Dow Jones futures fell slightly Sunday evening, along with S&P 500 futures and Nasdaq futures, with shifting bets on the presidential election in focus. The next Federal Reserve meeting and a continued earnings wave also are on tap this week.
Warren Buffett’s Berkshire Hathaway (BRKB) on Saturday reported operating profit fell 6% vs. a year earlier to $10.09 billion. Revenue fell a fraction to $93 billion. Cash levels swelled to a fresh high of $325.21 billion, fueled by sales of Apple (AAPL) and Bank of America (BAC). Berkshire halted stock buybacks.
Vistra (VST), the S&P 500’s top performer in 2024, reports this coming week. So do Vista rival Constellation Energy (CEG) as well as Arista Networks (ANET), Palantir Technologies (PLTR) and Howmet Aerospace (HWM) — all top-20 S&P 500 stocks in 2024.
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Palantir Earnings Due As Tech Stocks Stumble
Nvidia (NVDA) fell below a buy point last week but reclaimed a key level Friday. Late Friday, S&P Dow Jones Indices announced that Nvidia will replace rival chipmaker Intel (INTC) in the Dow Jones Industrial Average before the open on Nov. 8. NVDA stock rose modestly Friday night on the Dow Jones news. Nvidia stock fell 4.4% to 135.37 during the week, below the 140.76 buy point, but finished above the 21-day line.
Tesla (TSLA) tumbled below a buy point, on the verge of a sell signal.
Investors should be careful until the election and other big news is out of the way.
Dow Jones futures fell 0.4% vs. fair value. S&P 500 futures declined 0.2% and Nasdaq 100 futures lost 0.15%.
Futures may be reacting to prediction markets showing the presidential race as a true toss-up once again. The stock market had been pricing in a Donald Trump victory over Kamala Harris on Nov. 5 but pared those bets late last week, taking their cue from betting markets. Those betting markets showed continued movement over the weekend.
The 10-year Treasury yield rose to 4.39%.
Crude oil futures rose nearly 2%. On Sunday, OPEC+ delayed a production increase by another month, until the end of 2024. The move wasn’t a surprise, especially just ahead of U.S. elections.
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 suffered losses last week, including Thursday’s big sell-off led by Microsoft (MSFT) and Meta Platforms (META). The indexes bounced back somewhat on Friday thanks to Amazon.com (AMZN) and a weak jobs report, but faded into the close as Treasury yields jumped.
Trump Media & Technology (DJT), which has acted as a Trump election sentiment gauge, plunged nearly 41% in the past three sessions. That’s after DJT stock skyrocketed 338% in just over a month.
The Dow Jones Industrial Average shed 0.15% in last week’s stock market trading. The S&P 500 index lost 1.4%. The Nasdaq composite, which hit a record high Thursday morning, gave up 1.5%. The small-cap Russell 2000 edged up 0.1%.
All four indexes bounced Friday but slashed intraday gains after peaking around their 21-day averages. The Dow and Russell 2000 did recover their 50-day lines after dropping below that key level Thursday.
The Invesco S&P 500 Equal Weight ETF (RSP) fell nearly 1% for the week and failed to regain its 50-day line Friday.
The 10-year Treasury yield jumped 13 basis points to 4.36%, the highest level in nearly four months. The yield finally closed above the 4.3% level on Friday.
U.S. crude oil futures fell 3.2% to $69.49 a barrel last week.
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It’s possible that the market will remain cautious for the next several days. Election Day is Tuesday, Nov. 5, but it’s probable or even highly likely that it’ll be unclear who won the presidential election for at least a few days as key states such as Pennsylvania count mail-in ballots.
So that uncertainty — which could stretch out to weeks — may hang over the stock market, as well as bitcoin, gold, Treasury yields and individual names such as Tesla and DJT stock.
The Federal Reserve meets Wednesday-Thursday, with a Fed rate cut seen as a lock on Thursday afternoon. But there’s a chance of a December pause.
China’s parliament meets this coming week. There are hopes or expectations that a major fiscal stimulus will be announced late in the week.
And, of course, there will still plenty of earnings reports.
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) fell 1% last week. The iShares Expanded Tech-Software Sector ETF (IGV) rose a fraction. The VanEck Vectors Semiconductor ETF (SMH) slumped 3.25%. Nvidia stock is SMH’s dominant holding.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) lost 2.2% last week and ARK Genomics ETF (ARKG) bounced 3%. Tesla stock remains a top holding across Ark Invest’s ETFs.
SPDR S&P Metals & Mining ETF (XME) dipped 0.2% last week. SPDR S&P Homebuilders ETF (XHB) retreated 1.7%. The Energy Select SPDR ETF (XLE) dropped 2% and the Health Care Select Sector SPDR Fund (XLV) gave up 0.6%.
The Industrial Select Sector SPDR Fund (XLI) fell 1%. The Financial Select SPDR ETF (XLF) edged down 0.1%.
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Constellation Energy reports early Monday, with peer Vistra due on Thursday. The electric utilities, which are both nuclear and AI plays, have been consolidating near the 21-day line after their latest runs.
Late Friday, S&P Dow Jones Indices said Vistra will join the Dow Jones Utility Average before the open on Nov. 8.
But Vistra, Constellation Energy and some utility and nuclear plays fell solidly Friday night. The reason was not clear.
Palantir’s earnings are due Monday night. Shares fell from record highs last week, but found 21-day support.
Howmet Aerospace earnings are early Wednesday. The titanium alloy supplier for aircraft is one of the top S&P 500 performers without an AI connection. Howmet stock has pulled back to find support at the 50-day line, just below the 21-day.
Arista stock is due Thursday night. The AI networking play fell to about its 10-week line, but bounced to end the week near the 21-day line in a possible emerging consolidation just above a prior base. A strong move would break a downtrend.
Axon Enterprise (AXON), Iron Mountain (IRM), FICO (FICO), Targa Resources (TRGP), also top-20 S&P 500 performers in 2024, also are due this coming week.
AI chip IPO Astera Labs (ALAB) is another notable report on tap, along with cybersecurity giant Fortinet (FTNT) and e-commerce and payments giant MercadoLibre (MELI). All are near buy points.
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Shares tumbled 7.5% to 248.98 for the week, well below a 264.82 cup-with-handle buy point cleared on Oct. 25, according to MarketSurge. TSLA stock came close to triggering the automatic 7%-8% loss sell rule on Friday but never did. Shares are still holding the bulk of the prior week’s 22% spike on earnings, but are getting close to the low of the Oct. 24 gap-up day.
It’s possible that some of Tesla’s recent action reflects shifting perceptions on the presidential race, with CEO Elon Musk aggressively campaigning for Donald Trump.
Meanwhile, China EV giant BYD (BYDDF) reported higher revenue than Tesla for the first time in the third quarter, while its October sales suggest BYD will retake the BEV crown from Tesla in Q4.
The stock market rally has retreated but is still holding key support. While some mammoth earnings are out of the way, the presidential election and other big news will remain big uncertainties in the short run.
The upside from a modest pullback is that most leading stocks still look healthy, pulling back to key levels. If the market takes off, a number of buying opportunities could present themselves. So keep your watchlists fresh.
But if the major indexes break below their 50-day lines, you’ll want to reduce exposure. So have your exit strategy in place.
Nvidia, Axon and MercadoLibre stock are on IBD Leaderboard. Nvidia stock is on SwingTrader. Nvidia, Arista and Fortinet stock are on the IBD 50. Arista Networks, Axon and Palantir stock are on the IBD Big Cap 20.
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