Dow Jones futures rose slightly in after-hours trading, as did S&P 500 futures and Nasdaq futures. Nvidia (NVDA) chip maker Taiwan Semiconductor (TSM) will report sales data on Friday.
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The stock market rally was solid on Thursday, with the Dow Jones rising for the seventh consecutive day. Leading stocks showed bullish or constructive action.
Nvidia shares fell slightly for the third day in a row and are working on a possible solution. Broadcom (AVGO) is located near various listings. Chip equipment giants Applied materials (AMAT) and KLA Corp. (KLAC) are also near buy points.
Shares of Taiwan Semiconductor traded between two buy points ahead of April sales data. TSMC provides chips for Nvidia, Broadcom, Apple (AAPL) and many others. It is also a big buyer of chip gears.
Taiwan Semi sales data follows earnings reports from AI chip IPOs Arm stocks (ARM) and Astera Labs (FLAME).
Tesla shares have now just fallen below an important level Tesla (TSLA) Rival BYD (BYDDF) in a buy range.
Nvidia is on the IBD Leaderboard, while shares of Taiwan Semiconductor and ALAB are on the leaderboard’s watchlist. Nvidia stock is in SwingTrader and IBD 50. KLAC stock is in IBD Long-Term Leaders. AVGO stock is in the IBD Big Cap 20.
Dow Jones futures today
Dow Jones futures rose 0.15% from fair value. S&P 500 futures and Nasdaq 100 futures rose 0.1%.
Keep in mind that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.
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Stock market rally
The stock market rally recorded broad gains on Thursday.
The Dow Jones Industrial Average rose 0.9% in Thursday trading. The S&P 500 index rose 0.5%. The Nasdaq Composite rose 0.3%. The small-cap Russell 2000 gained 0.9%.
The Dow Jones, which has risen for seven consecutive sessions, is heading towards record highs. This also applies to the S&P 500. The Nasdaq and the Russell 2000 took a break in the last few days. All are above their 50-day moving averages.
Leading stocks continue to perform well. In addition to various technology stocks, numerous companies from the restaurant, financial, medical, construction and infrastructure sectors are also showing strength.
U.S. crude oil prices rose 0.3% to $79.26 a barrel.
The 10-year Treasury yield fell 3 basis points to 4.45%, its lowest close in a month.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) fell 0.1%. The VanEck Vectors Semiconductor ETF (SMH) fell 0.6%. Nvidia and TSM shares are the two largest SMH holdings, with Broadcom, KLA and AMAT shares also being key members.
The ARK Innovation ETF (ARKK) fell 0.6% and the ARK Genomics ETF (ARKG) rose 1.9%, reflecting more speculative story stocks. Tesla is Ark Invest’s No. 1 ETF. Cathie Wood’s Ark also owns a small stake in BYD.
The SPDR S&P Metals & Mining ETF (XME) rose 2.1% and the Global X US Infrastructure Development ETF (PAVE) gained 1.2%. The SPDR S&P Homebuilders ETF (XHB) gained 2.1%. The Energy Select SPDR ETF (XLE) rose 1.3% and the Health Care Select Sector SPDR Fund (XLV) gained 0.9%.
The Industrial Select Sector SPDR Fund (XLI) rose 1%, while the Financial Select SPDR ETF (XLF) gained 0.75%.
Plan the market with IBD’s ETF market strategy
AI Chip Stocks
Taiwan Semiconductor fell 0.6% to 142.79 on Thursday. Shares are heading toward a double bottom buy point of 148.43. TSM stock reclaimed the 50-day line on May 3 and crossed a descending trend line.
Nvidia shares fell 1.8% to 887.47 on Thursday, a third straight slight decline, still holding the 50-day line. According to MarketSurge, the AI chip leader has a consolidation buy point of 974. NVDA stock appears to be working on a handle that would provide a lower buy point. Nvidia results are due on May 22nd.
Broadcom shares slipped 1.5% to 1,305.67 on Thursday, just below the 50-day line. AVGO stock has a consolidation buy point of 1,438.17, although investors could use 1,403.98 as an early entry. A decisive move beyond the 50-day mark, perhaps beyond the 1,355 area, could be an aggressive entry.
Applied Materials shares fell slightly, down 0.5% to 206.33 on Thursday, still holding at the 50-day line. Shares have a flat-base buy point of 214.91. Investors could use the May 7 high of 209.47 as an entry point. However, Applied Materials’ results are expected on May 16.
KLA shares fell 0.9% to 710.67 on Thursday, slightly below a flat base entry of 727.64.
Arm shares fell 2.3% to 103.59 on Thursday, rebounding from an intraday low of 97.76. Stocks have recovered somewhat in recent weeks, but have only recovered part of their huge losses from mid-April. Late Wednesday, the AI and wireless chip developer beat fourth-quarter forecasts and beat first-quarter results, but gave a lackluster full-year revenue target.
Astera Labs shares rose 1.2% to 70.06 on Thursday, but fell 9.1% on Wednesday. Late Tuesday, the AI chip IPO significantly beat first-quarter expectations and showed a rise in the current quarter, but that wasn’t enough. ALAB stock has a 95.21 buy point based on the IPO, although the April 29 high of 88.59 may be a better entry. However, like Arm, Astera Labs may take some time before it is up and running again.
Tesla stock
Tesla shares fell 1.6% to 171.97, just below the 50-day line. Shares gave back most of their 15 percent gain on April 29. This comes after Tesla cleared key hurdles to rolling out full autonomous driving in China.
Rich Otto announced Wednesday that he resigned as Tesla’s head of product launches last week, citing sour sentiment amid ongoing drastic layoffs.
Elon Musk has announced layoffs of more than 10%. Due to weak demand and an apparent shift away from new vehicles, he eliminated the Supercharger and new vehicle teams entirely. Numerous top managers have resigned or been fired in recent months.
B.P (BP) said Thursday it wants to buy Tesla Supercharger sites in the United States
Meanwhile, China’s BYD rose 1.8% to 28.95. BYD stock, the only electric vehicle maker up in 2024, is trading above the 200-day line and a short consolidation. The EV giant will unveil the Sea Lion, a Model Y rival, on Friday with fast charging, smart car technology and other features. BYD will officially launch a plug-in hybrid pickup on May 14th.
What now
The Nasdaq’s recent pause has allowed stocks like Nvidia to work on possible fundamentals or prices, while fast-rising stocks are quickly gaining relative strength.
This also gives investors more time to update their watchlists, but not for too long. Leading stocks continue to send buy signals. You can gradually increase exposure as the market recovery continues to go well.
Remember, if these positions falter or the major indices fall below their 50-day lines, you should cut back. So have your exit plans ready.
Read The Big Picture daily to stay up-to-date on market direction and the leading stocks and sectors.
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