Dow Jones futures slightly increased later on, alongside S&P 500 and Nasdaq futures. The upcoming release of the CPI inflation report on Wednesday is significant, coinciding with key updates from Taiwan Semiconductor (TSM) and Delta Air Lines (DAL) in the US.
Tuesday witnessed a general uptick in the stock market, with investors exercising caution ahead of the CPI inflation data. While the market showed promise, several leading players experienced pressure.
Nvidia (NVDA) saw a dip in recent lows on Tuesday but managed to find crucial support. Meanwhile, Google’s parent company Alphabet (GOOGL) introduced a new in-house AI processor utilizing Arm Holdings (ARM) designs, thereby reducing its reliance on Nvidia chips. In response, Intel (INTC) also revealed its own AI chip to compete with Nvidia. Google’s stock surged further into a buy range, causing fluctuations in ARM shares initially, followed by a decline. Intel showed positive movement after reaching new highs for 2024.
Tesla (TSLA) extended its gains following Elon Musk’s endorsement of robotaxis, adding weight to Tesla’s investment significance.
Notably, Nvidia and ARM investments are featured on the IBD Leaderboard, with Nvidia stock and Finger Assets listed on the IBD 50. Additionally, Nvidia’s stock is part of the IBD Big Cap 20.
The video included in this article analyzed Tuesday’s market performance, focusing on Nvidia stock, Royal Caribbean (RCL), and Nutanix (NTNX).
CPI Inflation Report
The Labor Department is set to unveil the consumer price index at 8:30 a.m. ET. Projections suggest a 0.3% increase in consumer prices, excluding food and energy.
Year-over-year, overall CPI inflation is expected to rise by 3.5%, up from 3.2% in February. Conversely, core CPI inflation is anticipated to decrease marginally from 3.8% to 3.7%.
Additionally, the Fed’s March meeting minutes may be disclosed at 2 p.m. ET.
Thursday evening will witness the release of the March producer price index.
These crucial financial updates arrive amidst uncertainty regarding a potential June Fed rate adjustment.
Current Dow Jones Futures Outlook
Dow Jones futures exhibited a modest 0.1% rise relative to fair value, mirroring the trend in S&P 500 and Nasdaq 100 futures. The forthcoming CPI report is poised to influence Dow Jones futures and Treasury yields.
It’s important to note that immediate movements in Dow futures may not consistently translate into actual trading outcomes during the subsequent regular stock market session.
Stock Market Performance
Tuesday’s stock market session unfolded relatively calmly, with major indexes fluctuating between marginal losses and modest gains, hovering around the flatline.
During Tuesday’s trading, the Dow Jones Industrial Average closed marginally lower, while the S&P 500 index inched up by 0.1%. The Nasdaq composite recorded a 0.3% increase, with the small-cap Russell 2000 also advancing by 0.3%.
While prominent stocks experienced a relatively subdued session and winners surpassed losers, several leaders, including Nvidia, faced challenges.
Royal Caribbean shares declined by 3.7%, slipping below a key buy point. Deckers Outdoor (DECK) also saw a 2.4% drop, closing below the 50-day line for the first time since late October. On the flip side, Cava Group (CAVA) plummeted by 7.2%, testing its 10-week line for the first time in 2024.
On the commodities front, U.S. crude oil prices slid by 1.4% to $85.23 per barrel, while the 10-year Treasury yield decreased by six basis points to 4.365%.
Exchange-Traded Funds (ETFs)
Within the realm of growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) and VanEck Vectors Semiconductor ETF (SMH) rose by 0.3% and 0.5%, respectively. Notably, SMH holds significant stakes in Taiwan Semiconductor and Nvidia. Intel is also part of the SMH ETF.
In the domain of speculative story stocks, ARK Innovation ETF (ARKK) and ARK Genomics ETF (ARKG) both registered gains of 1.1%. Tesla stock holds substantial positions across Ark Invest’s ETFs.
Furthermore, SPDR S&P Metals & Mining ETF (XME) and Global X U.S. Infrastructure Development ETF (PAVE) saw contrasting movements, with XME climbing by 1.1% and PAVE dipping by 0.5%. The U.S. Global Jets ETF (JETS) rose by 0.5%, while the SPDR S&P Homebuilders ETF (XHB) and the Financial Select Sector SPDR ETF (XLF) experienced marginal declines.
Nvidia Stock Performance
Nvidia’s stock briefly touched 830.22 on Wednesday, marking its lowest levels since March 1. Despite this, the AI chip leader found support near the 10-week line, concluding the day with a 2% dip at 853.54. A robust rebound from the 10-month line, the first such test since the early January breakout, could present a buying opportunity. Looking ahead, NVDA stock is anticipated to form a flat base with a potential buy point at 974 later this year.
As Nvidia faces increasing competition in the AI sector, the emergence of rival products may impact its sales and pricing dynamics. Diversification in AI chip sourcing could become a strategic move for users to mitigate overreliance on Nvidia.
Google’s AI Processor and Intel’s Innovations
Google showcased a new AI processor during a cloud-computing event on Tuesday, leveraging Arm designs. Google’s stock edged up by 1.1% to 156.60, positioning it within reach of a buy point at 152.15.
Conversely, Finger shares initially rose to 135.41 before reversing course to close down by 1.9% at 126.81. While finding support near the 21-day line, the stock trades just above the 50-day line but below the 10-week line. MarketSurge suggests a potential buy point at 164, with alternative entry points at an upward trendline or 145.
In a parallel development, Intel unveiled its Gaudi 3 Artificial device to rival Nvidia’s offerings. Intel’s stock rose by 0.9% after hitting daily lows in 2024, persisting below its essential moving averages.
Tesla’s Market Performance
Tesla’s stock surged by 2.25% to 176.88 on Tuesday, building on Monday’s 4.9% jump. The rally follows Elon Musk’s announcement regarding a potential robotaxi launch on Aug. 8. However, the operational readiness of Tesla’s Full-Self Driving technology remains uncertain. TSLA shares are approaching the 10-year moving average, which has historically acted as a resistance level in 2024.
Taiwan Semiconductor’s Developments
Early on Wednesday, Taiwan Semiconductor is set to disclose its March and first-quarter sales figures. As a key player in the foundry industry, Taiwan Semi manufactures chips for various tech giants, including Nvidia, Apple (AAPL), Broadcom (AVGO), and Google. The company’s performance and outlook could have far-reaching implications across the semiconductor landscape.
TSM stock surged by 1.8% on Tuesday to 145.40, extending the previous day’s 1% gain but closing off its peak levels. Taiwan Semi’s stock is poised for potential growth opportunities in the near term.
Delta Air Lines Earnings
Anticipated to report a 45% increase in profits compared to the previous year, Delta’s first-quarter earnings are expected to climb by 6%. This marks the commencement of earnings season for U.S. firms.
Delta’s stock inched up by 0.7% to 47.32 on Tuesday, with a potential buy point at 49.20.
Current Market Outlook
Investors are advised to exercise patience and monitor the trajectory of major indexes and leading stocks before making significant moves. Tuesday’s market session presented a mixed bag of outcomes, with some stocks faltering, others rebounding, and a few showcasing positive momentum.
The upcoming CPI inflation report on Wednesday could offer clarity on the market direction, although outcomes may vary. With earnings season on the horizon, investors should brace for potential market fluctuations and sector-specific movements.
It is crucial for investors to curate watchlists diligently, tracking leading stocks as they form bases across various sectors while maintaining key support levels.
Stay informed about market trends and sector leaders by following The Big Picture on a daily basis.
For real-time stock market updates and more insights, follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson.
