debt ceiling talks resume; The key to Nvidia’s earnings is the market rally

Dow futures open Sunday night, along with S&P 500 futures and Nasdaq futures. Nvidia’s earnings threaten to be big in the coming week, with debt ceiling talks set to resume Friday night after previously stalled for hours.


The stock market rally was boosted last week by optimism about a debt ceiling deal and an easing of banks’ concerns, with gains led by AI-powered technology leaders such as nvidia (NVDA), advanced microdevices (amd), services now (now), a parent of Google the alphabet (Google), snowflake (to snow Palantir Technologies (PLTR).

The Nasdaq Composite and S&P 500 hit 2023 highs, with the Nasdaq 100 posting its best level in more than a year. White House and congressional leaders appeared to be heading for a deal on the debt ceiling as concerns about regional banks eased.

On Friday, GOP negotiators suspended debt ceiling talks, saying President Biden’s White House was being unreasonable. Around the same time, a report came out that Treasury Secretary Janet Yellen had told bank executives that more bank mergers might be needed. This weighed on regional bank stocks on Friday, even though they rallied during the week.

Leading indicators included the debt ceiling setback and Yellen’s comments on Friday, in part because it was around the same time that Federal Reserve Chairman Jerome Powell signaled his support for a rate freeze next month.

Investors also remain confident in the debt reduction deal. Negotiations on the debt ceiling even resumed on Friday evening.

No debt ceiling talks were scheduled for Saturday. President Biden will return from a trip to Asia on Sunday.

The stock market rally remains somewhat divided, with a small lead. However, investors can add exposure with caution, even though not many stocks currently offer buying opportunities.

Tesla (TSLA) made an upward move during its shareholder event last week, clearing some key levels. But TSLA stock faces more resistance.

Nvidia earnings

Nvidia’s earnings Wednesday night will be a big deal for the market rally. The NVDA share is in line with the market. It is the leading megacap and AI stock in a market recovery dominated by megacaps and AI plays. Nvidia shares are up 10% last week and have stretched significantly.

A pause for Nvidia stock or a modest decline over several weeks would be healthy. But if Nvidia’s revenue or guidance disappoints, NVDA could be severely punished. That would affect rival AMD, as well as Google and the many “artificial intelligence” games that have driven the market upwards.

ServiceNow shares soared last week amid AI-related alliances with Nvidia and Microsoft (MSFT). SNOW shares gained on a report it could buy an AI search company. Shares of PLTR, a long-game AI game, are up 23% this week after earnings jumped 28% the previous week. Google stock is up 14% so far in May.

Other Important Merits

snowflake Eleven beauty (dwarf), Palo Alto Networks (Banu) And outside deckers (dek) is also one of the prominent companies that will post profits next week.

The SNOW share is in a 10-month consolidation period. ELF shares are consolidating on the 21-day line after a huge surge. PANW stocks are trying to hold the 50-day line within a volatile new flat base. DECK stock was a big gainer, but last week it fell below the 50-day line as it is today hold on (On) And foot locker (fl) withdrew their results.

Nvidia stock runs IBD leaderboard, with ELF arrows on leaderboard watch list. ice stocks at defect 50. Stock now at IBD Big Cap 20.

The video embedded in the article discusses the weekly market action and presents three non-AI plays: lifelong group (LTH), Meritage houses (MTH) And MercadoLibre (millie).

Dow Jones Futures Today

Dow Jones futures open at 6 p.m. ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.

Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.

Join IBD experts as they analyze actionable stocks in the rising stock market on IBD Live

Stock market rise

The stock market rebounded last week, with a huge gap between the leaders and the laggards.

The Dow Jones Industrial Average rose 0.4% in trading last week. The S&P 500 rose 1.65%. The Nasdaq Composite jumped 3%. Smallcap Russell 2000 recovered by 1.9%.

The 10-year Treasury yield rose 23 basis points last week to 3.69%, reaching a two-month high.

The odds of a rate hike next month briefly exceeded 40% during the week amid strong economic data and some aggressive comments from Fed officials. But when Powell said “we can afford to look at the data,” the odds dropped to about 20% on Friday.

US crude oil futures rose 2.2 percent this week to $71.55 a barrel.

Exchange traded funds

One of the growth ETFs is iShares Expanding Technology and Software Sector Fund (IGV) up 5.25%. Inventory is now a big IGV component. VanEck Vectors Semiconductor Corporation (SMH) increased by 8.5%. Nvidia stock is one of SMH’s most important stocks, along with AMD stock. Reflecting more speculative stories, the ARK Innovation ETF (ARK)ark(up 2.7% last week and ARK Genomics ETF)ARKG) gained 3%. Tesla stock is the number one stock held in Ark Invest ETFs. Cathie Wood’s Ark also owns some shares of PLTR.

SPDR S&P Metals & Mining ETFs (XME) fell 0.5%, its fifth straight weekly loss. US Global Gates Foundation ETF (Aircraft) climbed 4.1%. SPDR S&P Homebuilders ETF (XHB) up 1.2%. Energy Defined Fund SPDR ETF (xle) gained 1.4%. SPDR Healthcare Sector Selection Fund (XLV) fell by 0.7%.

SPDR Financial Selection Fund (XLF(up 2.2% in the SPDR S&P Regional Banking ETF)KR) rallied 7.8%, despite Friday’s drop of 1.8%.

Top five Chinese stocks to watch right now

Buy Tesla shares?

Tesla stock rose 7.2% to 180.14 last week, recovering from near the 21-day line and regaining the 50-day line for the first time since early April.

Investors responded well to Tesla Shareholders’ Day on Tuesday. CEO Elon Musk has confirmed that deliveries of the Cybertruck will begin this year, while again referring to a next-generation vehicle. Musk also said Tesla will “try” some advertising. Like any savvy CEO in 2023, he mentioned “artificial intelligence” several times.

Meanwhile, Tesla has quietly introduced some new stock discounts on Model 3 cars in the US, following recent cuts on Model 3 and Y cars in Europe. Stock discounts don’t make the headlines that official price cuts do, but they do hit profit margins in the same vein. The balance between production, delivery and pricing is Tesla’s most important story in 2023.

Investors might view Friday’s move above the 50-day moving average as an early entry for Tesla stock. But she will be very aggressive. Tesla is still facing the 200-day line, which is dropping towards 200. Just above that is the buy point of 207.89, just above the March 31 high. This is a seven week consolidation or a three month double bottom buy point.

Tesla vs BYD: EV giants vying for the crown, but which one is better to buy?

Analysis of the market rally

Show the rise in the stock market The strength of last week, but progress is still limited. The Nasdaq is booming and peaking in 2023, and so is the S&P 500 late in the week.

The Russell 2000, backed by bank stocks, also had a strong week, but it is well off its 2023 highs. The Dow Jones posted small weekly gains after lowering the 50-day mark on Tuesday.

The tech boom has expanded from big stocks like Google and Nvidia to big chip and software names like AMD and ServiceNow and AI like Palantir. But most have now been extended.

The Nasdaq 100 hit a 52-week high, up 3.5% for the week. First Trust Nasdaq 100 Equal Weighted Mutual Fund (QQEW), which was struggling, rose 2.45%. It is close to the highest level in 2023.

But the overall width is lackluster at best. Invesco S&P 500 Equal Weight fund (RSP) jumped nearly 1%, but fell back below the 200-day mark on Friday. The RSP is not much closer to the highs of 2023 than the October bear market lows.

The losers were ahead of the winners on Friday after a modest positive expansion on Thursday. But new highs outweighed the losers for the second session in a row.

In addition to chips, software and huge inventories, homebuilders, building materials, medical products and biopharmaceutical names are doing well. This also applies to travel games and some share payments.

Shoe-related stocks fell last week due to ONON and Foot Locker. outside decks as well Dick’s Sporting Goods (DKS), will try to do their best.

Debt ceiling talks, banking worries and recession risks remain the big issues facing the market rally. While Wall Street and political analysts still view a debt reduction deal as highly likely, several headlines could move markets up and down in the coming days.

It’s time to hit the market with IBD’s ETF market strategy

What are you doing now

The stock market is trending higher, but leadership is narrow and market breadth is questionable. Several leading stocks have been expanded.

Overall, investors who took advantage of techniques that eliminated buy signals over the past week have been rewarded, some lavishly. But overall exposure should remain modest. Consider taking partial profit on the big winners. You definitely have a game plan.

A healthy number of stocks are being created from a variety of sectors, and this can continue as the market movement widens. So you want to be ready.

Read the big picture every day to stay on top of market trends, leading stocks and sectors.

Follow Ed Carson on Twitter at @tweet For stock market updates and more.

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