Dow Jones futures were steady early Wednesday, while S&P 500 futures and Nasdaq futures rose slightly.
The stock market rally saw losses on the major indexes Tuesday. Chip-equipment giant ASML (ASML) plunged on weak guidance, slamming Nvidia (NVDA) and other chip and AI plays. Plunging oil prices hit energy stocks while UnitedHealth Group (UNH) dived on weak guidance. Meanwhile, small caps and several sectors showed strength or resilience.
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Small Caps Rise As Chips Rocked; Nvidia, KB Home, Ensign Group In Focus
Nvidia stock did manage to close just above a buy point, while several other AI chip plays held near entries, including Broadcom (AVGO)Â and Taiwan Semiconductor (TSM).
ASML stock continued to slide early Wednesday, but Nvidia, Broadcom and Taiwan Semi edged higher.
Nvidia stock is on IBD Leaderboard, SwingTrader and the 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 (KBH).
Dow Jones Futures Today
Dow Jones futures were steady vs. fair value. S&P 500 futures rose 0.1% and Nasdaq 100 futures climbed 0.2%.
The 10-year Treasury yield fell a few basis points to 4.01%.
Crude oil futures declined slightly.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
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Earnings
United Airlines (UAL) and Interactive Brokers (IBKR) reported after the close.
United Airlines beat views and announced a $1.5 billion buyback. Interactive Brokers reported mixed results.
United rose slightly in premarket trade. Interactive Brokers fell solidly. Both were extended heading into Q3 financials.
Stock Market Rally
The stock market rally saw the major indexes retreat amid negative earnings guidance from Dow giant UnitedHealth and especially ASML.
The Dow Jones Industrial Average lost 0.8% in Tuesday’s stock market trading. So did the S&P 500 index 0.8%, but both were from record highs. The Nasdaq composite lost 1%, but still held above key short-term levels. All look solid on weekly charts as well.
The small-cap Russell 2000 eked out a fractional gain, slashing a decent intraday gain.
Homebuilders, financials, retailers, hospitals, travel, long-term care and various drug plays advanced or held up, though many faded into the close. Many flashed buy signals, though several have earnings soon, including Ensign Group and Texas Roadhouse (TXRH).
U.S. crude oil prices tumbled 4.4% to $70.58 a barrel. Israel reportedly won’t hit Iranian energy facilities, while Saudi Arabia may be poised to ramp up production. Renewed China worries also is weighing on crude and industrial commodities.
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) retreated 1%. The VanEck Vectors Semiconductor ETF (SMH) sold off 5.4%. Nvidia is the No. 1 SMH holding, with ASML stock, Taiwan Semi and Broadcom all big positions. ARK Innovation ETF (ARKK) dipped 0.2%.
SPDR S&P Metals & Mining ETF (XME) shed 0.7%. U.S. Global Jets ETF (JETS) climbed 0.3%, with UAL stock a key holding. SPDR S&P Homebuilders ETF (XHB) edged up 0.1%. The Energy Select SPDR ETF (XLE) slumped 3.2% and the Health Care Select Sector SPDR Fund (XLV) lost 1.2%
The Industrial Select Sector SPDR Fund (XLI) declined 0.8%. The Financial Select SPDR ETF (XLF) added 0.2%.
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ASML Warning Slams Nvidia, Chips
Dutch chip-equipment giant ASML released Q3 results a day early by mistake. ASML earnings and revenue beat views, but bookings dived 53% vs. Q2, roughly half of estimates. The company also lowered 2025 guidance. ASML dived 16.3% to its worst levels in nine months, with shares solidly lower early Wednesday.
Lam Research (LRCX), KLA Corp. (KLAC) and other chip-equipment plays also were huge losers Tuesday.
Nvidia stock gave up 4.5% to 131.84, but held above the 131.26 buy point. It’s possible that Nvidia could work on a handle just below the consolidation peak
A report that the U.S. could increase AI chip export restrictions yet again also weighed on Nvidia.
Broadcom (AVGO) lost 3.5%, Arm Holdings (ARM) fell 6.9% and Taiwan Semiconductor (TSM) lost 2.6%. Broadcom and Arm fell below handle buy points, while Taiwan Semi dipped below an alternate entry — but all are still very close.
Nvidia and these other AI plays could look a lot better or worse with relatively small moves now. All four AI chip stocks rose slightly early Wednesday.
Taiwan Semiconductor earnings are due early Thursday. After ASML’s grim news and with AI plays at critical levels, the stakes are even higher.
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What To Do Now
Unlike a follow-through day or a dramatic market breakdown, there wasn’t a just one way to play Tuesday’s action.
Some investors, especially those making recent tech buys or heavily invested in AI names, may have wanted to trim or exit some positions, though still remaining significantly invested.
Others, holding solid gains amid a market rally power trend, may have opted to stand pat. Using weekly charts can help position traders put bad days in perspective.
The key is to follow rules that work for your investing strategy.
It’s definitely a time to be engaged with the market. Have watchlists ready and review your portfolio. Tuesday showed the upside of having a diversity of leadership.
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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