Dow Jones futures rose slightly early Thursday, along with S&P 500 futures and Nasdaq futures. Nvidia chipmaker Taiwan Semiconductor reported strong earnings and guidance overnight.
Taiwan Semi fell slightly, while Nvidia and some other AI chip plays edged higher.
On Wednesday, the ailing stock market rally opened slightly higher but once again quickly headed lower, with the Nasdaq leading the retreat.
Investors should recognize that the stock market's character has changed.
Chip stocks were big losers Wednesday. Blame disappointing results and guidance from semiconductor-equipment giant ASML, as well as caution ahead of Taiwan Semi's results.
AI chipmakers Nvidia, Broadcom and Arm Holdings suffered significant to sharp losses Wednesday. As for chip-gear makers, ASML stock gapped lower, while Applied Materials, Lam Research, KLA Corp. broke key levels.
AI server maker Super Micro Computer reversed lower Wednesday after triggering buy signals near the open.
Meanwhile, Tesla fell slightly, right at 2024 lows. Cathie Woods' Ark Invest continued to buy TSLA shares on Wednesday. Shares kept falling Thursday on an analyst downgrade.
Nvidia stock is on IBD Leaderboard. KLAC stock is on the IBD Long-Term Leaders list. Nvidia, ASML, Broadcom stock are on the IBD 50. Nvidia, ASML, Broadcom and SMCI stock are on the IBD Big Cap 20.
Dow Jones Futures Today
Dow Jones futures were 0.2% above fair value. S&P 500 futures climbed 0.2%. Nasdaq 100 futures rose 0.3%.
The 10-year Treasury yield ticked up to 4.59%.
Crude oil futures fell slightly.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
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Stock Market Rally
The stock market rally continues to come under more and more pressure, with Wednesday's slim initial gains quickly turning into losses yet again.
The Dow Jones Industrial Average dipped 0.1% in Wednesday's stock market trading, at its worst levels since late January. The S&P 500 index gave up 0.6% and the Nasdaq composite lost 1.15%, both at the worst levels in two months. The small-cap Russell 2000 fell 1% to a fresh two-month low.
All are well below their 50-day lines.
Most recent breakouts or buy signals have struggled or outright failed in the past few days.
Various indicators point to the market being oversold, but that's been true all week. The CBOE Volatility Index is trading around 2024 highs, though it's not flashing excessive bearishness.
But while the market may be "due" for some sort of bounce, it doesn't have to happen right away and doesn't have to last.
U.S. crude oil prices tumbled 3.1% to $82.69 a barrel.
The 10-year Treasury yield fell 7 basis points to 4.58%. But it's still up 38 basis points just in April.
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ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF fell 0.6%. The VanEck Vectors Semiconductor ETF tumbled 3.1%. Nvidia and TSM stock are the largest holdings in SMH, with Broadcom, ASML, Applied Materials, Lam Research and KLA also major components.
Reflecting more-speculative story stocks, ARK Innovation ETF retreated 1.4% and ARK Genomics ETF gave up 2.3%. Tesla stock is a major holding across Ark Invest's ETFs.
SPDR S&P Metals & Mining ETF reversed for a 0.15% decline. U.S. Global Jets ETF jumped 3.9% as United Airlines skyrocketed on earnings. SPDR S&P Homebuilders ETF shed 0.8%. The Energy Select SPDR ETF dipped 0.3% and the Health Care Select Sector SPDR Fund inched down 0.2%.
The Industrial Select Sector SPDR Fund fell 0.5% and the Financial Select SPDR ETF climbed 0.25%.
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Taiwan Semiconductor Earnings
Taiwan Semiconductor reported better-than-expected Q1 earnings after Q1 sales topped views last week. The foundry giant also guided higher for Q2 revenue, thanks to AI chips, but was less upbeat about the broader semiconductor industry.
TSMC makes chips for Nvidia, Apple, Broadcom and many others.
Taiwan Semi maintained its 2024 capital spending plans.
TSM stock fell slightly despite the strong results and guidance.
Taiwan Semiconductor stock edged down 0.55% on Wednesday to 139.03, hitting resistance at the 21-day line after rebounding from its 10-week line on Tuesday. TSM stock is on track to have a new base with a 158.40 buy point after Friday's close. But investors could use the April 10 high of 148.43 as an early entry.
AI Chip Stocks Struggle
Nvidia stock rose slightly early Thursday. On Wednesday, Nvidia fell 3.9% to 840.35, sinking below the 10-week line for the first time since early November. Shares did hold the 50-day line. NVDA stock has a 974 buy point from a flat base.
Broadcom also nudged higher before the open after skidding 3.3% on Wednesday to 1,284.61, breaking below the 50-day line. AVGO stock has a new consolidation, with 1,403.98 as a buy point.
ARM stock nudged higher Thursday. But that's after diving 12% to 107.50, undercutting the lows of its consolidation and now far below the 50-day line.
Super Micro was slightly higher Thursday. SMCI isn't a chipmaker, but its AI servers are a place for AI processors from Nvidia and others. SMCI stock were right at a buy area after Tuesday's 10.6% spike. On Wednesday, shares hit 1,020.33 intraday, clearing above a trendline, but reversed to close down 1.7% at 960.14%, holding the 21-day and 50-day lines.
Taiwan Semiconductor's capital spending is key for chip-equipment giants.
ASML and other chip-gear giants edged up Thursday morning after a rough Wednesday.
ASML tumbled 7.1% to 907.61, gapping below its 50-day line and the lows of its flat base. The Dutch chip-equipment maker missed on sales and guidance early Wednesday.
AMAT stock, Lam Research and KLA all slumped about 5% on Wednesday, knifing below their 50-day lines. Lam Research and KLA report next week.
Tesla Stock
Tesla stock fell slightly Thursday, threatening to at least test its late April 2023 lows. Deutsche Bank downgraded the EV giant to hold, citing a likely delay to a mass-market small EV.
On Wednesday, shares declined 1.1% to 155.45, extending the weekly loss to 9.1%. TSLA has fallen to 2024 lows.
Tesla earnings loom on April 23, with the conference call of major importance. Analysts and investors want some clarity about Tesla's strategy.
On Wednesday, Tesla asked shareholders to approve reincorporating the company in Texas and approving a $55.8 billion pay package that was struck down by a Delaware court.
Cathie Wood's Ark ETFs bought 66,504 Tesla shares, after adding 20,683 on Tuesday.
Market Rally Analysis
The stock market is not acting well. The major indexes have broken decisively below their 50-day moving averages.
It's possible that the market could rebound, if only briefly, triggering a few buy signals. But the major indexes and most leading stocks would still need significant work.
Wait for real evidence of strength, not just one good day and certainly not just one strong open.
Investors should have been scaling back exposure amid the weak market. Even ignoring the major indexes, investors should be cutting exposure simply by cutting losers and taking profits.
Tesla, Google, Meta Platforms and Microsoft report earnings along with hundreds of others, creating the potential for major stock, sector and market moves.
Of course, upcoming earnings could deliver a positive catalyst, so you want to be ready.
Stay engaged with the market and work on those watch lists. Focus on stocks that are holding key levels and showing relative strength. Remember, just because a stock looks resilience today doesn't mean that will hold in the future.
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.
