Dow Jones futures fall, Dell falls late; The Fed’s key inflation report is ready

Dow Jones futures fell slightly overnight, as did S&P 500 and Nasdaq futures, weighing in on the Fed’s key inflation report. Dell Technologies (DELL) i Costco Wholesale (COST) delayed reports of significant profits.

The stock market rally clearly had an impact on the main indexes of the Dow giant Salesforce.com (CRM) declined due to poor revenues and guidance. This caused serious losses in the software sector, including: Service, immediately (NOW) i Crowd blow (CRWD) z Microsoft (MSFT) breaking key support.

Meanwhile, Nvidia (NVDA) fell, halting huge earnings growth amid reports of new U.S. export restrictions on AI chips.

However, small and medium-sized companies responded.

Costco, Dell technologies, NetApp (NTAP) i Marvell technology (MRVL) was reported late. Dell shares fell overnight. while Marvell and Costco also went out of business. NetApp shares slightly down.

Nvidia stock is on the IBD Leaders List. Microsoft stock is on IBD’s Long-Term Leaders List. Nvidia and CrowdStrike stock are both on the IBD 50.

Core PCE inflation

The April PCE Price Index will be released at 8:30 a.m. ET as part of the Commerce Department’s Income and Expenditures Report. The overall index was up 0.3% from the previous month and 2.7% from a year earlier, both the same as in March. The core PCE price index, the Fed’s favorite inflation gauge, is expected to show a modest monthly gain of 0.2%, down from 0.3% in March. Core PCE inflation should remain at 2.8% compared to the previous year.

Today’s Dow Jones futures

Dow Jones futures fell a fraction from fair value. S&P 500 futures fell 0.2% and Nasdaq 100 futures fell 0.3%. Dell shares are included in the S&P 500 and Nasdaq 100 indexes.

The yield on 10-year Treasury bonds dropped to 4.54%.

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

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Stock market rally

The stock market session was mixed, with Salesforce and the software sector weighing on the major indexes even as small-cap stocks and many sectors advanced.

The Dow Jones Industrial Average fell by 0.9% during Thursday’s stock market trading, and CRM shares enjoyed a decline. The S&P 500 index fell 0.6%, just below its 21-day moving average. The Nasdaq composite lost 1.1%.

Meanwhile, market breadth was overwhelmingly positive after losers dominated on Wednesday.

The small-cap Russell 2000 jumped 1%, back above its 50-day line. The S&P MidCap 400 also gained 1%, just shy of the 50-day mark.

The Invesco S&P 500 Equal Weight ETF (RSP) gained 0.5%, although it remains below the 50-day line. The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) is down 0.4%, now just below the 50-day low.

U.S. crude oil prices fell 1.7% to $77.91 a barrel. Copper futures fell 2.6%.

The 10-year Treasury yield fell 7 basis points to 4.55% but continues to rise this week.

Software stocks

Software fell after Salesforce on Thursday, Nutanix (NTNX) i Okta (OKTA) sells off earnings and guidance on weak outlook Working day (WEDNESDAY) last week.

Salesforce crashed 19.7%, Nutanix plunged 23.1% and Okta fell 7.8%.

ServiceNow plunged 12% to a six-month low. CRWD shares fell 9.6%, below early entries and the 50-day line. CrowdStrike results will be released next Tuesday.

Microsoft shares fell 3.4%, undercutting their 50-day line. It’s still not far from the traditional point of purchase.

Megacap shares

Most megacap technologies have retreated beyond Microsoft.

Nvidia (NVDA) fell 3.8% on Thursday after rising 20.9% in the previous four sessions. Reuters reported on Thursday afternoon that the United States would restrict sales of Nvidia and AMD AI chips in the Middle East, partly over concerns that some of the chips would end up in China.

Metaplatforms (META) i Amazon.com (AMZN) fell 1.5%, while parent Google Alphabet (GOOGL) lost 2.15%.

Breaking the trend, Apple (AAPL) increased by 0.5%.

Areas of strength in the stock market

On the plus side, Birkenstock (BIRK) i Burlington Stores (BURL) rose in Buy on Earnings, with the latter also rising TJX Co. (TJX) back into buy range.

Hospital networks Universal health (UHS) i HCA Healthcare (HCA) issued buy signals while many medical names held steady or gained ground.

Meanwhile, select restaurants, investment managers and foreign e-commerce giants are doing well.

ETFs

Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) fell 5.8%, undercutting its 50-day line for the first time since March 2023. Salesforce and Microsoft stocks are huge components, for example, shares of ServiceNow, Nutanix , CrowdStrike and Zscaler also in the ETF. The VanEck Vectors Semiconductor ETF (SMH) fell 1.4%, with shares of Nvidia and Marvell both among its members.

Reflecting more speculative corporate stocks, the ARK Innovation ETF (ARKK) fell 1.6% and the ARK Genomics ETF (ARKG) rose 0.6%.

The SPDR S&P Metals & Mining ETF (XME) rose 12.1% and the Global X US Infrastructure Development ETF (PAVE) rose 0.9%. The U.S. Global Jets ETF (JETS) rose 0.7%. SPDR S&P Homebuilders ETF (XHB) rose 1.7%. The Energy Select SPDR ETF (XLE) rose 0.3% and the Health Care Select Sector SPDR Fund (XLV) rose a fraction.

The Industrial Select Sector SPDR Fund (XLI) gained 0.7%. The Financial Select SPDR ETF (XLF) gained 0.5%.

Time the market with IBD’s ETF market strategy

Key earnings

Costco’s earnings slightly outpaced views, but COST stock fell slightly in overnight trading. Shares rose 1.1% during Thursday’s regular session to 815.34, near the top of a buy zone with a cup entry of 787.08.

Dell’s earnings were in line with FactSet, although they missed other consensus forecasts. Revenues in the black, return to growth. The computer and server maker who turned the game into artificial intelligence gave weak hints. Shares fell more than 15% during the extended action. Dell shares fell 5.2% to 169.92 on Thursday, but that was the close of the day after hitting a record high on Wednesday.

NetApp’s profits outpaced views. NTAP shares fell overnight. The data storage giant fell 0.85% to 116.50 on Thursday, after hitting a record intraday high. NetApp shares closed slightly up from a double-bottom buy point. NetApp rival Clean storage (PSTG) rose 0.4% on Thursday after a wild session, hitting a new high following its own results on Wednesday evening.

Marvell’s profits and sales were largely in line with views. MRVL shares fell sharply in extended trading. The data center chipmaker rose 1.4% on the day to 76.85, again above a 76.29 buy point from a double-bottom base.

What to do now

The market rally continues to be split, although some winners and losers have swapped places.

So far, this uneven market pause or pullback has allowed some companies to strike a balance or quickly show relative strength. There were buy signals for several companies, although these were often driven by wide earnings differentials.

Investors may choose to gain new positions or hold on to what they have rather than cut their losses.

If the market returns to broad-based growth, there will be many more buying opportunities. However, if fragmented gains turn into an overall decline, investors want to be ready to reduce their investments.

Update your watchlists and exit strategies.

Read The Big Picture every day to stay up to date with market direction and leading stocks and sectors.

Please follow Ed Carson on threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock updates and more.

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