Escalating violence between Israel and Hamas over the weekend has left Dow Jones futures under pressure heading into Sunday evening trading. Dow futures are set to open at 6 p.m. ET along with S&P 500 and Nasdaq 100 futures.
The major indexes face uncertainty amid one of the worst outbreaks of conflict between Israel and Palestinian militants in years. Over the weekend, Hamas unleashed massive rocket attacks across Israel, killing hundreds of civilians in deliberate strikes. Israel has declared war on Hamas and vowed overwhelming retaliation in the days ahead.
The Middle East clash has stoked volatility in crude oil prices and could disrupt relations between Israel and Saudi Arabia. While it’s unclear how much impact the geopolitical crisis will have on regular U.S. stock trading, Dow futures are likely to open under pressure Sunday evening. The conflict has the potential to weigh on global financial markets if the violence escalates further.
Stocks Staging Comeback Attempt
On Friday, the major indexes showed signs of life after a difficult week of trading. The S&P 500 rose 0.5% for the week, rebounding from a test of support near its 40-week moving average on Friday. The Dow eked out a 0.3% weekly decline despite rallying 0.9% on Friday.
The Nasdaq jumped 1.5% for the week after surging 1.6% on Friday. Tech stocks drove the Nasdaq higher as Treasury yields pulled back from recent highs. The 10-year Treasury yield hit a 2022 peak of 4.89% early Friday before dropping to close the week at 4.78%, up 21 basis points.
All the major indexes closed below their 200-day moving averages as the overall confirmed market uptrend remains broken. The S&P 500 and Dow did stage bullish upside reversals on Friday by rebounding from recent lows.
The market rebound comes after the major indexes struggled for most of last week, with the S&P 500 and Dow undercutting recent lows. But the Nasdaq held above its mid-October lows, keeping its rally attempt intact.
Friday’s higher volume in stocks tied to economic growth was an encouraging sign. Market breadth also turned positive with advancing stocks outpacing decliners. This reflected institutions stepping in to buy the dip.
Leading Stocks Flash Buy Signals
Growth stocks showed particular power on Friday as investors gravitated toward quality. Highly rated stocks with strong relative strength led the charge higher.
Nvidia (NVDA) jumped 2.4% Friday to 457.62, retaking its 50-day moving average and offering an early entry. Nvidia stock gained 5.2% on the week. Shares are forming a new base with a potential 502.66 official buy point.
Meta Platforms (META) popped 3.5% Friday to 315.43, clearing a 310.64 cup-with-handle entry as well as a 312.87 early buy point. Meta stock erased a weekly loss to finish slightly higher.
Medical stock leader Eli Lilly (LLY) surged 4.4% Friday to 565.22, bouncing firmly from its 50-day line to offer a new entry. LLY stock is one of the market’s top-performing health care names.
Palo Alto Networks (PANW) rallied 4.2% Friday to 246.69, reclaiming its 50-day line and breaking short-term resistance. Shares are eyeing a potential buy point at 258.88.
Arista Networks (ANET) spiked 3.2% Friday to 194.02, rising decisively above an 189.90 early entry. Arista stock vaulted 45.5% for the week.
Growth ETFs On The Rebound
Among growth ETFs, the Innovator IBD 50 (FFTY) increased 0.5% last week while the iShares Expanded Tech-Software Sector ETF (IGV) popped 2.2%. Top IGV holdings like Nvidia, Palo Alto Networks and Cadence Design Systems (CDNS) fueled the software ETF’s rebound.
The VanEck Vectors Semiconductor ETF (SMH) added 2.3%, also bouncing back strong. SMH holds Nvidia and Cadence Design.
But more speculative tech plays struggled to keep pace as market headwinds persist. ARK Innovation (ARKK) dipped 1.2% last week, extending its losing streak. ARK Genomics (ARKG) tumbled 5.7%, plunging further below its 200-day average. Tesla remains the №1 holding across ARK Invest’s ETFs.
Tesla Stock Hangs In With Market
Despite bearish Q3 delivery figures and multiple price cuts, Tesla (TSLA) stock is showing relative strength. Shares surged 5.9% Wednesday and reclaimed the 50-day line, offering a fresh early entry.
After a slight Friday pullback, TSLA finished the week 4.1% higher at 260.53. Tesla found support right at its 200-day line despite negative headlines. Shares are clinging to its potential cup base amid the market’s ups and downs.
What Should Investors Do Now?
Growth-focused investors should be updating their watchlists and honing in on stocks offering new entries. The market’s positive bias Friday has the potential to mark a turning point for leading stocks.
But uncertainty still looms with geopolitical tensions high and Treasury yields elevated. Progress may be choppy. Investors should look to stay nimble and raise exposure cautiously in the near-term.
Focus on stocks holding key levels like the 50-day and 200-day moving averages such as Nvidia, Tesla and Palo Alto Networks. Keep an eye on stocks reclaiming these lines like Meta Platforms, Eli Lilly and Qualys (QLYS).
Pay close attention to stocks breaking downtrends or emerging from bases with strong relative strength. Arista Networks, Cadence Design and CME Group (CME) are flashing early buy signals.
Don’t simply pile into every stock extending from a buy point. Wait for more definitive follow-on days and watch for increased volume signaling institutions returning to stocks. Also monitor overall market conditions closely for any warning signs of a failed rebound.
Review your holdings and remain quick to cut losses before they get out of hand. Trim lagging positions where the damage is mounting. This will preserve capital to deploy in the market leaders when uptrends become more entrenched.
Earnings season, inflation data and the Fed’s November rate hike outlook could drive volatility and potentially send the market in either direction. Stay alert and flexible to shift exposure to match changing conditions.
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The major indexes face uncertainty after the stock market’s rally attempt showed promise to end last week. With Dow Jones futures under pressure Sunday evening, volatility still looms as escalating Israel-Hamas violence weighs on global markets.