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Dow Jones futures fell slightly Sunday evening, along with S&P 500 futures and Nasdaq futures. Fed chief Jerome Powell testifies before Congress, with inflation data due later in the week. JPMorgan Chase (JPM) and other banks kick off earnings season.





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Banking Giants Kick Off Earnings Season Next Week



The stock market rally last week saw the S&P 500 and Nasdaq hit fresh highs, though the latter is increasingly extended. On the flip side, small caps retreated below a key level.

Still, more stocks flashed buy signals. Meta Platforms (META), Palantir Technologies (PLTR) and ASML (ASML) are in buy zones. Meanwhile, Tesla (TSLA) skyrocketed. Nvidia (NVDA) had a modest weekly gain, continuing to act well after pulling back from record highs.

French Election Results

Meanwhile, the left-wing New Popular Front won the most seats in France’s final round of parliamentary elections. Marine Le Pen’s far-right National Front, which led the first round, finished third. President Emmanuel Macron’s centrist alliance finished second. Traditional conservatives are a distant fourth, but still a factor.

No group is close to a majority. Some form of left-center pact, perhaps with the center-right, is in the offing.

Dow Jones Futures Today

Dow Jones futures fell 0.15% vs. fair value. S&P 500 futures lost 0.15% and Nasdaq 100 futures declined 0.1%.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

Powell Testimony, Inflation Ahead

Fed chief Jerome Powell will testify before Congress on Tuesday and Wednesday. Investors will be looking for any shifts in Powell’s comments on monetary policy. But if the recent run of slowing economic data continues, then Powell’s prior comments will point to rate cuts later this year.

Markets now see a 77.9% chance of a Fed rate cut by the Sept. 17-18 meeting, with a 76.5% chance of two cuts this year.

The June CPI inflation report is due on Thursday, following the soft jobs report on June 5. PPI inflation data is on Friday.

Bank Earnings Due

JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C) report earnings on Friday. All are near buy points or early entries.


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Stock Market Rally

The stock market rally showed positive action on the major indexes. The Dow Jones Industrial Average climbed 0.7% in last week’s stock market trading. The S&P 500 index popped 1.95%. The Nasdaq composite jumped 3.5%.

However, the small-cap Russell 2000 sank 1%, sinking below the 50-day line.

The Invesco S&P 500 Equal Weight ETF (RSP) dipped 0.4% to 163.38, falling further below the 50-day line.

In contrast, the First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) climbed 1.6% to a record high. That reflects strength in growth stocks, especially tech growth names, beyond the megacaps. That significantly lagged the Nasdaq 100’s 3.6% spike.

The Nasdaq is now 8.3% above its 50-day line, increasingly extended. That’s how extended the tech-heavy index was on June 17, setting stage for two weeks of sideways action. The odds of a pause or pullback are elevated again. It doesn’t have to happen right away and it doesn’t have to be that large, but those risks are growing.

The 10-year Treasury yield fell seven basis points to 4.27% after spiking to 4.49% early in the week.

U.S. crude oil futures rose 2% to $83.16 a barrel for the week, up 10.1% in the last four weeks.

Copper futures jumped 6.1% for the week. Gold prices climbed 2.6% while silver leapt 7.4%.

Bitcoin plunged 10.7% to $56,458.26, but rebounded from a multimonth low of $53,700 early Friday.


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ETFs

Among growth ETFs, the Innovator IBD 50 ETF (FFTY) rose 1.4% last week. The iShares Expanded Tech-Software Sector ETF (IGV) climbed 2.3% to just below its late 2021 peak. PLTR stock is a member. The VanEck Vectors Semiconductor ETF (SMH) popped 3.5%. Nvidia stock is the largest SMH holding by far while ASML is also a key component.

Reflecting more-speculative stocks, ARK Innovation ETF (ARKK) rallied 4.55% last week and ARK Genomics ETF (ARKG) fell 1.1%. Tesla stock is the No. 1 holding across Ark Invest’s ETFs.

SPDR S&P Metals & Mining ETF (XME) popped 3.25% last week, buoyed by rising metal and coal prices. The Financial Select SPDR ETF (XLF) rose 1%. JPMorgan stock, Citigroup and Wells Fargo are all big members.

But elsewhere there was weakness.

The Global X U.S. Infrastructure Development ETF (PAVE) declined 1.1%. U.S. Global Jets ETF (JETS) descended 2.6%. SPDR S&P Homebuilders ETF (XHB) skidded 3.1%. The Energy Select SPDR ETF (XLE) retreated 1.15% and the Health Care Select Sector SPDR Fund (XLV) lost 0.9%. The Industrial Select Sector SPDR Fund (XLI) dipped 0.5%.


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Tesla Stock

Tesla stock skyrocketed 27.1% to 251.52 for the week, blasting above the 200-day line and much more. Q2 deliveries fell vs. a year earlier but beat lowered expectations.

Shares are now greatly extended from the 191.08 handle buy point. TSLA stock is right at a long-term trendline going back to its late 2021 all-time high. Ideally, Tesla would pause for a while.

Tesla earnings are due on July 23, with a robotaxi event slated for Aug. 8.

Nvidia

Nvidia stock rose 1.85% to 125.83 for the week, bouncing off the 21-day line. An aggressive investor could have used Wednesday’s action as a place to add a few more shares. But NVDA stock could use a longer pause.

Nvidia earnings aren’t due until mid-August. However, Taiwan Semiconductor Manufacturing (TSM), which makes chips for Nvidia and many others, reports June sales on Wednesday and Q2 earnings on July 18.

Meta Stock

Meta stock jumped 7.1% to 539.91, mostly on Friday, moving above buy points at either 514.01 or 522.08. Meta earnings are due July 31.

Palantir Stock

Palantir stock leapt 7.5% to 27.23, clearing a 26.57 handle buy point on Friday, marking its best close since late 2021. The wide-and-loose four-month consolidation could be viewed as a big handle to a huge base. While actionable, PLTR stock is 18.7% above its 50-day line. The stock is prone to big moves up and down.

Palantir earnings are in early August.

ASML Stock

ASML stock climbed 5.1% for the week to 1,074.48, rebounding from the 21-day line and moving back above a 1,056.34 buy point. ASML earnings are due on July 17.

What To Do Now

The combination of the Nasdaq being extended while small caps, midcaps and the equal-weight S&P 500 ETF are losing sight of their 50-day lines isn’t ideal.

Still, most leading stocks are acting well, with a steady drip of new buying opportunities in recent days.

If you made some new buys recently, they probably are working. But be ready if the market pulls back or rotates again.

While there are yellow flags for making new buys, the broader bullish trend is well intact. Investors should have significant-to-heavy exposure.

Definitely be looking at your watchlists and reviewing your portfolio.

It’s time to pay attention to earnings season. JPMorgan, Citigroup and Wells Fargo, along with Delta Air Lines (DAL), are due this coming week, with results for other companies ramping up after that.

Fed chief Powell and inflation data will be key, with rate-cut hopes offering a market tailwind.

Nvidia and ASML stock are on the IBD Leaderboard. Meta stock is on SwingTrader. Nvidia stock, Palantir and Citigroup are on the IBD 50. Palantir stock is on the IBD Big Cap 20.

Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.

Please follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.

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