Dow Jones futures were slightly higher after hours, along with S&P 500 futures and Nasdaq futures. CPI inflation report on Wednesday, along with key reports Delta Air Lines (DAL) and Nvidia Chipmaker Taiwan Semiconductor (TSM)
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The stock market rally was generally higher on Tuesday, with investors wary of big moves ahead of the CPI inflation report. The breadth is positive, but many leaders are under pressure.
Nvidia (NVDA) pared recent lows on Tuesday but also found key support. It came as Google parent letters (Google) announced a new internal AI implementation using Arm Holdings (ARM) designs, making it easier to depend on Nvidia chips. Intel (INTC) also released an AI chip to take on Nvidia. Google shares rose further into buy territory. ARM stock bounced early but then retreated. Intel is on edge after setting new 2024 lows.
Tesla (D.S.L.A) Elon Musk extended gains on touting robotics. Tesla stock hits major resistance.
Shares of Nvidia and ARM are on the move IBD Leaderboard. Arm Holdings and Nvidia have shares IBD 50. Nvidia has stock IBD Big Cap 20.
A video embedded in this article reviews market action on Tuesday and examines Nvidia stock, Royal Caribbean (RCL) and Newtonics (NTNX)
CPI Inflation Report
The Labor Department will release the Consumer Price Index at 8:30 am. Consumer prices are expected to rise 0.3% with CPI excluding food and energy.
Overall CPI inflation should rise 3.5%, up from 3.2% in February and a year earlier. Core CPI inflation has slowed to 3.7% from 3.8%.
The Fed minutes for the March meeting will be released at 2pm ET.
The producer price index for March will be released on Thursday morning.
These key economic reports come as odds for a federal interest rate cut in June have turned into a tossup.
Dow Jones Futures Today
Dow Jones futures rose a fraction and fair value. S&P 500 futures and Nasdaq 100 futures rose about 0.1%.
CBI inflation report is sure to change Dow Jones futures and Treasury yields.
Remember that overnight action in Dow futures and elsewhere does not 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 on Tuesday, but the major indices were either flat or marginally better from slightly lower.
The Dow Jones Industrial Average ended lower in stock market trading on Tuesday. Meanwhile, the S&P 500 index rose 0.1%. The Nasdaq composite rose 0.3%. The small-cap Russell 2000 advanced 0.3%.
While the major indexes had a relatively quiet day and the winners outnumbered the losers, several leaders suffered, not just Nvidia.
Royal Caribbean shares fell 3.7%, below a buy point. Deckers Outdoor (site) fell 2.4%, closing below the 50-day line for the first time since late October. Kava group (CAVA) is reduced by 7.2% for the first 10 weeks of tax testing in 2024.
But many stocks held well or advanced.
US 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 Technology-Software Sector ETF (VATUp 0.3%. VanEck Vectors Semiconductor ETF (SMHUp 0.5%. Nvidia stock is the largest SMH holding, with Taiwan Semiconductor also a major member. Intel is also in SMH.
Reflecting the more speculative story stocks, the ARK Innovation ETF (ARKK) and the ARK Genomics ETF (ARKG) both received 1.1%. Tesla stock is the largest holding across ArcInvest's ETFs.
SPDR S&P Metals & Mining ETF (XME) rose 1.1% and the Global X US Infrastructure Development ETF (sidewalkfell 0.5%. US Global Jets ETF (JETS) rose 0.5%. SPDR S&P Homebuilders ETF (XHBdecreased by 0.1%. Energy Select SPDR ETF (XLE) closed partially higher and the Health Care Sector SPDR Fund (XLV) advanced 0.4%
Industrial Select Sector SPDR Fund (XLIdecreased by 0.2%. and Fund Selection SPDR ETF (45retreated 0.6%.
Time the market with IBD's ETF Market Strategy
Nvidia stock
Nvidia stock fell to 830.22 on Wednesday, hitting its lowest level since March 1. But the AI chip leader found support at a 10-week line, paring losses by 2% to close at 853.54. A strong move from the 10-week line, the first such test since the breakout in early January, would provide a buying opportunity. NVDA stock should have a flat base with a 974 buy point after this week.
Nvidia faces growing competition in the AI space. Even if its chips are a step up, competing products will undercut Nvidia's sales and prices by the margin. Customers will want to diversify their AI chip suppliers to avoid over-reliance on Nvidia.
Google-Arm AI processor, Intel chip
Google held a big cloud computing event on Tuesday. A highlight is the new AI app that uses arm designs.
Additionally, Google shares rose 1.1% to 156.60, still within a 152.15 handle buy point.
ARM shares rose to 135.41 at the open, but fell 1.9% to 126.81. Shares have found support in a 21-day line, trading above the 50-day but below the 10-week. The wireless chip design company has 164 integration buying points Market rise. But a downward sloping trend or the 145 level may provide safe, earlier entries.
Meanwhile, Intel unveiled its Gaudi 3 AI chip to compete with Nvidia. Intel shares rose 0.9% after hitting 2024 intraday lows, continuing to trade below all of its major moving averages.
Tesla stock
Tesla shares rose 2.25% to 176.88 on Tuesday, after a 4.9% gain on Monday. Shares are recovering from 11-month lows after Elon Musk promised to unveil a robotaxi on Aug. 8. But since Tesla's full-self-driving isn't ready to operate without a driver, it's unclear what that will entail. TSLA stock is nearing its 10-week moving average, which has served as resistance at 2024.
Taiwan Semiconductor
Taiwan Semiconductor will release March and first-quarter sales figures on Wednesday. The foundry, which makes chips for Nvidia, will report earnings next week. Apple (APL), Broadcom (AVGO), Google et al. It is a major chip-equipment buyer. Taiwan Semi's reports therefore have wider implications for the sector.
TSM shares rose 1.8% to 145.40, extending Monday's 1% advance but closing higher. The Taiwan half is working on a new platform.
Delta revenue
Ahead of the opening, Delta revenue is expected to rise 45% from a year earlier, while first-quarter revenue is expected to increase 6%. This starts the revenue for US carriers.
Delta shares rose 0.7% to 47.32 on Tuesday. DAL stock has a cup-with-handle buy point of 49.20.
What to do now
Investors need patience in a sideways market, waiting to see which way major indices and leading stocks break decisively. On Tuesday, the sideways market delivered a “big hit” session, with some leading stocks falling, some retreating, some finding support and some making good moves.
Wednesday's CBI inflation report may give some clear direction to the market rally, but may not. Earnings season is approaching, with the potential for big market, sector and stock moves up or down, or perhaps both.
Now, investors should work on their watch list. Leading stocks are testing key support levels and forming fundamentals in various sectors.
Read the big picture every day to stay in tune with market direction and leading stocks and sectors.
Follow Ed Carson on Threads @edcarson1971 and on X/Twitter @IBD_ECarson For stock market updates and more.
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