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Dow Jones futures were modestly lower overnight, along with S&P 500 futures and Nasdaq futures.
Tuesday was a breakout day for the market after the S&P 500 went into a strong trend on Friday. Instead of the S&P 500 hitting an all-time high, the stock market rally suffered significant losses, especially for the Nasdaq.
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Market Suffering from Expectations Breakout; Nvidia, Freshpet, and CyberArk in the Spotlight
Nvidia (NVDA program) has been sold, and it is the leading artificial intelligence play from chipmaker Nvidia. Taiwan Semiconductor (TSM) to play cooling Comfort systems (It is suitableMarket declines were broad-based, although many non-tech sectors held up relatively well.
Nvidia extended losses overnight after a report that the Justice Department is expanding its antitrust investigation into the artificial intelligence chip giant.
Freshbit (Near) It reclaimed a 136.85 buy point on Tuesday, but with some caveats. FRPT stock rose 0.85% to 137.15 on above-average volume, but was off its intraday high of 143.06.
The market decline is expected to give investors an opportunity to stop buying and prepare to unwind exposure.
Nvidia and Freshpet stocks in the market IBD LeaderboardFreshpet stock is available at Inflammatory bowel disease 50 IBD Stock Today Tuesday.
The video embedded in the article reviews the market movement and analyzes the stocks of Nvidia, Freshpet, and Cyber ​​Ark (Cyber).
Dow Jones Futures Today
Dow Jones futures were down 0.25% from fair value. S&P 500 futures were down 0.4% and Nasdaq 100 futures were down 0.5%, with NVDA contributing to the decline.
Crude oil prices fell slightly, to just under $70 a barrel.
Remember that overnight moves in Dow Jones futures and elsewhere do not necessarily translate into actual trades in the next regular stock market session.
Earnings and upcoming news
Late Tuesday, cybersecurity plays Zscaler (Zs) ZS stock fell late today on weak full-year guidance.
Dick Sporting Goods (DKS) is scheduled to go public early Wednesday. DKS stock is in a buy zone.
Investors should get US auto sales from General Motors (General Motors), Toyota (Brand) and most other traditional automakers, though. Ford (F) It will likely come on Thursday.
Join IBD experts as they analyze leading stocks and the market on IBD Live.
Stock market rise
The stock market rally from Labor Day week returned with big losses, led by Nvidia and the Nasdaq.
The Institute for Supply Management's manufacturing index for August renewed concerns about economic growth. The index rose slightly, but less than expected and still points to a decline in factory activity.
The Dow Jones Industrial Average fell 1.5% in Tuesday’s stock market trading, but remained above its 21-day exponential moving average. The S&P 500 fell 2.1%, just below its 21-day line and testing its 50-day line. The Nasdaq Composite dropped 3.3%, decisively below both its 50-day and 21-day lines. The Russell 2000 index of small companies fell 3.1%, undermining its 21-day line and approaching its 50-day line.
On Friday, the S&P 500 was on the cusp of record highs and was in a strong trend. The benchmark index was expected to continue to reach record highs, leading to a broad-based advance.
But the opposite happened. The Nasdaq, which had been lagging behind for weeks, led the downtrend on Tuesday. The Nasdaq is now below its August 13 high. A close below the previous day’s low would be a very bearish sign.
Nvidia was the biggest loser on Tuesday. That suggests the AI ​​leader, and perhaps many others in the field, will need a much longer recovery period. As the most important company and stock of the past two years, that bodes ill for the broader market.
Invesco S&P 500 Equal Weight ETF (FailedThe U.S. stock market index (NYSE: ASA), which plays down the influence of tech giants like Nvidia, fell 1.3%, but only to its 10-day line.
The losses were not limited to the technology sector, as biotech and aerospace stocks were among the sectors that fell the most on Tuesday.
The same was true for commodity stocks.
U.S. crude oil prices fell 4.4% to $70.34 a barrel. Copper and silver futures fell 2.7%, although gold fell only 0.2%.
The yield on the 10-year US Treasury note fell 7 basis points to 3.84%.
Exchange Traded Funds
Among the growth ETFs is the Innovator IBD 50 ETF (Boy) fell 4.2%. iShares Expanded Technology & Software ETFIGV) fell 2.2%. VanEck Vectors Semiconductor ETF (poison) is down 7.5%. Nvidia is the #1 stock in SMH.
The most speculative story stocks, the ARK Innovation ETF (Ark) fell 4.1% and the ARK Genomics ETF (I will ride) lost 4.8%.
SPDR S&P Metals & Mining ETF (XMESPDR S&P Homebuilders ETF ( down 6.05% )XHP) gave up 3.4%. Energy Select SPDR ETF (XLE) fell 2.5% and the Healthcare Select Sector SPDR Fund (XLV) decreased by 0.2%.
Select Industrial Sector SPDR Fund (Forty-one) Down 2.2%. Financial Select SPDR ETF (XLF) decreased by 0.7%.
Time the Market with IBD's ETF Market Strategy
Nvidia stock takes a hit
NVDA stock fell 9.5% to 108, falling sharply below its 50-day and 21-day moving averages. Last week, shares of the AI ​​chip pioneer fell 7.7% after second-quarter earnings failed to impress.
Aside from the ongoing earnings reaction, Nvidia shares fell on weak China manufacturing data and chipmaker sales.
Nvidia lost $278.9 billion in market value on Tuesday, the worst single-stock daily loss ever. That’s more than Meta platforms (Meta), down $232.8 billion on February 3, 2022.
Tuesday’s sell-off added to several other days of above-average trading. That’s in sharp contrast to Nvidia’s rebound from its August 5 lows, where trading volume was noticeably light.
The latest action suggests that Nvidia stock may need more time, perhaps a significant amount of time, before it rises again.
Shares were modestly lower in extended trading. The U.S. Justice Department has issued subpoenas to Nvidia and other companies to investigate concerns that Nvidia is exploiting its dominance in artificial intelligence chips, Bloomberg reported late Tuesday.
Other AI Plays
Taiwan Semiconductor Corp. shares fell 6.5% on Tuesday. Broadcom (I am bored), which announced its results late Thursday, fell 6.2%. Both are retreating from their 50-day and 21-day lines.
Meanwhile, some AI-related facilities and cooling have suffered huge losses, with Vestra (In ST) and Comfort Systems shares are both down about 11%.
What are you doing now
Market segregation is tricky. There are stocks and sectors that perform, but there is always the risk that the weaker parts of the market will drag the leading companies down. Also, if the market turns laggard, it is difficult to know whether this is just a temporary shift or something more permanent.
Investors who were expecting the S&P 500 to go all-out higher got a rude reminder Tuesday that the Nasdaq could instead be leading the way lower.
Clearly, Nvidia, chips, and many AI plays don't look great.
More broadly, investors may want to keep exposure to technology light overall, although some software and other names still look strong.
Many non-tech sectors appear to be in a better position, but investors should not look to increase exposure until the market strengthens again. Instead, it is time to exit losing positions or simply reduce exposure proactively.
Read The Big Picture every day to stay informed on market trends, leading stocks and sectors.
Please follow Ed Carson on Threads at @Edcarson1971 And X/Twitter on @IBD_ECarson For stock market updates and more.
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