In the early hours of Monday, Dow Jones futures edged downward, while S&P 500 and Nasdaq futures exhibited a modest uptick. The stage is set with notable players like Palantir, Nvidia, and Tesla making early moves in a landscape still shadowed by recent turbulence.
The previous week witnessed a harrowing setback for the stock market rally, as bearish sentiment surged following a hawkish Federal Reserve outlook. Yet, a spirited rally on Friday invigorated optimism, with both the S&P 500 and Nasdaq successfully reclaiming critical thresholds.
Palantir Technologies (PLTR), AppLovin (APP), and Astera Labs (ALAB) emerged victorious from Friday’s fray, with Palantir and AppLovin signaling robust buy opportunities. Other noteworthy performances included bullish movements by Interactive Brokers (IBKR), Insulet (PODD), Doximity (DOCS), and CyberArk (CYBR).
Meanwhile, Nvidia (NVDA) concluded the week with a slight gain, although it remains below pivotal benchmarks. Monday saw a slight incline in share prices.
Tesla (TSLA) hit a small snag after Wednesday’s peak, retreating modestly over the week. Nevertheless, its trajectory remains positive, presenting the potential for constructive pullbacks. Prior to the open, TSLA also edged upward.
Aggressive investors could have seized Friday’s market bounce to add to their portfolios, but caution is warranted as many sectors still face headwinds.
Reports surfaced that Palantir is in discussions with the likes of Anduril, OpenAI, and even Elon Musk’s SpaceX, as they seek to create a consortium aimed at competing for U.S. government contracts—a bold move against enduring industry giants. PLTR stock, included in the Nasdaq 100 beginning Monday, showed slight improvement ahead of trading.
Nvidia continues to act as a strategic play within the IBD Leaderboard, with Tesla and Astera Labs also noted for their potential. Palantir, AppLovin, and Interactive Brokers are highlighted in the SwingTrader, while Astera Labs, Interactive Brokers, and Insulet grace the IBD 50. Palantir and AppLovin are prominently listed among the IBD Big Cap 20, and both Palantir and Doximity feature in the IBD Sector Leaders. On Friday, AppLovin also earned the distinction of IBD Stock Of The Day.
Dow Jones Futures Today
Diving into the metrics, Dow Jones futures dipped by 0.2% against fair value, juxtaposed with a 0.1% rise in S&P 500 futures, while Nasdaq 100 futures soared by 0.45%.
In tandem, the 10-year Treasury yield crested at 4.55%.
It’s crucial to understand that the nocturnal maneuvers in Dow futures don’t necessarily dictate the flow of trading for the upcoming sessions.
Government Shutdown Crisis Resolved
This past Friday, the House decisively greenlit legislation to ensure government continuity through March, with the Senate affirming the decision shortly after. Although funding technically lapsed at midnight ET, the shutdown was effectively averted.
Two previous measures languished earlier in the week under the weight of interventions by President-elect Donald Trump and Tesla’s own Elon Musk.
Stock Market Rally
The stock market rally finished the week on a constructive note, albeit following a challenging series of days. Throughout the week, key indexes and ETFs faced stark sell-offs, stemming from the less-than-dovish Fed outlook, with almost all majors falling beneath their 50-day moving averages.
Friday brought a reprieve for the Nasdaq, which, threatened by looming shutdown concerns, ascended steeply in response to a softer inflation report, thereby reclaiming its position above the 21-day line. Meanwhile, the S&P 500 clawed back to its 50-day line after a tight struggle.
Unfortunately, the Dow Jones and Russell 2000 still battle below that pivotal average.
Last week bore witness to declines with the Dow Jones Industrial Average decrementing by 2.25%. The S&P 500 slipped by 2%, and the Nasdaq composite receded by 1.8%. The small-cap Russell 2000 faced a hefty 4.45% plunge.
The Invesco S&P 500 Equal Weight ETF (RSP) sustained a 3% cut, whereas the First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) saw a 3.6% tumble, even against Friday’s resilient advances. Similar to the Dow and Russell, both ETFs remain beneath their 50-day averages.
Many market leaders endured significant losses across the week, yet offered glimmers of resilience on Friday’s rebound.
The 10-year Treasury yield spiked by 12.5 basis points, reaching 4.52%, reflecting a two-week escalation of 37 basis points—the most aggressive growth seen in over two years, presenting an additional headwind for market conditions.
Additionally, U.S. crude oil futures receded by 1.9%, settling at $69.46 per barrel as the week unfolded.
ETFs
Within the realm of growth ETFs, the Innovator IBD 50 ETF (FFTY) faltered by 3.1% last week. The iShares Expanded Tech-Software Sector ETF (IGV) sank 2.1%, weighed down by key figures like Palantir and AppLovin. The VanEck Vectors Semiconductor ETF (SMH) endured a drop of 2%, with Nvidia being its prominent holding.
The ARK Innovation ETF (ARKK) saw a 3.2% decline last week, paralleling a 4.2% loss in the ARK Genomics ETF (ARKG), with Tesla being a significant asset throughout ARK’s portfolios. Notably, Cathie Wood’s ARK has established a substantial position in NVDA as well.
SPDR S&P Metals & Mining ETF (XME) plummeted by 8.4% last week, while the SPDR S&P Homebuilders ETF (XHB) contracted 7.25%. The Energy Select SPDR ETF (XLE) experienced a 5.7% decrement, and the Health Care Select Sector SPDR Fund (XLV) gave up 2.1%.
The Industrial Select Sector SPDR Fund (XLI) fell by 2.6%, with the Financial Select SPDR ETF (XLF) also retracting by 2.1%.
Dow Jones Futures: What To Do Now
The flourishing rebound witnessed on Friday provided a necessary counterbalance to a week steeped in negativity. Although this flicker of good news is encouraging, a significant portion of the market still bears scars from earlier declines. Just a single positive day does not guarantee a turnaround unless consistent strength follows.
Nonetheless, leading stocks continue to paint a promising picture overall.
Investors might have capitalized a bit on that Friday resurgence, with Palantir, AppLovin, Interactive Brokers, and others signaling bullish patterns. However, should these stocks breach last week’s lows or if market momentum tilts negative once more, swift exits become paramount.
Waiting for more promising market indications—such as the S&P 500 reclaiming its 21-day moving average or Nvidia regaining the 50-day line—could be a prudent approach, especially for those holding substantial positions.
Regardless of your trading style—whether aggressive or patient—now is the time to refine and revise watchlists. The tumultuous weeks gone by necessitate careful additions and deletions.
Be aware, as we navigate through two holiday-shortened weeks, tax-related selling may propel market behavior come early January.
Stay aligned with market trends and pivotal stocks by engaging with The Big Picture daily.
Follow Ed Carson for stock market updates on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson.
