Dow Jones futures edged higher Monday morning, as did S&P 500 futures and Nasdaq futures. AI tech titans Apple (AAPL), Microsoft (MSFT), Meta-platforms (META) And Amazon.com (AMZN) headlines a week of massive earnings. The Federal Reserve is expected to announce this week that rate cuts are coming.
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These 7 Great Stocks Are Set to Report Earnings as Tech Stocks Drop
The stock market has been on a strong rally over the past week, with small caps surging and plenty of buying opportunities emerging across a variety of sectors. The Nasdaq fell below its 50-day line, though the S&P 500 regained that level on Friday.
You’re here (TSLA) and Google-parent Alphabet (GOOGLE) fell on their profits, while the CEOs of Google and Meta Platforms expressed concerns that tech companies may be spending too much money on artificial intelligence. Nvidia (NVDA).
So the signals from Apple, Microsoft, Meta Platforms and Amazon regarding AI capital spending and monetization will be huge next week.
For investors, the best opportunities and buying setups remain in non-technology sectors.
The video embedded in this article takes an in-depth look at upcoming earnings from Apple, Microsoft, Meta, and Amazon, while previewing Advanced microsystems (AMD), Arm (ARM), Arista Networks (A NET) and more.
Dow Jones Futures Today
Dow Jones futures rose 0.4% from fair value, with McDonalds (MCD) edged higher despite weak earnings. S&P 500 futures rose 0.4% and Nasdaq 100 futures climbed 0.7%.
The yield on 10-year Treasury notes fell to 4.16%. Crude oil edged lower.
Remember that the night action in Dow Futures and elsewhere does not necessarily translate into actual trading in the next regular quarter stock market session.
Fed Meeting
The Federal Reserve will meet on July 30-31, and markets expect policymakers to leave rates unchanged. But the Fed’s statement at 2:00 p.m. ET and Fed Chair Jerome Powell’s speech at 2:30 p.m. ET could signal a willingness to cut rates.
Investors have fully incorporated into prices a rate cut of at least a quarter of a point end of September, and we are looking at at least two, if not three, reductions this year.
If Powell does not give a clear green light to a rate cut on Wednesday, financial markets could react badly.
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Stock markets rebound
Stock market gains diverged last week, although a broad rebound was seen on Friday.
The Dow Jones Industrial Average rose 0.6% last week stock market tradingrebounding from a drop toward the 21-day line with a 1.5% jump on Friday. The S&P 500 index fell 0.8%, but regained its 50-day moving average on Friday.
The Nasdaq Composite Index fell 2.1% for the week, below its 50-day line, despite Friday’s rebound.
The small-cap Russell 2000 index jumped 3.5%, near recent multi-year highs.
The Invesco S&P 500 Equal Weight ETF (RSP) climbed 0.8%, just below record highs.
The first Nasdaq 100 equal-weight ETF (QQEW) fell 1.65%, below its 50-day line, as tech weakness extends beyond megacaps.
The upcoming results from Apple, Microsoft and other major tech companies this week — as well as the Fed’s rate outlook — will go a long way in determining whether the Nasdaq can find its footing.
While mega-cap and AI companies have generally struggled, there have been a number of breakouts or stocks reclaiming buy points or making early entries, including in housing/construction, industrials/aerospace, financials, energy as well as some medical sectors and even some software.
The 10-year Treasury yield fell four basis points to 4.2%. The two-year yield fell 12 basis points to 4.39% as the yield curve continued to invert less.
U.S. crude oil futures fell 1.89% to $77.16 a barrel last week, down 7.2% over three weeks.
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Among growth ETFs, the Innovator IBD 50 ETF (FFTY) fell 1.3% last week. The iShares Expanded Tech-Software Sector ETF (IGV) lost a fraction, with Microsoft shares a major holding. The VanEck Vectors Semiconductor ETF (SMH) fell 3.2%, with Nvidia stock a dominant member and AMD also a key holding.
SPDR S&P Metals & Mining ETF (XME) rose 1% last week. The Global X US Infrastructure Development ETF (PAVE) rebounded 2.4%. US Global Jets ETF (JETS) rose 0.1%. SPDR S&P Homebuilders ETF (XHB) jumped 4.3%. The Energy Select SPDR ETF (XLE) fell 0.2% and the Health Care Select Sector SPDR Fund (XLV) climbed 1.4%. The Industrial Select Sector SPDR fund (XLI) increased by 1.2%.
The SPDR Financial Select ETF (XLF) rose 1.3% and the SPDR S&P Regional Banking ETF (KRE) jumped 5.75%.
Reflecting more speculative stocks, ARK Innovation ETF (ARKK) fell 1.8% last week and ARK Genomics ETF (ARKG) climbed 7.4%.
Tesla stock is the top holding among Ark Invest ETFs. TSLA stock fell 8.1% last week on a weaker-than-expected result and the lack of positive surprises on Elon Musk’s moonshots during the call.
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AI Signals from Big Tech
Apple, Microsoft, Meta and Amazon all had a rough week, with only Apple stock breaking its 50-day mark. They’re not broken yet, but they need some repairs.
For now, investors will be looking for signs that tech companies are monetizing generative AI, including Apple’s hints at production orders for the upcoming AI-powered iPhone 16 and Microsoft’s Copilot efforts. Growth at Microsoft Azure and Amazon Web Services is also important.
Apple Intelligence will be available in iOS 18.1 in October, Bloomberg reported Sunday, later than the September release. Developers will still have access to Apple’s new AI features this week.
The key question is whether these tech titans are willing to continue spending massively.
Last week, Meta CEO Mark Zuckerberg and Alphabet CEO Sundar Pichai admitted that tech companies may be investing too much in artificial intelligence. However, both said that underinvesting in AI is a bigger risk than overspending.
Tech companies are feeling the pressure to spend massively, if only to maintain their current market position and revenue. In this regard, Microsoft-backed OpenAI launched a New AI-powered search engineSearchGPT, attacks Google.
Apple stock is below its 21-day line but above its 50-day line. Shares of Microsoft, Meta and Amazon fell below their 50-day lines last week.
Strong AI investment spending could boost Nvidia stock, along with earnings and guidance from AMD and Arm Holdings. Nvidia shares fell 4.1% for the week, pulling back from Thursday’s lows but below the 50-day line.
Arista Networks, in addition to its own results Tuesday night, will also be influenced by investment plans from its major customers Microsoft and Meta. ANET stock also fell below its 50-day price last week, though it found support near a previous buy point.
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What to do now
The Federal Reserve and big tech companies will dominate headlines next week, and for good reason. But with a few exceptions, investors should focus on non-tech sectors. Many industrial and construction companies will report earnings this week, as will other names in the aerospace sector.
Investors have had the opportunity to pivot to new hot sectors rather than tech in recent weeks. At the very least, tech exposure should be significantly reduced at this point.
Evaluate your portfolio and work on your watch lists. A broad market rally could trigger a new wave of buying opportunities, but this week’s headlines could also trigger a bigger drop.
Nvidia shares are rising IBD Rankingswith AMD on the watch list of the ranking. Apple shares are on SwingTrader. Microsoft shares are up IBD Long-Term Leaders.
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