Dow Jones futures rose slightly early Wednesday, along with S&P 500 futures and Nasdaq futures, with Nvidia and Tesla in focus. The Federal Reserve meeting decision looms Wednesday afternoon, with a hawkish Fed rate cut expected.
The stock market rally saw continued weak breadth. The Nasdaq dipped from record highs, as even most growth leaders came under some pressure. The Dow Jones undercut key support as its losing streak is now the longest streak since 1978.
Nvidia fell again, triggering multiple sell signals, with Microsoft the latest negative catalyst. Nvidia stock did come off lows. Tesla rose again, increasingly extended.
Early Wednesday, Nvidia rebounded while Tesla fell back slightly. Neither has changed their recent trends.
Nvidia is a hedged position on IBD Leaderboard. Tesla stock is on the watchlist.
The video embedded in the article discusses Tuesday's stock market action and analyzes Fortinet, Insulet and Embraer.
Dow Jones Futures Today
Dow Jones futures rose 0.35% vs. fair value, with Nvidia stock providing a boost. S&P 500 futures and Nasdaq 100 futures advanced 0.3%. Nvidia and Tesla are major S&P 500 and Nasdaq members.
The 10-year yield moved up to 4.42%. Crude oil rose 1%.
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 To Offer Hawkish Rate Cut?
The final Fed meeting of 2024 ends Wednesday, with an announcement due at 2 p.m. ET. Markets see a quarter-point rate cut as a virtual lock. That would be 100 basis points in Fed rate cuts over three meetings. With economic growth solid and inflation sticky, investors are betting that the central bank wrap that dovish rate cut in semi-hawkish guidance.
The latest economic projections and policymakers' "dot plot" rate forecasts will be key, along with Fed chief Jerome Powell's comments.
Join IBD experts as they analyze leading stocks and the market on IBD Live
Stock Market Rally
The stock market rally had a modestly down session, with the Nasdaq also joining the ongoing weak breadth.
The Dow Jones Industrial Average fell 0.6% in Tuesday's stock market trading, its ninth straight decline, closing just below its 50-day line. The S&P 500 index gave up 0.4%, still holding the 21-day line. The Nasdaq composite slipped 0.3% after jumping to a record high Monday. The small-cap Russell 2000 slumped 1.2%, approaching the 50-day line.
The Invesco S&P 500 Equal Weight ETF fell 0.8%, now clearly below the 50-day line.
The First Trust Nasdaq 100 Equal Weighted Index ETF sank 0.4%, testing the 21-day line. The Invesco S&P MidCap Momentum ETF skidded 1.4%, nearing the 50-day.
Tesla stock continued to rise Wednesday but most leaders fell. New buys continued to struggle amid the general market drift.
U.S. crude oil prices fell 0.9% to $70.08 a barrel.
The 10-year Treasury yield edged down to 4.38%.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF fell nearly 1%. The iShares Expanded Tech-Software Sector ETF declined 0.9%. The VanEck Vectors Semiconductor ETF shed 1.3%. Nvidia is the No. 1 stock in SMH.
ARK Innovation ETF rose a fraction and ARK Genomics ETF retreated 2.1%. Tesla stock is a massive position across Ark Invest's ETFs, while Cathie Wood's Ark also owns a lot of Nvidia.
SPDR S&P Metals & Mining ETF dropped 1.8%. SPDR S&P Homebuilders ETF retreated 1.2%. The Energy Select SPDR ETF slipped 0.7% and the Health Care Select Sector SPDR Fund lost about 0.1%.
The Industrial Select Sector SPDR Fund fell 0.9%. The Financial Select SPDR ETF gave up 0.7%.
Five Best Chinese Stocks To Buy And Watch Now
Nvidia Stock
Nvidia stock fell as low as 126.86 Tuesday morning, definitively triggering the 7%-8% sell rule for those who bought at the 140.76 buy point. Shares came off lows, closing down 1.2% to 130.39%. But it was the fourth straight decline and the eighth drop in nine sessions. The AI giant also closed below the Nov. 27 low of 131.80.
Nvidia fell initially Tuesday on comments from Microsoft CEO Satya Nadella that his company is "not chip supply constrained." Microsoft is one of Nvidia's biggest customers. Nvidia also faces Blackwell chip overheating concerns as well as competition from in-house custom chips.
NVDA stock rebounded nearly 3% early Wednesday, though still well below its 50-day line.
How To Invest: When To Buy And Sell Stocks In Bull And Bear Markets
Tesla Stock
Tesla stock popped 3.6% to 479.86, extending its monthly gain to 39% after soaring 38% in November.
Mizuho became the latest to upgrade TSLA stock, raising its price target to 515. Tesla China EV sales remain strong, offsetting weakness elsewhere.
Meanwhile, Tesla has begun to roll out Full Self-Driving v13 widely to FSD owners with HW4.0, with FSD 13.2.1, after initially only releasing a limited version to a small number of influencers. Elon Musk and Tesla have promised massive improvements in miles per disengagement with FSD v13. That's critical toward reaching actual self-driving by mid-2025, something Musk has promised almost a decade.
Optimism about self-driving has been a huge driver of TSLA stock over the past few months.
The EV giant is 16.2% above its 10-day line and 55.2% above its 50-day.
TSLA stock fell nearly 2% before Wednesday's open.
TSLA stock could easily correct to its 10-day or beyond and still look normal. On the other hand, a face-ripping climax-type move could take place, or a much-longer run.
As with any extended stock, investors have to decide whether to take some Tesla profits on the way up or wait for sell signals on the way down. That depends on your investing style, your conviction in the name, the size of your position and market conditions.
The key is to have a strategy in place ahead of time.
Time The Market With IBD's ETF Market Strategy
What To Do Now
The stock market rally is struggling a little bit aside from a handful of megacaps such as Tesla. A split market is at higher risk of turning into a broad decline, or sector rotation.
A slightly lower market trend is tough. There's just enough strength in individual leaders to flash buy signals, but market headwinds make it hard to sustain such gains, let alone keep rising.
With the Fed rate outlook on tap, investors should be cautious in the very short term. If you feel compelled to make new buys, be ready and willing to exit quickly.
However, a number of stocks are forging bases or handles, trading tightly at their 21-day lines or pulling back to their 50-day lines. If the market revs higher, a number of buying opportunities could present themselves.
Read The Big Picture every day to stay in sync with the 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.
