Stock Market Update: Futures Slip; Nasdaq Hits New High with AI Chip Leader’s Surge; Dell Reports Strong Performance

Stock market futures showed slight declines on Friday morning, with Dow Jones futures, S&P 500 futures, and Nasdaq futures all holding steady. The market saw gains on Wednesday after a PCE inflation report that didn’t meet the worst expectations. The S&P 500 and Nasdaq reached record closing highs, while the Russell 2000 briefly touched a 52-week high, extending its solid weekly gains.

Advanced Micro Devices (AMD), a competitor to Nvidia (NVDA), broke out of a short consolidation period. Both Airbnb (ABNB) and Lennar (LEN) reclaimed their buy points.

Following Thursday’s market close, several companies, including Dell Technologies (DELL), NetApp (NTAP), Elastic (ESTC), Zscaler (ZS), Veeva Systems (VEEV), Autodesk (ADSK), and SoundHound AI (SOUN), reported their earnings.

Dell and NetApp saw significant gains after their earnings reports, with NetApp poised for a breakout. Autodesk also experienced a late surge. However, ESTC and SoundHound stocks saw declines, while Zscaler and Veeva retreated.

New York Community Bancorp (NYCB) issued a warning about “internal controls” issues and reported a Q4 loss worse than initially disclosed after Thursday’s market close. This led to a significant drop in NYCB stock early Friday. In late January, NYCB experienced a crash after reporting an unexpected loss and raising some credit concerns, impacting regional bank stocks.

Nvidia and Zscaler are included in IBD Leaderboard and the IBD 50. Nvidia is also part of the IBD Big Cap 20. AMD was highlighted as the IBD Stock Of The Day on Wednesday.

Dow Jones Futures Today

Dow Jones futures were slightly lower compared to fair value. S&P 500 futures remained flat, while Nasdaq 100 futures rose by 0.1%.

Crude oil futures rose over 1%, reaching above $79 per barrel.

The 10-year Treasury yield saw a slight increase to 4.26%.

Overnight, China’s official manufacturing index for February edged down by 0.1 point to 49.1, meeting expectations and remaining below the neutral 50 level. Caixin’s China manufacturing index inched up by 0.1 point to 50.9.

It’s important to note that overnight movements in Dow futures and other markets may not necessarily translate into actual trading during the next regular stock market session.

Earnings

Dell reported better-than-expected earnings, citing strong demand for AI servers. The company’s stock surged higher in overnight trading, having already extended from last week’s rebound at the 10-week line.

Zscaler also beat earnings expectations and provided an optimistic guidance. However, ZS stock experienced a sharp decline in extended trading, indicating a potential test of its 50-day/10-week line. During Thursday’s regular session, Zscaler rose by 1.9% to 241.87.

Elastic exceeded earnings estimates, but its guidance was in line with expectations. Nevertheless, ESTC stock fell overnight, signaling a potential move to or below the 50-day line and a previous buy point. On Thursday, shares of Elastic rose by 3.2% to 133.81, just above a previous entry point.

Veeva’s earnings also surpassed expectations, although VEEV stock experienced a slight decline in extended trading. The company’s shares rose by 14 cents to 255.51 on Thursday, hovering around the top of a five-month consolidation. Veeva stock is currently at the upper end of the buy zone from a previous entry point.

Autodesk beat Q4 views, but its guidance for Q1 and fiscal 2025 EPS was slightly lower. Nevertheless, ADSK stock surged in overnight trading. On Thursday, shares of Autodesk rose by 1.1% to 258.17, finding support at the 21-day line. The stock remains within range of last week’s test of the 10-week line, which was the second such test since its late 2023 breakout.

NetApp’s earnings exceeded expectations, resulting in a surge in premarket trading. This signaled a potential breakout from a flat base or base-on-base formation. The company’s performance follows strong results from Pure Storage (PSTG) and Nutanix (NTNX) on Wednesday night.

SoundHound AI reported a wider-than-expected Q4 loss, accompanied by revenue that fell short of expectations. SOUN stock experienced a decline before the market opened on Friday. However, SoundHound stock skyrocketed by 347% in February, with much of the increase following Nvidia’s disclosure of a stake in SOUN.

Stock Market Rally

The stock market rally started off strongly on Thursday, with investors initially responding positively to the PCE inflation report. While the major indexes later trimmed their gains, they rebounded once again.

In Thursday’s stock market trading, the Dow Jones Industrial Average edged up by 0.1%. The S&P 500 index rose by 0.5%, reaching an all-time closing high. The Nasdaq composite increased by 0.8%, achieving its first record close since 2021 and rising above 16,000. Additionally, the small-cap Russell 2000 climbed by 0.7%, briefly surpassing its late December peak and setting a new 22-month high.

For the major indexes, a brief pause would be

considered healthy, allowing them to catch up while more stocks form bases, handles, or bullish pullbacks. The sideways movement of the Nasdaq over the past week, particularly since February 12, has been beneficial in this regard. However, it would be positive to see small caps break out from their current range.

The Nasdaq is currently 4.8% above the 50-day line, approaching a potentially overextended level once again.

While AI and tech stocks continue to lead the rally, with AMD being a standout performer on Thursday, various stocks and sectors are also participating.

U.S. crude oil prices decreased by 0.4% to $78.26 per barrel, registering a 3.2% gain for the month.

The 10-year Treasury yield declined by 2 basis points to 4.25%, but saw a significant increase of 29 basis points in February.

ETFs

Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) climbed by 0.8%. This ETF includes Elastic stock, Zscaler, and Autodesk. The VanEck Vectors Semiconductor ETF (SMH) jumped by 2.2%, with AMD being a major holding and Nvidia occupying the top position.

Reflecting more speculative story stocks, the ARK Innovation ETF (ARKK) edged up by 0.2%, while the ARK Genomics ETF (ARKG) decreased by 2.4%.

Other sector ETFs also saw gains, including the SPDR S&P Metals & Mining ETF (XME) with a 1.8% increase, the Global X U.S. Infrastructure Development ETF (PAVE) with a 0.8% rise, and the U.S. Global Jets ETF (JETS) with a 0.25% increase. Additionally, the SPDR S&P Homebuilders ETF (XHB) rose by 0.8%, driven by Lennar stock, while the Energy Select SPDR ETF (XLE) climbed by 0.5% and the Health Care Select Sector SPDR Fund (XLV) fell by 0.8%.

The Industrial Select Sector SPDR Fund (XLI) increased by 0.3%, while the Financial Select SPDR ETF (XLF) experienced a slight decline.

Stocks In Buy Zones

AMD stock surged by 9% to 192.50 in above-average volume, reaching a new high. The AI chip company broke out of a short consolidation period, with 184.92 serving as a legitimate buy point. The relative strength line also reached a new high, confirming the breakout. Nvidia stock increased by 1.9% to 791.12, hitting resistance at the 800 level. Airbnb stock rose by 2.6% to 157.43, moving back above a 154.95 buy point. Lennar stock gained by 3% to 158.35, reclaiming a 156.01 flat-base buy point.

What To Do Now

The market rally remains strong, with the Nasdaq not yet extended and small caps testing major resistance levels. Investors may consider making incremental buys while maintaining current exposure. It’s essential to have watchlists prepared, as a variety of quality stocks are setting up across different sectors. Engaging in analysis and being prepared to make informed decisions as stocks present buy signals is crucial for successful trading.