Dow Jones futures rose slightly early Wednesday, along with S&P 500 futures and Nasdaq futures. The CPI inflation report looms Wednesday, Nvidia chipmaker Taiwan Semiconductor posted strong Q1 sales on AI demand. Delta Air Lines earnings topped, with its shares signaling a breakout.
The stock market rally generally edged higher Tuesday, with investors wary of big moves ahead of the CPI inflation report. Breadth was positive, but a number of leaders came under pressure.
Nvidia undercut recent lows Tuesday but also found key support. That came as Google parent Alphabet announced a new in-house AI processor using Arm Holdings designs, easing its dependence on Nvidia chips. Intel also unveiled an AI chip to take on Nvidia. Google stock rose further into a buy zone. ARM stock initially bounced but reversed lower. Intel edged up after setting fresh 2024 lows.
Tesla extended gains on Elon Musk touting robotaxis. Tesla stock is coming up to key resistance. Shares edged higher early Wednesday, even with two more analysts slashing estimates.
Nvidia and ARM stock are on IBD Leaderboard. Arm Holdings and Nvidia stock are on the IBD 50. Nvidia stock is on the IBD Big Cap 20.
The video embedded in this article reviewed Tuesday's market action and analyzed Nvidia stock, Royal Caribbean and Nutanix
CPI Inflation Report
The Labor Department will release the consumer price index at 8:30 a.m. ET. Consumer prices are expected to rise 0.3%, along with CPI excluding food and energy.
Overall CPI inflation vs. a year earlier should rise 3.5%, picking up 3.2% from in February. Core CPI inflation is seen dipping to 3.7% from 3.8%.
Fed minutes for the March meeting will be released at 2 p.m. ET. The March producer price index will be out Thursday morning.
These key economic reports come as the odds for a Fed rate cut in June have turned into a tossup.
Dow Jones Futures Today
Dow Jones futures rose 0.25% vs. fair value. S&P 500 futures and Nasdaq 100 futures climbed 0.2%.
The 10-year Treasury yield edged down to 4.35%. Crude oil futures rose slightly.
The CPI inflation report will be sure to swing Dow Jones futures and Treasury yields.
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 had a quiet session Tuesday, but the key indexes improved from slightly lower to flat or slightly higher.
The Dow Jones Industrial Average closed fractionally lower in Tuesday's stock market trading. Meanwhile, the S&P 500 index climbed 0.1%. The Nasdaq composite rose 0.3%. The small-cap Russell 2000 also advanced 0.3%.
While the major indexes had a relatively quiet day, and winners outpaced losers, a number of leaders were hit, and not just Nvidia.
Royal Caribbean stock tumbled 3.7%, back below a buy point. Deckers Outdoor sank 2.4%, closing below the 50-day line for the first time since late October. Cava Group caved 7.2% to its first 10-week line test of 2024.
But there were also a number of stocks that held up well or advanced.
U.S. crude oil prices fell 1.4% to $85.23 a barrel.
The 10-year Treasury yield fell six basis points to 4.365%.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF climbed 0.3%. The VanEck Vectors Semiconductor ETF climbed 0.5%. Nvidia stock is the biggest SMH holding by far, with Taiwan Semiconductor also a big member. Intel also is in SMH.
Reflecting more-speculative story stocks, ARK Innovation ETF and ARK Genomics ETF both gained 1.1%. Tesla stock is a huge holding across Ark Invest's ETFs.
SPDR S&P Metals & Mining ETF rose 1.1% and the Global X U.S. Infrastructure Development ETF fell 0.5%. U.S. Global Jets ETF ascended 0.5%, with DAL stock a top holding.SPDR S&P Homebuilders ETF edged down 0.1%. The Energy Select SPDR ETF closed fractionally higher and the Health Care Select Sector SPDR Fund advanced 0.4%
The Industrial Select Sector SPDR Fund dipped 0.2%. And the Financial Select SPDR ETF retreated 0.6%.
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Delta Earnings
Delta earnings soared 80% to 45 cents a share, while revenue grew about 8% to $13.75 billion, both beating first-quarter views. Kicking off Q1 results for U.S. airlines, Delta reaffirmed Q1 guidance.
Delta stock popped more than 4% to 49.40 early Wednesday, signaling a breakout. DAL stock has a 49.20 cup-with-handle buy point.
Other carriers, including United Airlines and American Airlines, also rose solidly.
Taiwan Semiconductor
Early Wednesday, Taiwan Semiconductor reported March sales swelled 34% vs. a year earlier to 195.21 Taiwanese dollars. Q1 revenue came in at 592.64 billion Taiwanese dollars ($18.54 billion), slightly beating views.
The foundry giant, which will report earnings next week, makes chips for Nvidia, Apple, Broadcom, Google and many others. It's also a major chip-equipment buyer. So Taiwan Semi's reports have broad implications for the sector.
Taiwan Semi stock rose 1% early Wednesday. Shares climbed 1.8% on Tuesday to 145.40, extending Monday's 1% advance but closing off highs. TSM stock is working on a possible new base.
Nvidia Stock
Nvidia stock fell as low as 830.22 on Wednesday, hitting its lowest levels since March 1. But the AI chip leader found support around the 10-week line, paring losses to close down 2% at 853.54. A strong move off the 10-week line, the first such test since an early January breakout, would offer a buying opportunity. NVDA stock is due to have a flat base with a 974 buy point after this week.
Shares edged lower early Wednesday.
Nvidia faces growing competition in the AI space. Even if its chips remain a step ahead, rival products will temper Nvidia sales and prices at the margin. Customers will want to diversify AI chip suppliers to avoid overreliance on Nvidia.
Google-Arm AI Processor, Intel Chip
Google held a big cloud-computing event on Tuesday. A highlight was a new AI processor using Arm designs.
Additionally, Google stock climbed 1.1% to 156.60, still in range of a 152.15 handle buy point.
ARM stock rose to 135.41 soon after the open, but reversed to close down 1.9% to 126.81. Shares have been finding support at the 21-day line, trading just above the 50-day but below the 10-week. The wireless chip design giant has a 164 consolidation buy point, according to MarketSurge. But a downward-sloping trendline or the 145 level might offer safer, earlier entries.
Meanwhile, Intel unveiled its Gaudi 3 AI chip to compete with Nvidia. Intel stock rose 0.9% after hitting 2024 lows intraday, continuing to trade below all its key moving averages.
Tesla Stock
Tesla stock rose 2.25% to 176.88 on Tuesday, after Monday's 4.9% jump. Shares are rebounding from an 11-month low following Elon Musk's promise of an Aug. 8 robotaxi unveiling. But it's unclear what that will entail, given that Tesla's Full-Self Driving isn't ready to operate without a driver. TSLA stock is nearing the 10-week moving average, which has served as resistance in 2024.
Analysts at Jefferies and Piper Sandler slashed 2024 earnings estimates on Wednesday, predicting lower deliveries for the year. Both cut TSLA stock price targets.
But Tesla shares edged higher early Wednesday.
What To Do Now
Investors need patience in a sideways market, waiting to see which way the major indexes and leading stocks decisively break. On Tuesday, the sideways market offered a "greatest hits" session, with some leading stocks tumbling, some reversing lower, some finding support and even a few making bullish moves.
Wednesday's CPI inflation report may provide some clear direction for the market rally, but may not. Earnings season is looming, with the potential for big market, sector and stock moves up or down, or perhaps both.
Right now, investors should be working on their watchlists. Leading stocks are testing key support levels and forging bases across a range of sectors.
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