As of Sunday evening, stock futures showed minimal movement. Dow Jones Industrial Average futures, S&P 500 futures, and Nasdaq futures were all relatively stable, suggesting a cautious start to the week. Investors are closely watching for new economic data releases, which will likely shape market sentiment in the coming days. The economic calendar includes critical reports on inflation and consumer spending, which are anticipated to provide insights into the health of the economy.
Recent Market Recovery
The stock market experienced a rebound following a significant global sell-off on August 5. This recovery initiated a rally attempt, but a decisive follow-through day, which would confirm the rally’s strength, is still pending. Investors are monitoring this situation closely, as the success of the rally will depend on upcoming economic data and market reactions.
Sector and Stock Performance
Artificial Intelligence (AI) Stocks:
- Nvidia: Nvidia has faced ongoing challenges, including concerns about AI spending fatigue and production delays for its next-generation AI chip. Despite some recovery from recent lows, Nvidia’s stock has experienced its fourth consecutive weekly decline, down 2.35% for the week.
- Other AI Stocks: Several AI-related stocks have shown resilience and strength. Notable performers include Meta Platforms, Palantir Technologies, ServiceNow, Samsara, and Arista Networks. These stocks have demonstrated positive movements, with Palantir stock surging 21.3% last week, and ServiceNow and Samsara also making notable gains.
Stocks Above Key Moving Averages:
- Eli Lilly, CAVA, TradeDesk, On Holding, and Costco Wholesale: These stocks have recently moved above their 50-day moving averages, signaling potential early entry points. Costco and CAVA have joined SwingTrader, while Palantir, Samsara, and Arista Networks feature prominently on various notable stock lists.
Economic Data and Market Reactions
Upcoming Economic Reports:
This week’s economic data will be crucial for market direction:
- Producer Price Index (PPI): Scheduled for release on Tuesday, this report will provide insights into wholesale price trends.
- Consumer Price Index (CPI): The July CPI report, set for Wednesday, will be a key indicator of inflationary pressures.
- Retail Sales and Industrial Production: Both reports are expected on Thursday, along with weekly jobless claims and regional manufacturing surveys from the Philly Fed and New York Fed.
These reports could influence the market significantly, either reinforcing the rally or pushing the indexes back toward recent lows.
Treasury Yields:
The 10-year Treasury yield experienced a rebound, rising to 3.94% after dipping to 3.67% earlier in the week. This volatility in yields reflects ongoing uncertainties about monetary policy and economic conditions.
ETF and Sector Performance
Growth ETFs:
- Innovator IBD 50 ETF: Rose by 2.2% last week.
- iShares Expanded Tech-Software Sector ETF: Increased by 2.8%, benefiting from strong performances by ServiceNow, Palantir, and Samsara.
- VanEck Vectors Semiconductor ETF: Gained 2.9%, with Nvidia and Taiwan Semiconductor being major holdings.
Sector ETFs:
- Energy Select SPDR ETF: Gained 1.1%, reflecting a rebound in U.S. crude oil futures.
- SPDR S&P Metals & Mining ETF and Global X U.S. Infrastructure Development ETF: Both saw minor declines.
- Health Care Select Sector SPDR Fund: Fell by 0.6%, despite Eli Lilly’s strong performance.
AI Stocks to Watch
Palantir Technologies: The stock hit a three-year high with a 21.3% increase, driven by strong earnings and a new alliance with Microsoft.
Meta Platforms: Jumped 6.1% to reclaim its 50-day moving average. Investors are watching for potential buy points based on recent highs.
ServiceNow: Rose 2.65%, breaking out past key technical levels but facing some volatility.
Samsara: Advanced 8% and is nearing a buy point following a volatile period.
Arista Networks: Rebounded by 5.2% and is currently above its 50-day moving average, showing promise for further gains.
Taiwan Semiconductor: Reported a 45% increase in July sales, driven by AI chip demand. The stock surged 11.55%, approaching its 50-day line.
Notable Market Events
Elon Musk and Donald Trump: Former President Trump is scheduled for a conversation with Tesla CEO Elon Musk on Musk’s platform, X, on Monday night. The discussion is expected to cover various topics, including electric vehicle policies and cryptocurrency developments.
Stock Market Strategy:
Investors are advised to remain cautious and largely in cash, waiting for a follow-through day to confirm the market rally. The focus should be on identifying promising stocks and maintaining a watchlist of potential targets. Gradual exposure to the market, based on evolving conditions and technical signals, is recommended.