Dow Jones Futures: ASML Pops Chips, But Nvidia Holds Buy Point; What to do now

Dow Jones futures were trending lower in after-hours trading, as were S&P 500 futures and Nasdaq futures.

The stock market rally made the big headlines with losses. Chip equipment giant ASML (ASML) plunged and struck due to weak forecasts Nvidia (NVDA) and other chip and AI games. The collapse in oil prices weighed on energy stocks UnitedHealth Group (UNH) plunged due to weak forecasts.

Meanwhile, small caps and several sectors showed strength or resilience.

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Small caps rise as chips fluctuate; Nvidia, KB Home, Ensign Group in focus

Nvidia stock managed to close just above a buy point, while several other AI chip companies remained near the entry point, including Broadcom (AVGO) and Taiwan Semiconductor (TSM).

Investors had several options on Tuesday. The key is to have solid rules that work for you – and follow them.

Nvidia stock is on the IBD Leaderboard, SwingTrader and IBD 50. Broadcom stock is on the IBD Big Cap 20.

The video embedded in the article discussed Tuesday’s market action and analyzed Nvidia, Ensign group (ENSG) and KB home page (KBH).

Dow Jones futures today

Dow Jones futures recorded a slight decline from fair value. S&P 500 futures and Nasdaq 100 futures lost a fraction.

Keep in mind that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.

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Result

United Airlines (UAL) and Interactive brokers (IBKR) reported after the market closed.

United Airlines beat expectations and announced a $1.5 billion buyback. Interactive Brokers reported mixed results.

United saw a slight decline in late trading. Interactive Brokers fell significantly. Both were extended ahead of third quarter financials.

Stock market rally

The stock market rally saw major indices fall due to negative earnings forecasts from Dow giant UnitedHealth and particularly ASML.

The Dow Jones Industrial Average fell 0.8% in Tuesday trading. The same was true for the S&P 500 index, which rose 0.8%, but both stocks were off record highs. The Nasdaq Composite lost 1% but still held above key near-term levels. Everyone looks solid on the weekly charts too.

The Russell 2000 small-cap index posted a marginal gain and posted a decent intraday gain.

Home building, finance, retail, hospitals, travel, long-term care, and various drug businesses progressed or continued, although many faded toward the end. Many issued buy signals, but some have made early profits, including Ensign Group and Texas Roadhouse (TXRH).

U.S. crude oil prices fell 4.4% to $70.58 a barrel. Israel reportedly will not attack Iran’s energy facilities, while Saudi Arabia may be ready to ramp up production. The renewed concerns about China are also weighing on crude oil and industrial raw materials.

The 10-year Treasury yield fell 3.5 basis points to 4.04%.

ETFs

Among growth ETFs, the Innovator IBD 50 ETF (FFTY) fell 0.5%. The iShares Expanded Tech-Software Sector ETF (IGV) fell 1%. The VanEck Vectors Semiconductor ETF (SMH) fell 5.4%. Nvidia is the No. 1 SMH stock, with ASML shares, Taiwan Semi and Broadcom all big positions. The ARK Innovation ETF (ARKK) fell 0.2%.

The SPDR S&P Metals & Mining ETF (XME) fell 0.7%. The US Global Jets ETF (JETS) rose 0.3%, with UAL stock a key holding. The SPDR S&P Homebuilders ETF (XHB) rose 0.1%. The Energy Select SPDR ETF (XLE) fell 3.2% and the Health Care Select Sector SPDR Fund (XLV) lost 1.2%

The Industrial Select Sector SPDR Fund (XLI) fell 0.8%. The Financial Select SPDR ETF (XLF) gained 0.2%.

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ASML warning criticizes Nvidia, chips

Dutch chip equipment giant ASML accidentally reported third-quarter results a day early. ASML’s earnings and revenue beat views, but bookings fell 53% compared to the second quarter, about half of estimates. The company also lowered its forecast for 2025. ASML fell 16.3% to its lowest level in nine months.

Lam research (LRCX), KLA Corp. (KLAC) and other chip equipment plays were also big losers.

Nvidia shares fell 4.5% to 131.84, but held above the 131.26 buy point. It’s possible that Nvidia is working on a grip just below the consolidation peak

A report that the USA could increase export restrictions for AI chips again weighed on Nvidia.

Broadcom (AVGO) lost 3.5%, Arm stocks (ARM) fell 6.9% and Taiwan Semiconductor (TSM) lost 2.6%. Broadcom and Arm fell below the buy level, while Taiwan Semi fell below an alternative entry point – but all are still very close.

Nvidia and these other AI games could now look a lot better or worse with relatively small steps.

Taiwan Semiconductor’s earnings are expected early Thursday. After the grim news from ASML and in light of the critical AI games, the stakes are even higher.

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What to do now

Unlike a follow-up day or a dramatic market drop, there wasn’t just one way to play out what happened on Tuesday.

Some investors, particularly those who have recently made technology purchases or invested heavily in AI names, may have wanted to reduce or exit some positions even though they are still significantly invested.

Others that posted solid gains amid a strong market rally may have chosen to stay quiet. Using weekly charts can help position traders put bad days in perspective.

The key is to follow rules that work for your investment strategy.

It’s definitely time to get to grips with the market. Have watchlists ready and review your portfolio. Tuesday demonstrated the benefits of having diverse leadership.

Read The Big Picture daily to stay up-to-date on market direction and the leading stocks and sectors.

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

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