Dow Jones Futures: Stock Market Breaks Expectations As Iran Fears Spike; What To

Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures.

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The stock market rally sent mixed messages during the week, but ended on a bearish one. The Nasdaq set a record close Thursday as Nvidia (NVDA) and other megacap and AI stocks rebounded. But the S&P 500, Dow Jones and Russell 2000 struggled from hot inflation and Mideast tensions, with the Dow and small-cap Russell below their 50-day lines. The Nasdaq just eked out a weekly gain

The CBOE Volatility index, the market fear gauge, spiked Friday to its highest levels since late October amid worries that Iran will directly attack Israel, raising the prospect of a much-bigger Mideast conflict. Disappointing JPMorgan Chase (JPM) guidance, a big Arista Networks (ANET) sell-off and China woes for Intel (INTC) and Advanced Micro Devices (AMD) took a toll too.

All of that spurred a risk-off shift, especially heading into the weekend.

Investors need to recognize Friday’s market expectations breaker and respond accordingly.

Late Friday, Tesla (TSLA) cut the price of Full Self-Driving subscriptions to $99 a month from $199. Shares edged higher.

Salesforce.com (CRM) is is in late-stage talks to buy data-management software maker Informatica (INFA), The Wall Street Journal reported Friday night

Key Earnings Ahead

Goldman Sachs (GS) and Charles Schwab (SCHW) report early Monday. Goldman stock fell below its 50-day line on Friday, while Schwab is holding in a buy zone.

Chip-equipment giant ASML (ASML) and Nvidia chipmaker Taiwan Semiconductor (TSM) may be the two most important earnings in the coming week. Their results and guidance will have big implications for the chip sector, including Nvidia, Broadcom (AVGO), Lam Research (LRCX), Applied Materials (AMAT) and KLA Corp. (KLAC).

All of these chip stocks have new bases or potential entries.

Nvidia stock is on IBD Leaderboard, SwingTrader and the IBD 50. KLA stock is on the IBD Long-Term Leaders list. Nvidia, ASML and Broadcom stock are on the IBD Big Cap 20.

Dow Jones Futures Today

Dow Jones futures open at 6 p.m. ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.

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

Join IBD experts as they analyze leading stocks and the market on IBD Live

Stock Market Rally

The stock market rally had a tough week on a hot CPI inflation report and Mideast fears, with Friday’s losses wiping out Thursday’s bullish signals.

The Nasdaq, which hit a record close Thursday, fell 1.6% in Friday’s stock market trading to end the week with a 0.45% loss. The composite finished below the 21-day line but just above the 50-day and 10-week lines. It’s also still trading with the big April 4 reversal day.

The rest of the market looked worse.

The S&P 500 index sank 1.55% for the week, below the 21-day. The benchmark index closed just above its 50-day line but below its 10-week.

The Dow Jones Industrial Average slumped 2.4% to the lowest level since late January while the small-cap Russell 2000 shed 2.9% to the lowest since late February. Both are clearly below the 50-day.

The Invesco S&P 500 Equal Weight ETF (RSP) fell 2.6%, knifing through the 50-day line Friday. The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) slumped 1.7%, below the 50-day line to its worst levels since late February.

Crude oil fell 1.4% to $85.66 a barrel for the week, backing off Friday’s intraday high of $87.67. Gold climbed 1.3% to $2,356.20 an ounce, also well off Friday highs.

The 10-year Treasury yield leapt 12 basis points to 4.5%, with Thursday’s peak of 4.59% a five-month high. Investors only see a modest chance of a Fed rate cut in June and are only leaning toward a move in July.

Stock Market Fear Gauge Soars

The CBOE Volatility index shot up 16.1% to 17.31 on Friday, with a the 19.20 session peak the highest since late October. Excessive fear could foreshadow at least a short-term bottom. But the market fear gauge is still well off its October peaks, let alone its Covid highs.

Another sentiment gauge, notably the bulls vs. bears reading, had been near excessive bullish levels heading into this past week.

If Mideast tensions ease, there could be a snapback rally in stocks. But a direct Iran-Israel conflict could trigger a far-larger fear spike and a big retreat from equities.

ETFs

Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) fell 1.7% for the week. The VanEck Vectors Semiconductor ETF (SMH) slipped 0.9%. Nvidia and Taiwan Semiconductor are the largest SMH holdings, with ASML, Lam Research, KLA and AMAT stock also members.

SPDR S&P Metals & Mining ETF (XME) declined 1% last week. The Global X U.S. Infrastructure Development ETF (PAVE) tumbled 3.4%. U.S. Global Jets ETF (JETS) descended 2.6%. SPDR S&P Homebuilders ETF (XHB) stepped down 4%. The Energy Select SPDR ETF (XLE) retreated 2% and the Health Care Select…