The stock market witnessed a mixed week with various indices showing different trends. Dow Jones futures were flat on Monday morning, while S&P 500 and Nasdaq futures fell slightly. This week's stock market rally had its ups and downs, but all major indexes hit fresh highs at some point, driven by strong tech earnings. Treasury yields fell due to tame economic data, boosting expectations of another Fed rate cut on Dec. 18.

Unraveling the Dynamics of the Stock Market

Overview of Dow Jones Futures

Dow Jones futures were just above fair value. S&P 500 futures lost about 0.1%, and Nasdaq 100 futures declined 0.2%. The 10-year Treasury yield rose to 4.18%, and crude oil futures increased by more than 1%. Bitcoin fell to above $98,000 after reaching the $100,000 level last week. In Hong Kong, the Hang Seng jumped 2.8% as China pledged more proactive fiscal and moderately easier monetary policies to boost consumption. Copper prices also rose on the China stimulus pledge. It's important to note that overnight Dow futures action doesn't necessarily translate to actual trading in the next regular session.

The Nasdaq led the way, with the 20,000 level acting as a magnet. However, the tech-heavy composite is starting to look extended, and market sentiment is becoming frothy. Nvidia (NVDA), Apple (AAPL), Meta Platforms (META), and Microsoft (MSFT) are all showing buy signs. However, Nvidia stock fell on Monday morning due to a China probe on anti-monopoly grounds. Nvidia and Meta stocks are on the IBD Leaderboard, and Meta is also on SwingTrader. Microsoft stock is on IBD Long-Term Leaders, and Nvidia stock is on the IBD 50.

Stock Market Rally and Its Impact

The stock market rally had a mixed week. The Dow Jones Industrial Average fell 0.6%, but hit a fresh all-time peak on Wednesday. The S&P 500 index rose nearly 1%, and the Nasdaq composite jumped 3.3%, setting records on Friday. The small-cap Russell 2000 declined 1.1%. The 10-year Treasury yield declined four basis points to 4.15%, reaching the lowest levels since late October. U.S. crude oil futures fell 1.2% to $67.20 per barrel.

The Nasdaq is within 1% of the 20,000 level, one month after topping 19,000 for the first time. While it's not yet overly extended, when it gets 5%-6% above the 50-day line, the risks of a pullback start to rise. The S&P 500 is not as extended, only 3.7% above its 50-day. Sentiment indicators are also raising concerns. The Investors Intelligence Bulls vs. Bears survey shows 62.9% of investment newsletters bullish, which is a sign of excessive bullishness. The CBOE Volatility Index hit its lowest reading since July 19.

ETF Performance and Market Trends

Among growth ETFs, the Innovator IBD 50 ETF (FFTY) rose 1.55% last week. The iShares Expanded Tech-Software Sector ETF (IGV) leaped 5%, with Microsoft as a major holding. The VanEck Vectors Semiconductor ETF (SMH) gained 2.7%, with Nvidia stock as the dominant component. ARK Innovation ETF (ARKK) soared 8.5% last week, and ARK Genomics ETF (ARKG) climbed 1.85%. SPDR S&P Metals & Mining ETF (XME) plunged 4.8%, U.S. Global Jets ETF (JETS) ascended 4.1%, SPDR S&P Homebuilders ETF (XHB) gave up 3.1%, the Energy Select SPDR ETF (XLE) tumbled 4.7%, and the Health Care Select Sector SPDR Fund (XLV) declined 2.1%. The Industrial Select Sector SPDR Fund (XLI) retreated 2.4%, and the Financial Select SPDR ETF (XLF) shed 1.8%.

These ETF movements reflect the overall market trends and sector performances. It shows how different sectors and stocks are responding to various market conditions. Investors need to closely monitor these ETFs to understand the market dynamics and make informed investment decisions.

Key Stocks and Their Movements

Nvidia stock fell about 2% to under 140 early Monday, back below the 140.76 buy point and the 21-day line but still above the 50-day moving average. It rose 3% to 142.44 last week, rebounding from the 50-day to move back into buy range. China has launched a probe into Nvidia on suspicion of anti-monopoly breaches.

Apple stock climbed 2.3% to 242.84 for the week, moving above a 237.49 buy point from a flat base next to another consolidation. Meta stock jumped 8.6% to 623.77, clearing a 602.95 flat-base buy point. The Facebook and Instagram parent rose 2.4% on Friday as a federal court upheld a looming U.S. ban of TikTok. Meta also launched its latest large language model, Llama 3.3. Microsoft stock gained 4.75% to 443.57, rebounding from all its moving averages and later topping short-term highs.

What to Do in the Current Market

The stock market rally is performing well, with tech and other growth plays leading the way. Some buying opportunities still exist. If fully invested, one might need to cut something to take a new position or add to a holding. The market, especially the Nasdaq, is starting to look stretched. While it's not the time for proactive selling alone, it's a factor to consider when deciding whether to take profits in extended stocks.

Earnings season is past its peak, but there are quality stocks among the limited quantity. Toll Brothers (TOL), Broadcom (AVGO), Oracle (ORCL), Costco (COST), Ollie's Bargain Outlet (OLLI), and Adobe (ADBE) are key earnings reports this week, along with Nvidia chipmaker Taiwan Semiconductor (TSM) reporting monthly sales. All but Costco stock, which is extended, are trading near buy points or early entries.

Macy’s (M) shares witnessed a notable rise on Monday. Activist investors, such as Barington Capital Group and Thor Equities, collaborated on a proposal. This proposal aimed to revitalize the retailer by creating a real estate subsidiary and curbing capital expenses. Chief Executive Officer (CEO) Tony Spring’s plan to close many underperforming Macy’s stores received support. The activists also called for reducing capital expenditures to 1.5%-2% of sales and buying back a minimum of $2-$3 billion in stock over the next three years. Thor chairman Joseph Sitt emphasized Macy’s valuable real estate assets. The Macy’s board stated confidence in their Bold New Chapter strategy. Despite the share increase of about 2% on Monday afternoon, the stock has shed about 17% of its value this year. - Sarina Trangle

Activist Investors' Plan to Transform Macy's

Activist Investors' Proposal and Its Impact

Activist investors have played a significant role in Macy’s recent developments. Their proposal to create a real estate subsidiary and make other strategic changes is expected to have a profound impact on the retailer. By focusing on property sales and redevelopments and charging stores rent, they aim to enhance the company's financial performance. This move shows the growing influence of activist investors in the retail sector and their efforts to drive change and improve shareholder value.The reduction in capital expenditures is another crucial aspect of the proposal. Bringing it down to 1.5%-2% of sales from the current level of about 4% is expected to free up funds for other strategic initiatives. Buying back stock also indicates the investors' confidence in the company's future and their belief that it will generate higher returns. These actions by the activists are likely to attract the attention of investors and market analysts alike.

CEO's Strategy and Board's Response

CEO Tony Spring's plan to close underperforming stores is part of a broader strategy to revitalize Macy’s. The board's statement of confidence in this strategy shows their commitment to addressing the challenges faced by the retailer. By sharing further details of their progress when reporting full third-quarter results, they are providing transparency and keeping investors informed. This approach helps build trust and confidence among stakeholders and shows that the company is actively working towards improving its performance.The combination of the activists' proposal and the CEO's strategy creates a dynamic environment for Macy’s. It highlights the need for the company to adapt to changing market conditions and find innovative ways to drive growth. The board's support and the potential for increased returns make this a crucial period for Macy’s as it navigates through the challenges of the retail industry.

Share Performance and Future Outlook

Macy’s share performance on Monday afternoon, with a 2% increase, is a positive sign but still leaves the stock down about 17% this year. This indicates the ongoing challenges faced by the retailer despite the efforts of the activists and the management. However, the potential for the implementation of the proposed changes and the improvement in financial performance gives hope for the future.Looking ahead, Macy’s will need to continue to execute its strategies and address the various issues it faces. The collaboration between the activists and the management provides a potential path forward, but there are no guarantees of success. Market conditions and competition will also play a significant role in determining the future of the company. Investors will be closely watching Macy’s progress and how it responds to the challenges ahead.

Interpublic Group Stock Surge and Omnicom Deal

Interpublic Group of Companies (IPG) shares surged on Monday after Omnicom Group announced a deal to acquire it in an all-stock transaction. This deal is expected to form the world’s largest advertising company and is subject to approvals from both companies' shareholders and regulators.Citigroup's report before the deal was announced highlighted that while investors may anticipate regulatory challenges, there is still significant competition in the market from smaller agencies, tech firms, and consulting companies. The rarity of mergers among large agency holding companies makes this deal an important event in the advertising industry.Interpublic shares, which had lost around 10% of their value this year as of Friday's close, ended trading at $29.26, giving the company a market value of almost $11 billion. The deal values Interpublic at $13.25 billion. During mid-day trading on Monday, Interpublic shares were up 8%, while Omnicom shares were down about 8%.

Super Micro Computer Stock Jump and Nasdaq Filing Extension

Super Micro Computer (SMCI) shares traded higher in early trading on Monday after receiving an extension until February from the Nasdaq to file its delayed annual report. This extension allows the company to meet its listing requirements and provides some relief from the pressure of meeting deadlines.Although the stock dropped around 65% between late October and mid-November, it has recovered most of those losses over the past month and is now trading more than 50% higher on the year through Friday's close. The recent recovery, with the price more than doubling from its mid-November low, is a remarkable turnaround.The increase in volume during the bullish reversal indicates buying activity from larger market players, which is a positive sign for the stock. The consolidation within a pennant last week signals a continuation of the stock's recent upward movement, and there are key overhead areas and a major support level worth watching during pullbacks.

Nvidia Stock Slip and Chinese Antitrust Probe

Nvidia (NVDA) shares moved lower on Monday morning after China's State Administration for Market Regulation announced an investigation into the chipmaking giant for potential violations of anti-monopoly laws. The 2020 acquisition of Israeli-American networking hardware maker Mellanox Technologies is under scrutiny.Approval for the deal came with certain conditions, including not discriminating against Chinese companies and informing competitors of new products. The investigation highlights the importance of compliance with anti-monopoly laws in the global market.Despite the initial drop of more than 2% in early trading, Nvidia's shares have still risen over 180% since the start of the year. This shows the company's strong performance and market position, but the antitrust probe adds an element of uncertainty.

Futures Mixed Ahead of Fed Decision

Futures contracts connected to the Dow Jones Industrial Average were up about 0.1% in premarket trading on Monday. S&P 500 futures were little changed after recovering from earlier losses, while Nasdaq 100 futures were off 0.1%.The mixed performance of the futures indicates the uncertainty ahead of the Fed decision. Market participants will be closely watching for any indications of the central bank's monetary policy stance and its impact on the stock markets. The outcome of the Fed decision will likely have a significant influence on the direction of the markets in the coming weeks.