Dow futures were little changed after hours, along with S&P 500 futures and Nasdaq futures. The stock market rally eased on Wednesday, with the Nasdaq leading the way lower. KB major (KBH) reported late.
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while, nvidia (NVDA) And Tesla (TSLA) backed off after taking power on Tuesday. advanced micro devices (AMD) and the parent of Google the alphabet (Google) break below a major level, while the AI plays turbocharged Palantir Technologies (PLTR) AI shares tumbled.
Federal Reserve Chairman Jerome Powell on Wednesday reiterated that more rate hikes are likely, but did not change the outlook from his comments after the Fed’s meeting a week ago. At most, Powell provided another catalyst for the market’s decline.
In the technology and fast-growing sectors, investors should be watching the leaders to see who is the best during the emerging downturn. Nvidia stock, although lower on Wednesday, looks much better now than AMD stock.
But outside of the mega-growth and AI spaces, the sale has been muted. Investors can choose to make purchases in some non-technical areas. Chipotle Mexican Grill (CMGBuy signals are flashing Wednesday.
C3. ai (Amnesty International) analyst on Thursday.
Tesla and Nvidia stocks are running IBD Leaderboard, with Chipotle on the Watch Leaderboard. CMG stock is on SwingTrader. TSLA stock is located at IBD Big Cap 20. Chipotle was IBD’s Wednesday stock of the day.
The video in this article reviewed Wednesday’s market action, analyzed Chipotle and compared AMD stock vs. Nvidia.
Dow jones futures today
Dow futures contracts were flat against fair value. S&P 500 and Nasdaq 100 futures changed little.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
KB home earnings
KBH stock rose in extended trading after KB Home’s earnings outperformed strongly with revenue unexpectedly up 1%. The homeowner was also guided higher. KB Home stock rose 1.9% to 52.01 on Wednesday, extending from various entries.
Accenture (ACN) will report early Thursday. The IT consulting giant on Wednesday announced AI’s ties with Microsoft (MSFT) and Google and Amazon (AMZN). ACN shares fell 1.3% to 313.20 on Wednesday, the third straight decline after a strong rally since early May.
Join IBD experts as they analyze actionable shares in the bullish stock market on IBD Live
Stock market rise
The stock market rally saw losses in major indices, but the Nasdaq took the brunt of the selling.
The Dow Jones Industrial Average fell 0.3% in stock market trading Wednesday. The S&P 500 fell 0.52%. The Nasdaq Composite Index fell 1.2%. Small cap Russell 2000 fell 0.2%.
US crude oil prices rose 1.9% to $72.53 a barrel.
The 10-year Treasury yield partially fell to 3.72%. The odds of a July rate hike were barely budging at 72% chance of a July rate hike. Markets are still pricing in less than a 20% chance of a second additional rate hike this year.
Exchange Traded Funds
Among the ETFs, the Innovator IBD 50 ETF (fifty(down 0.6%, while IBD Breakout Opportunities ETF)fit) decreased by 0.2%. iShares Expanded Technology and Software ETF (IGV) decreased by 1.85%. VanEck Vectors Semiconductor Corporation (SMH) decreased by 2.3%. Nvidia stock is the No. 1 component of SMH, with AMD also carrying significant weight.
Reflecting more speculative stories, the ARK Innovation ETF (ARK)ark(down 3.6% and ARK Genomics ETF)ARKG) 2.7%. TSLA stock is the #1 stock ETF by Ark Invest. Shares fell 5.5% in a downtrend, outside of the Wednesday session, but still above the 10-day line. Tesla stock fell slightly overnight.
SPDR S&P Metals & Mining ETFs (XME(Up 0.85% and US Global X Infrastructure Development Fund (ETF) )cradle) 0.9%. US Global Gates Foundation ETF (Planes) decreased by 0.1%. SPDR S&P Homebuilders ETF (XHB) rose 0.5%. Energy Defined Fund SPDR ETF (xle(up 0.8% and SPDR fund)XLV) was partially higher.
SPDR Financial Selection Fund (XLF) decreased by 0.1%. SPDR S&P Regional Banking ETF (KRE) decreased by 1.5%.
Top five Chinese stocks to watch now
nvidia vs. AMD Stock
Nvidia shares fell 1.7 percent to 430.45 on Wednesday, far from its session lows. AMD stock tumbled 5.7% to 112.13. But the real difference is in the graphics. NVDA stock is down after hitting its highest level on Tuesday. It’s still well above the 10-day and 21-day lines.
In contrast, AMD stock fell through the 21-day line on Wednesday and trimmed recent lows after falling to that level on Tuesday. It was the fifth drop in six sessions for AMD, with four sessions of above-average volume. It all started with a negative turn on June 13, as AMD unveiled its AI chips to challenge Nvidia.
If AMD investors haven’t started expanding before, Wednesday’s devastating losses were a place to take at least a partial profit.
Nvidia and AMD stocks have tended to trade off the chip lead in recent years, and it could happen again. But for now, Nvidia is the leader while AMD is struggling somewhat.
Meanwhile, Google stock fell 2.1% in light volume on Wednesday. But GOOGL stock fell below the 21-day line for the first time since May 5, according to MarketSmith. A good day can change the picture. But for now, GOOGL stock looks weaker than other megacap technologies.
CMG stock
Chipotle stock rose 1.2% to 2,073.67 on Wednesday, after Wedbush raised its price target to 2,300 from 2,200. Shares rebounded modestly from the 21-day and 10-week lines, breaking a downtrend and clearing some short-term levels. All of these provided reasons for early entry, even though the shares came off intraday highs of 2,092.51. CMG stock traded very tightly. It boasts a tight four weeks with 2139.88 buys which is on track to be a flat base after Friday.
AI Investor Day
C3.ai will be holding an Investor Day event at 1:30 PM ET Thursday. Will AI’s hot play provide some new financial guidance, perhaps before opening? C3 news and commentary can make or break AI enthusiasm.
AI stock fell 9.6% to 39.04, the third consecutive day of decline in above-average trading volume. Stocks are still more than twice their early May lows and found support at the 21-day line.
PLTR stock tested the 21-day line on Wednesday, falling 7.3% to 14.64. It was Palantir’s third consecutive decline in the above-average trade.
Market rally analysis
The stock market fell for the third straight session, with the Nasdaq now clearly lower.
The Nasdaq and Nasdaq 100 led the sell-off on Wednesday. This is a turnaround from Tuesday, when Tesla and Nvidia continued to surge. The Nasdaq just tested its 10-day moving average on Wednesday, still 2% higher than the 21-day line and 7.1% higher than the 50-day line.
First Trust Nasdaq 100 Equal Weighted Mutual Fund (QQEW) was down 1% on Wednesday, not as much as the Nasdaq or the Nasdaq 100.
Invesco S&P 500 Equal Weight Fund (RSP) lost only 0.1%, and traded slightly higher for most of the session as Dow and Russell 2000.
Declining stocks topped the advancers in the Nasdaq, but it wasn’t a problem. Meanwhile, the winners led the losers slightly on the NYSE. New highs led in the New York Stock Exchange, but lagged somewhat in the Nasdaq.
All of this together looks positive. Fueled by big tech companies, the Nasdaq and Nasdaq 100 indices expanded, while the Dow, Russell 2000 and RSP ETFs were gaining momentum, along with various non-tech sectors. Ideally, the NASDAQ would gradually decline over several days or weeks so that it does not get extended, while the rest of the market just declines or moves sideways. This creates new buying opportunities across a large number of stocks and sectors.
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What are you doing now
The stock market rally so far is in a normal and healthy decline.
Investors can look outside of technology for new purchases now. But the Nasdaq-led market decline is still a market decline. Sideways action to the downside is not a great environment for making short-term buys.
For now, investors will have to wait and see how the big winners respond in an AI-infused 2023. Are they selling resistance and finding support at the 10 or 21 day lines?
Also keep an eye on the stocks around the points of purchase, eg Monday.com (MNDY), Shockwave Medical (SWAV) And Rockwell Automation (The Republic of Korea).
The ones that look the strongest when the withdrawal is largely spent will be the ones you want to target. Remember, the big winners that look strong or find support may falter, while the hardest-hit names like AMD can support.
Read the big picture every day to stay in sync with the market trend, leading stocks and sectors.
Please follow Ed Carson on Twitter at @employee For stock market updates and more.
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