Dow Jones Futures Fall As AI Fears Grip Market, CPI Inflation Due; Arista, Applied Materials Jump On Earnings

Dow Jones futures fell slightly early Friday, along with S&P 500 futures and Nasdaq futures, with the January CPI inflation report due. Applied Materials (AMAT) and Arista Networks (ANET), two big AI hardware plays, jumped overnight on earnings.

The stock market rally saw sharp losses Thursday, with the S&P 500 falling back below its 50-day moving average. The AI disruption trade continues to intensify and widen. Software stocks continued their weekslong sell-off, but in recent days data providers, online travel sites, wealth management and commercial real estate brokers have seen huge losses on AI fears. On Thursday, trucking and logistics firms such as C.H. Robinson Worldwide (CHRW) became the latest to crack.

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The video embedded in the article reviews Thursday’s market action and analyzes C.H. Robinson stock, McDonald’s (MCD) and TJX Cos. (TJX).

Dow Jones Futures Today

Dow Jones futures fell 0.2% vs. fair value. S&P 500 futures lost 0.2% and Nasdaq 100 futures declined 0.3%.

Investors will get the January CPI inflation report at 8:30 a.m. ET. The core CPI inflation rate is expected to cool slightly to 2.5% vs. a year earlier.

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

Futures: Five Ways To Handle This Dangerous Market

Earnings

Applied Materials reported strong earnings and guidance after the close. AMAT stock jumped before the open, set to gap above a four-weeks-tight with a 344.60 buy point.

Arista Networks stock leapt in extended action signaling a move above an early entry on robust growth and guidance.

Roku (ROKU), Rivian (RIVN), Dutch Bros. (BROS) and Instacart parent Maplebear (CART) were all up more than 10% early Friday, but the charts need a lot of repair work.

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Stock Market Rally

The stock market rally tumbled after pausing in the prior two sessions. The Nasdaq fell further below its 50-day line while the S&P 500 undercut that key level. The Russell 2000 tumbled toward its 50-day line. Dow Jones fell, but only to its 21-day line.

The Dow Jones Industrial Average fell 1.3% in Thursday’s stock market trading. The S&P 500 index sank 1.6%. The Nasdaq composite and small-cap Russell 2000 tumbled 2%.

The Invesco S&P 500 Equal Weight ETF (RSP) gave up 1.3%, but after hitting a fresh high intraday.

Transports were hard hit. The AI disruption trade slammed trucking firms while, separately, airlines slumped again. That offset raised guidance from FedEx (FDX).

Gold and especially silver miners sold off with underlying precious metals.

Aerospace held up, with Curtiss-Wright (CW) and Howmet Aerospace (HWM) jumping on earnings. Boeing (BA) flirted with regaining a buy point.

Consumer staples and discounters like McDonald’s and TJX had a solid performance, with the former breaking out on earnings. But defensive plays leading isn’t a great sign for the overall market.

U.S. crude oil prices sank 2.8% to $62.84 a barrel.

The 10-year Treasury yield fell eight basis points to 4.1%, hitting a three-month low.

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ETFs

Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) sank 2.7%. The VanEck Vectors Semiconductor ETF (SMH) shed 2.1%. Applied Materials stock is a big SMH holding.

ARK Innovation ETF (ARKK) tumbled 3.4% and ARK Genomics ETF (ARKG) lost 3.1%.

SPDR S&P Metals & Mining ETF (XME) dived 5.7%. U.S. Global Jets ETF (JETS) descended 1.8%. SPDR S&P Homebuilders ETF (XHB) stepped down 1.2%. The Energy Select SPDR ETF (XLE) sank 1.8% and the Health Care Select Sector SPDR Fund (XLV) dipped 0.2%.

The Industrial Select Sector SPDR Fund (XLI) retreated 1.2%. The Financial Select SPDR ETF (XLF) skidded 2%.

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What To Do Now

The S&P 500 is below its 50-day line, but not decisively so. The equal-weight RSP ETF is right at highs.

But the market has had a tendency over the past few months to rise for a few days, then fall for a few days. Throw in sector rotation, earnings season and out-of-the-blue AI disruption moves, and it’s been a difficult environment for investing.

When the road is windy and visibility poor, it’s not a time to step on the gas but to tap on the brakes. Investors should be cautious about new buys and ready to cut losses quickly.

Hard-hit sectors and stocks could bounce in the near future, but a one-day respite wouldn’t mean much on its own.

Have watchlists and exit strategies up to date. Stay engaged and flexible.

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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