Dow Jones futures rose slightly Monday morning, along with S&P 500 futures and Nasdaq futures, Bitcoin pushed to a new all-time high Sunday before paring gains. The final Federal Reserve meeting of 2024 is on tap this week.
The stock market rally was mixed last week. The Nasdaq edged higher as Alphabet and Broadcom surged on news while Tesla hit a record high. But otherwise the market fell back somewhat as Treasury yields roared back.
Nvidia was a notable laggard among AI chip stocks and megacaps, as investors turn their attention to custom, in-house AI chips from Broadcom, Marvell Technology and others.
Palantir Technologies and some superhot stocks fell back, though PLTR stock slashed weekly losses to just 0.35% by Friday's close.
Dow Jones Futures Today
Dow Jones futures advanced 0.1% vs. fair value. S&P 500 futures rose 0.15% and Nasdaq 100 futures climbed 0.4%.
Bitcoin surged to hit a new record of just above $106,500 Sunday night before backing off to below $104,000.
The 10-year Treasury yield fell to 4.37%. Crude oil fell 1%.
Chinese November retail sales rose 3% vs. a year earlier, down from October's 4.8% and well below views for 5%. Fixed-asset investment came in slightly below forecasts while industrial output just topped estimates.
Over the weekend, Chinese authorities said they would support stock and property prices, the latest stimulus signals, while investors await hard commitments. A slew of November economic data, including retail sales and industrial production, is due at 9 p.m. ET.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Nasdaq 100 Rebalancing
Palantir, MicroStrategy and Axon Enterprise, three of the hottest stocks in 2024, will join the Nasdaq 100 index, The Nasdaq announced late Friday. Moderna, Super Micro Computer and Illumina will exit.
Palantir reversed slightly lower Monday morning, with its Nasdaq 100 entry largely expected. MicroStrategy stock rose modestly, helped by bitcoin prices, but off initial highs. Axon cooled to a modest gain.
Super Micro sold off after already tumbling late Friday on a Bloomberg report that it's hired Evercore to help raise capital. Moderna and Illumina edged lower.
Moderna stock has plunged in 2024, while Supermicro has dived from its March peak amid major accounting woes. Illumina is up slightly in 2024, but in a long downtrend.
Nvidia stock is on IBD Leaderboard, but the position has been reduced and is hedged. Google and Axon also are on IBD Leaderboard, with Tesla stock on the watchlist. Google stock is on SwingTrader. Palantir stock and Axon Enterprise are on the IBD 50.
Fed Meeting
The final Fed meeting of 2024 is on Dec. 17-18, with markets seeing another quarter-point rate cut as a virtual lock Wednesday afternoon. That would be 100 basis points in Fed rate cuts over three meetings. But with economic growth solid and inflation sticky, investors are betting that policymakers will stand pat through next spring.
The latest economic projections and "dot plot" rate forecasts will be key, along with Fed chief Jerome Powell's comments.
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Stock Market Rally
The stock market rally generally retreated this past week, with weakness apparent aside from some megacap stocks.
The Dow Jones Industrial Average fell 1.8% in last week's stock market trading, now down seven straight sessions. The small-cap Russell 2000 sank 2.6% Both undercut their 21-day line and neared their 10-week averages.
The S&P 500 index declined 0.6% but is trading tightly near record highs. The Nasdaq composite edged up 0.3%, but below the 20,000 level after hitting a record high Friday morning.
Alphabet jumped 8.65%, Tesla 12.1% and Broadcom stock 25.2%, all hitting record highs and propping up the Nasdaq.
The Invesco S&P 500 Equal Weight ETF, not so swayed by those megacaps, gave up 1.6% for the week, testing its 50-day line.
The First Trust Nasdaq 100 Equal Weighted Index ETF also slumped 1.6%, testing its 21-day line. That's vs. a 0.8% gain for the QQQs.
All in all, market breadth has deteriorated considerably in December.
The 10-year Treasury yield surged 25 basis points to 4.4%, the biggest weekly gain since October 2023. The 10-year yield is moving rapidly back toward a six-month peak of just over 4.5%. Rising Treasury yields are among the reasons for the broader stock market's struggles this past week.
U.S. crude oil futures jumped 6.1% to $71.29 a barrel last week.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF slumped 4.5% last week, but steadied after Tuesday. The iShares Expanded Tech-Software Sector ETF fell 3.9% as Adobe and Oracle plunged on results. The VanEck Vectors Semiconductor ETF edged up 0.35%. Nvidia is the No. 1 stock in SMH, but Broadcom and Marvell also are notable holdings.
ARK Innovation ETF retreated 2.5% last week and ARK Genomics ETF sold off 6.5%.
SPDR S&P Metals & Mining ETF skidded 5.2% last week. SPDR S&P Homebuilders ETF shed 3.95%. The Energy Select SPDR ETF gave up 2% and the Health Care Select Sector SPDR Fund lost 2.3%. The Industrial Select Sector SPDR Fund dropped 2.2%. The Financial Select SPDR ETF finished off 1.7%.
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Nvidia Stock An AI Laggard?
Nvidia stock fell 5.75% to 134.25 last week. On Friday, shares once again hit resistance at the 50-day line and other key levels, reversing for the lowest close since Oct 31. NVDA stock is now 3.8% below the 10-week line, but hasn't undercut its Nov. 27 low of 131.80. Falling below that also would also mean triggering the 7%-8% sell rule for those who bought at the 140.76 buy point.
Nvidia's decline is striking given the strength in Broadcom and Marvell stock, as well as Astera Labs, Taiwan Semiconductor and Arm Holdings.
While demand for Nvidia chips remains high and will remain so for some time, Broadcom and Marvell are surging in part because key Nvidia customers are looking to build up in-house AI chips from Broadcom, Marvell and others.
Of course, this past week might be the shakeout that Nvidia needed before making a move. It's still just a good day or two from looking strong. In another week, NVDA stock could have a new flat base next to the top of the prior consolidation.
But you can't invest on maybes. Right now Nvidia stock is lagging. It could be set for a much longer break, and perhaps a significant pullback.
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What To Do Now
The market rally had a mixed week, with the Nasdaq edging higher and a number of leaders showing strength. The S&P 500 is right at highs. The weak market breadth, including weakness in small caps and RSP equal-weight ETF, is a concern.
Not many stocks are flashing buy signals, while many are extended. A market pause or modest pullback could help leaders forge handles, round out bases or decline in a dignified fashion to key moving averages.
So keep working on watchlists while remaining heavily exposed.
The Federal Reserve meeting is the main focus for the final five-day market week of 2024. Micron Technology is a notable earnings report, but Micron stock has been a laggard for months.
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