Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures. Late Friday, the House passed a stopgap funding bill to avert a government shutdown. Senate approval is expected soon.
The stock market rally suffered sharp, damaging losses last week following the less-dovish Fed outlook. But Friday’s strong upside reversal was encouraging, with the S&P 500 and Nasdaq regaining key levels.
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Palantir Technologies (PLTR), AppLovin (APP) and Astera Labs (ALAB), three institutional “heat” stocks, were among Friday’s winners, with Palantir and AppLovin flashing aggressive entries. Interactive Brokers (IBKR), Insulet (PODD), Doximity (DOCS) and CyberArk (CYBR) also made bullish moves Friday.
Nvidia (NVDA) had a solid finish to end the week fractionally higher, but the AI chip giant is below key levels.
Tesla (TSLA) backed off Wednesday’s record high, falling modestly for the week. But shares are still in a huge uptrend, with the pullback potentially constructive.
Nimble investors could have used Friday’s rebound as a chance to make a few buys. But there are reasons to be cautious as well. Much of the market is still under pressure.
Nvidia stock is a hedged position on IBD Leaderboard, with Tesla stock and Astera Labs on the Leaderboard watchlist. Palantir stock, AppLovin and Interactive Brokers are on SwingTrader. Astera Labs, Interactive Brokers and Insulet stock are on the IBD 50. Palantir and AppLovin stock are on the IBD Big Cap 20. Palantir and Doximity stock are on IBD Sector Leaders. AppLovin was Friday’s IBD Stock Of The Day.
A government shutdown seems off the table, with the Senate expected to approve the latest funding bill Friday night. The House overwhelmingly passed the short-term measure Friday evening. Two prior measures fizzled earlier in the week after President-elect Donald Trump and Tesla CEO Elon Musk intervened.
Dow Jones futures open at 6 p.m. ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.
ETFs tracking the Dow Jones and S&P 500 rose 0.3% and 0.2%, respectively, following the House vote to avert a government shutdown. The Nasdaq 100 QQQ ETF climbed 0.4%.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
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The stock market rally ended on a high note but it was a tough week. The key indexes and ETFs sold off hard Wednesday following a less-dovish Fed rate outlook, with all but the Nasdaq below the 50-day line.
The Nasdaq threatened to test its 50-day on Friday amid shutdown fears, but roared higher on a tame inflation report, moving back above the 21-day line. The S&P 500 just regained its 50-day Friday, backing off from near its 21-day intraday.
The Dow Jones and Russell 2000 are still below their 50-day averages.
The Dow Jones Industrial Average lost 2.25% in last week’s stock market trading. The S&P 500 index retreated 2%. The Nasdaq composite shed 1.8%. The small-cap Russell 2000 dived 4.45%.
The Invesco S&P 500 Equal Weight ETF (RSP) lost 3% for the week and the First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) tumbled 3.6%, despite strong Friday gains. Like the Dow and Russell, both are below their 50-day lines.
Many leading stocks suffered heavy losses for much of the week, but showed strength Friday.
The 10-year Treasury yield jumped 12.5 basis points to 4.52% even with Friday’s modest decline. The two-week gain of 37 basis points — the most in over two years — is a headwind for the market
U.S. crude oil futures fell 1.9% to $69.46 a barrel last week.
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) fell 3.1% last week. The iShares Expanded Tech-Software Sector ETF (IGV) sank 2.1%, with Palantir stock and AppLovin both key members. The VanEck Vectors Semiconductor ETF (SMH) declined 2.%. Nvidia stock is the dominant holding in SMH.
ARK Innovation ETF (ARKK) lost 3.2% last week and ARK Genomics ETF (ARKG) shed 4.2%. Tesla stock is a major holding across ARK Invest’s ETFs. Cathie Wood’s ARK has also built up a big NVDA stake.
SPDR S&P Metals & Mining ETF (XME) plunged 8.4% last week. SPDR S&P Homebuilders ETF (XHB) dived 7.25%. The Energy Select SPDR ETF (XLE) tumbled 5.7% and the Health Care Select Sector SPDR Fund (XLV) gave up 2.1%.
The Industrial Select Sector SPDR Fund (XLI) slumped 2.6%. The Financial Select SPDR ETF (XLF) retreated 2.1%
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Friday’s upside reversal provided a much-needed response to a bearish week. While encouraging, much of the market remains damaged. One good day doesn’t mean much unless further strength follows.
Leading stocks still look impressive overall.
Investors could have made some incremental buys, with Palantir, AppLovin, Interactive Brokers and more flashing bullish signals. But if those names undercut Friday’s lows or the market resumes its recent slide, quick exits will be key.
Waiting for more positive market signals is perfectly valid, such as the S&P 500 regaining its 21-day line or Nvidia stock pushing above its 50-day. That’s especially true if you are significantly or heavily invested.
But whether you’re an aggressive trader or a patient investor, it’s important to work on your watchlists. That past couple of weeks will require some additions and subtractions.
Keep in mind that we’re entering two holiday shortened weeks, with the possibility of tax-related selling in early January.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.
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