Dow Jones futures rose modestly Monday morning, along with S&P 500 futures and Nasdaq futures, as U.S. officials urged Israel to show restraint after thwarting Iran's drone and missile attack. Tesla, Apple, Salesforce and Goldman Sachs were in focus.
Israel, the U.S. and other allies shot down 99% of the roughly 350 Iranian drones and missiles. Saturday's attack slightly damaged an Israeli military base.
Tehran had vowed retaliation for Israel's April 1 strike on its consulate in Damascus. The well-telegraphed attack may have been an effort to show a forceful response while minimizing the risk of much-wider escalation.
President Biden and fellow Group of Seven leaders "firmly condemned" Iran's attack in a Sunday statement, but appealed for calm. Israel's war cabinet met to mull its options.
Goldman Sachs reported first-quarter earnings that were much better than expected. Goldman stock rose solidly, signaling a move back above the 50-day line.
Charles Schwab narrowly topped views early Monday. Schwab fell slightly in premarket trade, trying to hold above a buy point.
Dow Jones Futures Today
Dow Jones futures climbed 0.6% vs. fair value, with Goldman, Apple and Salesforce all Dow components. S&P 500 futures advanced 0.6% and Nasdaq 100 futures rose 0.7%.
Crude oil futures fell 1%.
The 10-year Treasury yield jumped to 4.58%, as Friday's safe-haven flows into U.S. Treasuries reversed.
Copper, aluminum and nickel prices rose on new U.S. and U.K. sanctions vs. Russian metals.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
That could be especially true as futures traders try to digest geopolitical news that's still unfolding.
The stock market rally sold off Friday on fears of an Iran attack. The Nasdaq fell for the week, despite setting a record close Thursday as Nvidia and other megacap and AI stocks rebounded. The S&P 500, Dow Jones and Russell 2000 suffered larger weekly losses.
The CBOE Volatility index, or VIX, spiked Friday to the market fear gauge's highest levels since late October on Iran concerns.
Nvidia Leads 5 Stocks Near Buy Points
Tesla News
Tesla is laying off more than 10% of its global workforce, or 15,000 jobs, the company confirmed Monday.
Late Friday, Tesla cut the price of Full Self-Driving subscriptions to $99 a month from $199. Tesla has halted Cybertruck deliveries, according to online chatter over the weekend.
TSLA stock lost more than 1% early Monday.
Other News
Salesforce.com is in late-stage talks to buy data-management software maker Informatica, The Wall Street Journal reported Friday night. CRM stock fell modestly and Informatica declined slightly before the open.
Apple iPhone shipments fell 9.6% in January-March, IDC estimated Sunday. AAPL stock edged lower.
Key Earnings Loom
Chip-equipment giant ASML and Nvidia chipmaker Taiwan Semiconductor may be the week's two most important earnings. Their results and guidance have big implications for the chip sector, including Nvidia, Broadcom, Lam Research, Applied Materials and KLA Corp..
All of these chip stocks have new bases or potential entries.
Nvidia stock is on IBD Leaderboard, SwingTrader and the IBD 50. KLA stock is on the IBD Long-Term Leaders list. Nvidia, ASML and Broadcom stock are on the IBD Big Cap 20.
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Stock Market Rally
The stock market rally had a tough week on a hot CPI inflation report and Mideast fears, with Friday's losses wiping out Thursday's bullish signals.
The Nasdaq, which hit a record close Thursday, fell 1.6% in Friday's stock market trading to end the week with a 0.45% loss. The composite finished below the 21-day line but just above the 50-day and 10-week lines. It's also still trading with the big April 4 reversal day.
The S&P 500 index sank 1.55% for the week, below the 21-day. The benchmark index closed just above its 50-day line but below its 10-week.
The Dow Jones Industrial Average slumped 2.4% to the lowest level since late January while the small-cap Russell 2000 shed 2.9% to the lowest since late February. Both are clearly below the 50-day.
The Invesco S&P 500 Equal Weight ETF fell 2.6%, knifing through the 50-day line Friday. The First Trust Nasdaq 100 Equal Weighted Index ETF slumped 1.7%, below the 50-day line to its worst levels since late February.
Crude oil fell 1.4% to $85.66 a barrel for the week, backing off Friday's intraday high of $87.67. Gold climbed 1.3% to $2,356.20 an ounce, also well off Friday highs.
The 10-year Treasury yield leapt 12 basis points to 4.5%, with Thursday's peak of 4.59% a five-month high. Investors only see a modest chance of a Fed rate cut in June and are only leaning toward a move in July.
Stock Market Fear Gauge Soars
The CBOE Volatility index shot up 16.1% on Friday, hitting its highest levels since late October. Excessive fear could foreshadow at least a short-term bottom. But the market fear gauge is still well off its October peaks, let alone its Covid highs.
If Mideast tensions ease, there could be a snapback rally in stocks. Various indicators suggesting the market is getting oversold also bolsters that hopeful case.
But an escalating Iran-Israel conflict could trigger a far-larger fear spike and a big retreat from equities.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF fell 1.7% for the week. The VanEck Vectors Semiconductor ETF slipped 0.9%. Nvidia and Taiwan Semiconductor are the largest SMH holdings, with ASML, Lam Research, KLA and AMAT stock also members.
Time The Market With IBD's ETF Market Strategy
ASML, Taiwan Semi Earnings
Dutch chip-equipment giant ASML reports Wednesday morning and Taiwan Semiconductor is due early Thursday.
Analysts expect ASML earnings to tumble in Q1, but see a second-half recovery. Taiwan Semi earnings are expected to be flat, though the foundry giant reported better-than-expected Q1 sales on April 10.
Taiwan Semi is benefiting from strong demand for AI chips. TSMC's earnings and capital spending guidance will be key for the industry.
ASML stock fell 1.8% to 961.84 last week, right around the 50-day and 10-week lines. It now has a flat base with a 1,056.34 buy point. Investors could use a trendline entry around 1000 to start a position off the 10-week, or the April 1 high of 1002.66.
TSM stock rose 0.85% to 142.56 for the week. Shares have been consolidating for a few weeks, but need another week for a proper base. Investors could use the April 10 high of 148.43 as an entry if Taiwan Semi stock rallies on earnings.
Chip Stocks
Nvidia stock edged up 0.2% to 881.86 for the week. Shares rebounded from the 10-week line on Wednesday-Thursday before retreating Friday, still holding the 21-day. NVDA stock now has a flat base with a 974 buy point. Investors could use Thursday's high of 907.39 as an early entry.
Broadcom has a consolidation base with a handle buy point. Lam Research and KLA have flat bases, according to MarketSurge. Applied Materials has a de facto flat base, as well as a three-weeks-tight pattern.
What To Do Now
After Thursday's strong action, the expectation was that the market would keep rise, especially the Nasdaq and leaders such as Nvidia.
Instead there was a big retreat Friday in anticipation of an Iran strike. While Treasury yields fell Friday, the weekly surge — and pushing Fed rate cuts further back — is a broader headwind.
It's still a time to be working on watchlists. If the drumbeat of war fades and upcoming earnings reactions are positive, you'll want to be ready. But you also have to be prepared to scale out more aggressively.
With earnings season kicking in, know when your holdings report, as well as when key rivals, customers and suppliers are on tap.
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