Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures, amid the Labor Day holiday weekend. A U.S. appeals court ruled late Friday that most Trump tariffs are illegal.
The stock market rally was strong through Thursday, with the S&P 500 hitting fresh highs, but AI plays led a Friday retreat.
Nvidia stock retreated amid China concerns, exacerbated Friday by reports that Alibaba is developing its own AI chip. AI-related plays, many of which shrugged off Nvidia earnings and flashed buy signals, came under pressure Friday. Those included Advanced Micro Devices, Taiwan Semiconductor Manufacturing and GE Vernova.
While nothing like the DeepSeek sell-off from late January, China could be a cloud hanging over AI stocks, especially Nvidia.
Nvidia's pain was Alibaba stock's gain. Alibaba was Friday's IBD Stock Of The Day, gapping above a buy point.
Separately, Tesla broke out to start the week but reversed lower.
Trump Tariffs Struck Down
A federal appeals court ruled that most of President Donald Trump's tariffs are illegal, a big blow to his agenda. The case will likely ultimately go to the Supreme Court.
Trump could probably replicate many of the struck-down tariffs using other authority, but the U.S. government might have to reimburse tens of billions of dollars to importers who paid the tariffs.
Meanwhile, late Friday, Spirit Airlines filed for Chapter 11 bankruptcy for the second time in a year. That boosted rival carriers, especially Frontier Airlines.
Dow Jones Futures Today
U.S. markets will be closed Monday for the Labor Day holiday, but other markets around the world will be open.
Dow Jones futures will still open at 6 p.m. ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures. Futures will also trade Monday.
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 saw slim weekly losses on the major indexes thanks to Friday's Nvidia-led losses, after the S&P 500 hit a new high on Thursday.
The Dow Jones Industrial Average dipped 0.2% in last week's stock market trading. The S&P 500 index slipped 0.1%. The Nasdaq composite declined 0.2%. The small-cap Russell 2000 edged up 0.2% after setting an eight-month best Thursday.
Leading stocks showed strength until Friday's AI-led retreat. Financials and aerospace stocks fared better, along with some medicals.
The 10-year Treasury yield fell three basis points to 4.23%. Friday's July PCE inflation report was largely in line, but the August jobs report on Sept. 5 will be another test for Fed rate-cut expectations.
U.S. crude oil futures rose 0.55% to $64.01 a barrel last week.
Bitcoin sold off hard this past week, tumbling to its worst levels since early July.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF climbed 1.7% last week. The iShares Expanded Tech-Software Sector ETF rose 0.6%. The VanEck Vectors Semiconductor ETF fell 1.1%, with Nvidia, Taiwan Semi, Broadcom and AMD huge holdings.
ARK Innovation ETF and ARK Genomics ETF both retreated 2%. Tesla stock is the No. 1 holding across ARK's ETFs.
SPDR S&P Metals & Mining ETF popped 2.75% last week. SPDR S&P Homebuilders ETF slid 2.6%. The Energy Select SPDR ETF gained 2.55% and the Health Care Select Sector SPDR Fund slipped 0.5%. The Industrial Select Sector SPDR Fund gave up 0.7%.
The Financial Select SPDR ETF advanced 0.8%.
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Alibaba AI Chip Adds To Nvidia China Fears
Nvidia beat quarterly views and guided slightly higher, not counting any China revenue from the H20 AI chip for the Chinese market. That could be a big upside, but Beijing has urged local companies to use other chips.
Alibaba is working on an AI chip to sub in for Nvdia's H20, The Wall Street Journal reported Friday. Meanwhile, China AI startup DeepSeek reportedly is using Huawei chips to train some AI models.
That could hurt Nvidia's China prospects, even if geopolitical issues are resolved. That could also affect AMD and its own China-specific AI chip. Taiwan Semiconductor makes Nvidia and AMD chips.
Separately, Marvell Technology dived 18.6% Friday following earnings, amid concerns about its AI prospects.
Nvidia stock fell 3.4% on Friday and AMD nearly 3%, both moving back toward the 10-week line. Taiwan Semi stock slumped 3.1%, below its 50-day. Broadcom sank 3.65%, but still rose slightly for the week with earnings due Sept. 4.
AI-related energy plays such as GE Vernova and air conditioning stocks such as Comfort Systems fell back Friday after flashing buy signals. Oracle, which is becoming an AI infrastructure play, tumbled well below its 50-day line.
For its part, Alibaba stock shot up 12.9% on Friday to 135, clearing a 127.93 entry within a deep base.
No DeepSeek Redux So Far
While many AI stocks fell Friday, it's so far nothing like the DeepSeek sell-off that began in late January, coinciding with the broader Trump tariff sell-off. To be fair, DeepSeek fears took a little time to filter through the market.
However, there is a key difference. The January DeepSeek sell-off raised concerns — since waned — that long-term AI spending globally might need to be far less than expected. The Alibaba news, if true, seems more concentrated on Nvidia AI chip sales to China.
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Tesla Stock
Tesla stock cleared a 348.98 handle buy point on Tuesday. But shares fell back for the week, down 1.8% to 333.86, largely on Friday's 3.5% loss. TSLA stock wiped out gains from an early entry back on Aug. 22. The buy point is still valid, though investors could look to Wednesday's high of 355.39 as a new, alternate buy point.
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What To Do Now
Friday's losses were disappointing but the major indexes are right at highs. Nvidia is holding key support, while many AI plays simply gave up weekly gains.
Investors may have needed to cut some recent buys.
Consider how much exposure you have to the broader AI sector. Run your screens and have your watchlists up to date. Also have exit strategies ready.
Nvidia and GE Vernova stock are on IBD Leaderboard. Nvidia stock is on the IBD 50.
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