Dow Jones futures rose modestly early Wednesday, along with S&P 500 futures and Nasdaq futures. Chip-equipment giant ASML, Bank of America and Morgan Stanley rallied on earnings, all flashing buy signals.
The stock market rally was mixed and volatile Tuesday amid U.S.-China tensions and Fed chief Jerome Powell bolstering rate-cut expectations. Small caps rallied to a record high amid strong breadth. The Nasdaq fell as Nvidia slumped back below a buy point.
Once-hot AI play Astera Labs dived, flashing a definitive sell signal.
Walmart ran above a buy point on a shopping deal with OpenAI's ChatGPT. TJX Cos. and Somnigroup International flashed buy signals as well.
The video embedded in the article reviews Tuesday's stock market action and analyzes Walmart, Somnigroup and Astera Labs stock.
Dow Jones Futures Today
Dow Jones futures were 0.5% above fair value. S&P 500 futures advanced 0.7% and Nasdaq 100 futures rose 0.9%.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Key Earnings
ASML missed on revenue, but earnings, orders and 2026 guidance were strong. Shares of the Dutch chip-gear giant rose more than 4% to about 1,025 in premarket trade.
ASML stock edged down 0.15% on Tuesday to 983.18. It has a 977.48 cup-with-handle buy point on a daily chart, and a 1,059 handle buy point on a weekly chart. Shares have boomed as chip-gear makers catch the AI trade.
Bank of America earnings beat views on strong investment banking revenue amid broad strength. BAC stock jumped more than 5% before the open to above 52.50, set to clear the 21-day line and a downward-sloping trendline.
Shares rose 2.5% on Tuesday to 50.09, above the 50-day line, amid other bank earnings. Bank of America technically moved back above an old 49.30 flat-base buy point.
Morgan Stanley easily beat views amid robust investment banking and wealth management. Shares gained more than 3% before the open, signaling an early entry from clearing the 50-day line and breaking a short downtrend in an emerging base.
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Stock Market Rally
The stock market rally started Tuesday in the red amid fresh Beijing moves that stepped-up U.S.-China tensions. The major indexes rebounded from near their 50-day lines. But they weakened into the close as President Donald Trump said China not buying U.S. soybeans is an "Economically Hostile Act," adding that he is mulling retribution.
In between those negative U.S.-China headlines, Fed chief Jerome Powell didn't push back on October rate-cut expectations, citing weak labor markets. He also suggested the central bank may soon stop reducing its bond holdings.
The Dow Jones Industrial Average rose 0.4% in Tuesday's stock market trading, back above its 21-day line. The S&P 500 index dipped 0.2% and the Nasdaq composite declined 0.8%, both fractionally below their 21-day lines.
The small-cap Russell 2000 jumped 1.4%, hitting a record high.
The Invesco S&P 500 Equal Weight ETF gained 0.85%, back above its 50-day.
The First Trust Nasdaq 100 Equal Weighted Index ETF rose 0.3%. reflecting modest tech strength outside of Nvidia and a few megacaps.
JPMorgan Chase and Goldman Sachs fell despite solid earnings, but pared losses to hold their 50-day lines. Citigroup rose solidly back above that key level and the 21-day line. Wells Fargo, which had been a group laggard, gapped up 7.15% to reclaim a buy point.
Overall, financials did well, along with several other industrials, housing and biotechs and more.
U.S. crude oil prices fell 1.3% to $58.70 a barrel.
The 10-year Treasury yield fell three basis points to 4.02%, back near six-month lows.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF dipped 0.15%. The iShares Expanded Tech-Software Sector ETF declined 0.9%. The VanEck Vectors Semiconductor ETF retreated 1.8%, with Nvidia a huge holding and ASML also a notable position.
ARK Innovation ETF sank 1%. ARK Genomics ETF rose 0.8%.
SPDR S&P Metals & Mining ETF added 0.8%. SPDR S&P Homebuilders ETF jumped 3.1%, with Somnigroup stock a big component. The Energy Select SPDR ETF was down a fraction and the Health Care Select Sector SPDR Fund advanced 0.3%.
The Industrial Select Sector SPDR Fund bounced 1.2%. The Financial Select SPDR ETF climbed 1.1%, with JPMorgan, Goldman, Citigroup, Wells Fargo Bank of America and Morgan Stanley all notable holdings.
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Nvidia Falls, Astera Dives
Nvidia stock fell 4.4% to 180.01, back below the 184.48 flat-base buy point and the 21-day line, according to MarketSurge. The AI chip giant just held its 50-day moving average. NVDA stock slumped as Oracle said it'll use 50,000 GPUs from Advanced Micro Devices.
Meanwhile, Astera Labs dived 19% to 161.55, gapping well below the 50-day line. ALAB stock tumbled 8.5% in Friday's market sell-off, then fell 3.2% on Monday despite the broad market bounce. At this point, Astera stock has given up well more than half its gains from the 101.82 buy point cleared in late July.
Astera Labs appears to be falling on Nvidia and Broadcom news this week.
Walmart Leads New Buys
Walmart stock jumped 5% to 107.21, back above a 104.72 flat-base buy point and hitting a fresh all-time high. The Dow Jones retail giant is teaming up with OpenAI to allow customers to purchase items directly within ChatGPT.
TJX stock gained 1.9% to 144.10, bouncing off the 21-day line and breaking a short downtrend. The discount retailer has a 145.58 flat-base buy point.
Somnigroup stock gained 2.7% to 87.35, bouncing off the 21-day and 10-week lines and clearing some short-term levels. Somnigroup, formerly Tempur Sealy, has an 88.15 buy point from a flat base after a strong run.
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What To Do Now
The past few days underscore how stocks will generally follow the market. Right now the market is choppy, prone to big daily and intraday swings. It's not a good environment for making new buys, especially volatile names.
Investors should still be significantly to heavily invested. The market is close to record highs. Some quieter, sideways action for a few days or weeks would be constructive.
Keep working on watchlists. But if the market resumes selling with the major indexes and big leaders such as Nvidia breaking below their 50-day lines, you'll also want to have your exit strategies in place.
Walmart stock was added to SwingTrader on Tuesday. Nvidia stock is on the IBD Big Cap 20. Walmart was Tuesday's IBD Stock Of The Day.
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