 1.2% Friday but still sank 0.6% for the week.
The First Trust Nasdaq 100 Equal Weighted Index ETF fared better. While lagging the Nasdaq 100's big 2.9% weekly gain, QQEW rose 0.7%, moving above its 50-day Friday. A number of big-cap techs beyond the megacaps had strong weeks.
Market leadership is strong. Tech is leading the charge, but leaders hail from a variety of sectors.
A longer market rally pause could be healthy, but bulls don't want to stop.
The 10-year Treasury yield rose 7 basis points to 4.63%, amid some big daily swings.
U.S. crude oil futures slid 4.15% to $77.17 a barrel last week, but did bounce late in the week.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF leapt 4.1%, with Datadog stock in IGV. The VanEck Vectors Semiconductor ETF jumped 5.2%. Nvidia stock is the No. 1 holding in SMH, with TSM stock, Broadcom, KLA and LRCX all major components.
SPDR S&P Metals & Mining ETF sank 3.6% last week as metal prices retreated. SPDR S&P Homebuilders ETF edged up 0.1%, thanks to Friday's 2.1% bounce. The Energy Select SPDR ETF slumped 3.8% and the Health Care Select Sector SPDR Fund fell 0.9%. The Industrial Select Sector SPDR Fund gained 0.9%
The Financial Select SPDR ETF edged up 0.4%.
Reflecting more-speculative story stocks, ARK Innovation ETF slipped 1.8% last week and ARK Genomics ETF plunged 7.45%.
Five Best Chinese Stocks To Watch Now
Chip Stocks In Buy Zones
Nvidia stock rose 7.4% this past week to 483.35, clearing a 476.09 double-bottom buy point on Friday. The relative strength line hit a new high. The RS line, the blue line in the charts provided, tracks a stock's performance vs. the S&P 500 index.
Nvidia earnings are due Nov. 21, so there's not much time to build a cushion. Also, Microsoft will announce its latest AI advancements at its Ignite 2023 event on Wednesday, with some buzz that it could unveil its own AI chip to ease its dependence on Nvidia.
Broadcom stock leapt 8.5% this past week to 957.52. On Friday, shares cleared resistance going back to the end of May, according to MarketSmith analysis. AVGO stock's RS line also is at a new high.
Lam Research stock jumped 8.1% to 685.43, clearing a 665 entry from an awkward-looking double-bottom base. KLA stock ran up 6.9% to 534.25, topping a 520.19 buy point. LRCX stock and KLA were among the S&P 500's top performers Friday. Both could move on Applied Materials earnings, due on Nov. 16. AMAT stock also cleared a buy point Friday.
TSM stock jumped 6.35% on Friday to 97.44 in double normal volume, clearing its 200-day, a trendline and a short-term high. On Friday, Taiwan Semiconductor reported October sales rose 15.7% vs. a year earlier and 34.8% vs. September. That signals a turnaround after three quarters of declining earnings and revenue.
The foundry giant makes chips for Nvidia, Broadcom, Apple and many others. It's also a massive chip-equipment buyer. So Taiwan Semi sales likely helped drive Friday's bullish moves by NVDA stock, Broadcom, Lam Research and KLA.
Second Chance For These Earnings Winners
MELI stock dipped 1% to 1,374.39 last week after surging 15.6% in the prior week as the Latin American e-commerce and payments giant reported strong earnings. MercadoLibre stock now has a cup-with-handle base with a 1,398.15 buy point.
Roku stock fell 4.1% to 81.31 last week, forging a weekly handle with an 86.40 buy point. In the prior week, shares of the streaming media platform skyrocketed 50% from a five-month low. Roku is still losing money but revenue growth accelerated for the third straight quarter.
Datadog stock shot up 26% to 103.65 for the week on strong earnings and guidance. Shares have consolidated since Tuesday's spike. DDOG stock is above a 102 buy point from an awkward double-bottom base. But investors may want to use Tuesday's high of 104.43 as an entry. That could become a handle in a few days.
Time The Market With IBD's ETF Market Strategy
What To Do Now
The stock market rally is looking healthy, rebounding quickly from Thursday's pullback. Leading stocks are acting well and expanding.
Investors can continue to gradually add exposure as long as the market and their own positions act well.
Use this weekend to work on your watchlists. Since the Nov. 1-2 follow-through days, a number of stocks have become extended, while many others are setting up.
You want to be ready if and when new leaders break out or clear other buy points.
Earnings season is past its peak but still active. Investors will also get October inflation data and retail sales in a busy week for economic reports.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on X/Twitter at @IBD_ECarson, Threads at @edcarson1971 and Bluesky at @edcarson.bsky.social for stock market updates and more.
