The resurgent Apple (AAPL) and a muted employment report helped the Nasdaq surpass a crucial level, capping a successful week for the stock market advance.
After a midweek decline, Nvidia (NVDA) recovered and flashed an early buy signal on Friday.
Earnings for Palantir Technologies (PLTR), Astera Labs (ALAB), Arista Networks (ANET), Datadog (DDOG), and Constellation Energy (CEG). They’re all setup plays with anything to do with AI.
The Long Range RWD Model Y was introduced by Tesla (TSLA) in substitution of the Model Y Rear-Wheel Drive model. Top executive Tom Zhu is leaving his post as global automotive overseer and going back to becoming senior vice president for China.
Futures for Dow Jones At fair value, Dow Jones futures increased by 0.15% today. Futures on the S&P 500 increased 0.1%, while those on the Nasdaq 100 gained 0.1%.
Recall that trading in the Dow futures and other markets during the overnight period may not correspond with actual trading during the following regular session of the stock market.
Earnings at Berkshire Hathaway
Compared to a year ago, Berkshire’s operating earnings increased 39% in the first quarter. Profits increased by 5% to $89.87 billion. Both exceeded projections.
In Q1, the corporation purchased $2.6 billion worth of its own shares. From $167.6 billion in Q4 to a record $188.99 billion, Berkshire’s cash grew.
Speaking at Berkshire’s annual shareholder meeting, Buffett projects “modest” earnings growth for the entire year and $200 billion in cash by the end of the second quarter.
Last week, Berkshire shares fell 0.3%, closing at 400.60, below the 50-day line. There is a 430 flat-base buy target for BRKB stock. A strong move above the 50-day could provide an early entry point for investors.
Rally in the Stock Market
Despite some lulls in the middle of the week, the stock market rally surged on Thursday and Friday, propelled by positive earnings reports and a muted jobs data.
During the stock market trade last week, the Dow Jones Industrial Average increased by 1.1%. S&P 500 index increased by 0.55%. The Nasdaq composite saw a 1.4% increase. The Russell 2000 small-cap increased by 1.7%.
On Friday, the Nasdaq surged 2% above its 50-day line. However, the Nasdaq experienced a significant price increase with slightly lower volume than the previous session for the third time in six sessions. Thus, the market rally effort still hasn’t had an official follow-through day.
Though the S&P is currently slightly below that crucial level, the Dow Jones, Russell 2000, and S&P 500 all climbed over their 50-day lines on Friday before closing below it.
Although a few equities are preparing and Nvidia cleared an early purchase threshold, there weren’t many possibilities to buy on Friday.
The yield on the 10-year Treasury fell 17 basis points to 4.5% over the week, retreating from 2024 highs.
Last week, U.S. crude oil futures fell 6.85% to $78.11 a barrel.
ETFs: Sector ETFs closed mostly close to weekly highs despite slight movements.
The iShares Expanded Tech-Software Sector ETF (IGV), a growth ETF that includes DDOG stock, fell 0.3% last week. Semiconductor ETF VanEck Vectors (SMH) saw a little increase. Stock in Nvidia is the top holding.
In yet another close weekly closing, the SPDR S&P Metals & Mining ETF (XME) shed less than 0.1 percent. The 0.4% increase was seen in the Global X U.S. Infrastructure Development ETF (PAVE). The U.S. Global Jets ETF saw a 0.1% decline. The SPDR S&P Homebuilders ETF saw a 1.4% increase.
The Select Sector SPDR Fund for Health Care (XLV) saw a 0.7% increase. The 0.1% increase was felt by the Industrial Select Sector SPDR Fund (XLI). The Financial Select SPDR ETF saw a 0.6% decrease (XLF).
XLE, the Energy Select SPDR ETF, fell 3.3%.
Stock of Nvidia
Last week, Nvidia’s stock increased 1.2% to 887.83, rising 3.6% on Friday. The stock recovered the 50-day line and broke through a trendline, providing a favorable early entry. The April 30 high of 888.19 was also briefly reached by NVDA stock, but it did not close above it.
The official buy point for Nvidia’s stock, which dates back to its top on March 8, is 974. Following poor guidance from rival Advanced Micro Devices and AI server partner Super Micro Computer (SMCI), shares of the company dismissed Wednesday’s decline.
Nvidia’s earnings date May 22.
AI Profits
Monday night’s earnings for Palantir are due. With a concentration on commercial sales, analysts anticipate strong revenue growth and explosive profitability growth. Last week, the price of PLTR stock surged by 3.55% to 23.32, well below the 50-day line. After earnings, a strong move over that mark might provide an early entry. MarketSurge indicates that the consolidation buy point for Palantir shares is 27.50.
Datadog reported profits early on Tuesday. Although analysts have factored in decreased profit for the remainder of the year, they still anticipate 22% EPS and revenue improvements. Last week, DDOG dropped 5.5% to 124.27, breaking below the 50-day line on Friday due to poor guidance from Cloudflare (NET). With a flat basis, Datadog has a buy point of 138.61. The high of 132.90 on April 26th may serve as an early entry point for investors.
Tuesday’s Arista Networks earnings are delayed. The networking leader reached its zenith on March 22, 2024, after a successful run in 2023. Following a decline below the 50-day line, IT giants, such as Microsoft (MSFT) and Meta Platforms (META), are boosting their AI spending forecasts, causing shares to rebound. Last week, ANET’s shares increased 3.7% to 274.38.
Tuesday night marks Astera Labs’ first financial release since going public in March. ALAB’s stock dropped 9.5% to 76.96 last week after the sell-off of Super Micro and AMD, although it recovered from its lows. On a daily chart, the AI networking chipmaker’s IPO base is 95.21, but after Monday, it will have an 88.59 handle entrance. That handle is now good for one week.
Earnings for Constellation Energy are expected early on Thursday; experts predict strong growth in Q1. Given the high power requirements of artificial intelligence processors, the leader in nuclear power has evolved into a play that touches on AI.
CEG stock rose 4.7% on Friday to 194.86, bouncing from the 21-day line, breaking a trendline and setting a record close. The relative strength line hit a new high. All of that offered a buy signal, but upcoming earnings raise the risks. Constellation Energy stock has a 198.83 flat-base buy point.
The market rebound overcame many significant technical obstacles as a massive week of economic and earnings news mostly came in positive.
If the market rally holds, investors may decide to increase their exposure to modest levels.
Thus, make watchlist updates. Although Nvidia and AI plays were the focus of this article, equities from a number of industries, including retail, banking, healthcare, and energy, are also worth considering or setting up.
Regaining the 50-day line for the Russell 2000 and S&P 500 would be encouraging. However, it wouldn’t take much for the Nasdaq to revert to that crucial level.
There is less chance of a significant market move this next week because the earnings season is beginning to taper off and the economic calendar is weak.
Shayne Heffernan
