Dow Jones futures were little changed after hours, along with S&P 500 futures and Nasdaq futures. Brace (faster) and C3.ai (AI) headline earnings on Wednesday night.
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The stock market’s rally started with good gains on Wednesday, but ended in decline. Treasury yields and crude oil continued to fall amid concerns that the economy is slowing too fast.
Tesla (D.S.L.A) managed gains, but were the only top seven stocks to advance.
Advanced Micro Devices (AMD) unveiled its latest AI chip line Nvidia (NVDA) directly in artificial intelligence. According to AMD CEO Lisa Su, the market for AI chips will be $400 billion by 2027. Google Parents letters (Google) unveiled its Gemini large-language model and its latest in-house AI chip. All of these announcements are important to the AI leader Microsoft (MSFT)
But AMD stock fell after regaining a buy spot on Wednesday morning. Nvidia stock, which regained its own buy point, turned negative. Google shares fell slightly below key levels, while Microsoft maintained a buy rating.
Microsoft Stock and Nvidia are on IBD Leaderboard and are on IBD 50. Nvidia stock is on SwingTrader. MSFT stock is on the IBD Long-Term Leaders list. A video embedded in the article was analyzed Ollie’s Bargain Outlet (Ollie) stock, Trex (TREX) and AMD.
Dow Jones Futures Today
Dow Jones futures flat vs. fair value. S&P 500 futures and Nasdaq 100 futures edged lower.
The 10-year Treasury yield fell to 4.11%.
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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AI stock fell of late as C3.ai reported a smaller-than-expected loss, but revenue came in short and so did earnings guidance. AI stock retreated 3% to 29.16 in Wednesday’s regular session, above the 200-day line. A move above the Nov. 15 high of 31.83 would provide an entry into the C3.ai stock, which is attempting to form a right side that could be a very deep consolidation.
BRZE shares rose in extended action, with Braze posting a smaller-than-expected loss and leading higher. The software maker fell 1.2% to 56.12 on Wednesday after hitting a 21-month high. Brace stock is significantly extended from a buy point after running off the bottom of the foundation that began on November 1.
Sprinkler (CXM) revenues and earnings topped fiscal Q3 views. CXM stock fell overnight, indicating a drop below the 16.68 cup-base buy point. Shares fell 0.2% to 16.70, having rebounded from 17.14 intraday.
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Stock market rally
The stock market’s rally started with solid gains, but soon pared the gains and turned lower during the session.
The Dow Jones Industrial Average fell 0.2% in stock market trading on Wednesday. The S&P 500 index was down 0.4%. The Nasdaq composite retreated 0.6%. The small-cap Russell 2000 fell 0.1%.
While several leading stocks held, some aggressive-growth plays, including in the AI space, suffered big losses.
The 10-year Treasury yield fell five basis points to 4.12% following a weaker-than-expected ADP employment report. On Tuesday, the 10-year Treasury yield fell 12 basis points on a surprisingly weak job outlook. Friday’s jobs report looms. Notably, the two-year Treasury yield rose 3 basis points to 4.6%.
The S&P 500 and Nasdaq have been largely sideways over the past two weeks, despite continuing declines in 10-year Treasury yields. Some of that will reflect technical resistance at the 2023 highs after big November gains. But it could signal concerns that the fall in Treasury yields now reflects recession fears and cooling inflation. Weak foreign economies don’t help.
Trucking companies Arkbest (ARCB) and Old Dominion Freight Line (ODFL) weak November figures this week, a bad sign for economic activity. But rail data is strong.
Meanwhile, US crude oil prices fell 4.1% to $69.38 a barrel, the lowest price since June 27. It fell 10.9% over the past five sessions, another sign of weakening demand.
ETFs
Among growth ETFs, the iShares Expanded Technology-Software Sector ETF (VATWith 1% retreated, MSFT is the No. 1 holding with the stock. VanEck Vectors Semiconductor ETF (SMHgave up to 0.8%. Nvidia and AMD shares are major SMH holdings.
Reflecting the more speculative story stocks, the ARK Innovation ETF (ARKK) rose 1.3% and the ARK Genomics ETF (ARKGrose 0.4%. Tesla stock is still heavily weighted across Arc Invest’s ETFs.
SPDR S&P Metals & Mining ETF (XME) fell 1.2% and the Global X US Infrastructure Development ETF (sidewalk0.35% improved. US Global Jets ETF (JETS) flew higher by 1.9%. SPDR S&P Homebuilders ETF (XHB) rose 1.2%. Energy Select SPDR ETF (XLE) fell 1.5% and the Health Care Sector SPDR Fund (XLVUp 0.1%.
Industrial Select Sector SPDR Fund (XLIrose 0.4%. Fund Selection SPDR ETF (450.5% was given.
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AMD AI chips
AMD formally unveiled its MI300X AI chip line at its AI event on Wednesday. The chipmaker said the MI300X lineup will perform as well or better than Nvidia’s H100.
Nvidia has an even more advanced H200 AI chip coming, but AMD’s AI offerings may undercut its dominance and pricing.
AMD CEO Lisa Su now sees the AI accelerator chip market rising to more than $400 billion by 2027 and growing by more than 70% annually over the next four years. That’s more than double what AMD expected in August.
In November, AMD predicted $2 billion in sales of AI chips by 2024, so expectations were high as of Wednesday.
AMD stock fell 1.3% to 116.82 on Wednesday, before the MI 300X AI chip announcement, with shares briefly retrieving a 122.11 cup-with-handle buy point. Investors may choose to use the Nov. 29 high of 125.73 as the best handle buy point, although Wednesday’s intraday high of 122.83 will be the initial entry.
Nvidia stock fell 2.3% to 455. With an intraday high of 473.87, NVDA stock moved above the 21-day line and reached a still valid 476.09 double-bottom buy point. The AI chip leader is just above its 50-day line. It may be in the process of creating a new integration.
Microsoft, a major Nvidia AI chip buyer, was at the AMD event. The Dow Jones tech titan unveiled its own AI chip this month. This will reduce dependency on third parties such as Nvidia GPUs and AMD.
MSFT shares fell 1% on the 21-day streak to 368.80. The stock has a cup-base buy point of 366.78. Lateral action over the past few weeks allows moving averages to catch up.
Like Google, Microsoft and Amazon.com (AMZN), unveiled its latest in-house AI chip on Wednesday. Meanwhile, its Gemini big-language model will power the Bart chatbot and various AI monetization initiatives.
Google shares fell 0.7% to 130.02. Shares are working on a buy point at the 139.42 cup-with-handle, but are below the 50-day line.
Tesla stock
Tesla shares rose 0.3% to 239.37, but continued to push past a 50-day line. According to MarketSmith analysis, the EV company has a double-bottom buy point of 278.98. Investors can use the trendline of 250 or the November 29 high of 252.75 as an initial entry.
Meanwhile, Elon Musk’s artificial intelligence venture, xAI, raises $1 billion in funding.
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Market rally analysis
Lateral market action can be frustrating, at least in the S&P 500 and Nasdaq. Investors want to see their stocks rise every day, and who wants to take a break after November’s big run? Days when stocks are strong and close weak are encouraging, especially when investors buy highs in the morning.
But a pause can be healthy. A week’s decline in the major indexes, albeit moderate, will help several leading stocks build handles, while others can gain relative strength as they build on the right side of fundamentals.
In a sideways market, stocks may flash a buy signal, but then give up gains or give back less. If you have more exposure, you can stand the pot. You may make some profit or take advantage of new buying opportunities, but they may be marginal.
It is important for investors, even active traders, to keep a tight grip on patience.
For now, focus on keeping your watchlists up to date. Some new stocks and sectors are coming up and some will be dropped. If the market rally goes up another leg, you need to be prepared.
Read the big picture every day to stay in tune with market direction and leading stocks and sectors.
Follow Ed Carson on X/Twitter @IBD_ECarsonAt threads @edcarson1971 and Bluesky at @edcarson.bsky.social For stock market updates and more.
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