Dow Jones futures experienced a slight decline overnight, accompanied by drops in S&P 500 futures and Nasdaq futures. Late plunges in Palo Alto Networks (PANW) and Cisco Systems (CSCO) following guidance announcements, coupled with upcoming reports from Walmart (WMT) and Alibaba (BABA), contributed to the market’s pause after robust gains on Tuesday.
The market rally, which saw powerful advances on Tuesday, tempered its momentum, closing below Wednesday’s intraday highs. A notable rebound in Treasury yields followed Tuesday’s sharp decline. President Joe Biden met with China’s Xi Jinping near San Francisco, adding geopolitical dimensions to market dynamics.
Microsoft (MSFT) unveiled its in-house AI chip, Azure Maia, and an Arm-powered Azure Cobalt CPU, signaling a move to reduce reliance on Nvidia (NVDA). This announcement impacted stocks like Advanced Micro Devices (AMD), Super Micro Computer (SMCI), and ARM, in addition to Nvidia.
Tesla (TSLA) reclaimed its 50-day line, while Chinese electric vehicle companies Li Auto (LI) and BYD (BYDDF) signaled buying opportunities.
Key Earnings Highlights:
- Palo Alto Networks (PANW): While PANW stock fell in extended trading, Palo Alto reported earnings that exceeded fiscal Q1 expectations. However, the cybersecurity company lowered its full-year billings target.
- Cisco Systems (CSCO): CSCO stock plunged overnight despite surpassing fiscal Q1 views. The Dow Jones networking giant reduced its full-year guidance.
- Walmart (WMT) and Alibaba (BABA): Walmart rose within a buy zone, and BABA stock gained 3.8% as JD.com (JD) beat views. Both Chinese e-commerce giants are off their highs.
Dow Jones Futures Today:
- Dow Jones futures dipped 0.1% vs. fair value.
- S&P 500 futures declined 0.2%.
- Nasdaq 100 futures fell 0.25%.
Stock Market Rally:
- The Dow Jones Industrial Average rose 0.5%.
- The S&P 500 climbed nearly 0.2%.
- The Nasdaq composite eked out a 0.1% advance.
ETFs:
- iShares Expanded Tech-Software Sector ETF (IGV) fell 0.6%, with MSFT and Palo Alto as significant components.
- VanEck Vectors Semiconductor ETF (SMH) edged up 0.1%, with Nvidia as the top component.
Microsoft AI Chips:
- Microsoft introduced Azure Maia AI chip and Arm-powered Azure Cobalt CPU at Ignite 2023 conference.
- Aims to reduce dependence on Nvidia AI chips.
- The Maia AI chip is set to roll out to data centers in early 2024.
- MSFT stock inched up to 369.65, nearing a 366.78 cup-base buy point.
Tesla Stock:
- TSLA stock rose 2.3% to 242.84, reclaiming its 50-day line.
- Building the right side of a double-bottom base with a 278.98 buy point.
Chinese EV Stocks:
- Li Auto stock climbed 1.7% to 40.53, moving above a 40.14 early buy point.
- BYD stock advanced 1.1% to 32.30, rebounding from its 50-day line.
- XPeng (XPEV) reversed higher following mixed Q3 results, climbing 2.3% to 17.39.
What To Do Now:
- With the recent market surge, be cautious with extended stocks.
- Regularly update watchlists and consider sector rotations.
- Be selective and focus on potential new buying opportunities in various sectors.
