In the after-hours trading, Dow Jones futures, along with S&P 500 futures and Nasdaq futures, experienced a slight increase. Investors remained cautious ahead of the upcoming CPI inflation report and key earnings reports from Delta Air Lines and Taiwan Semiconductor.

On Tuesday, the stock market rally showed a modest upward trend, with investors refraining from making significant moves before the release of the CPI inflation report. While breadth was positive, several leaders encountered some pressure.

Notably, Nvidia, a key player in the chip industry, experienced a dip but found crucial support during Tuesday's trading. Meanwhile, Google's parent company, Alphabet, announced the development of an in-house AI processor that relies less on Nvidia chips, leading to an increase in Google stock. Intel also unveiled its own AI chip to compete with Nvidia, causing a slight rise in Intel stock.

Tesla continued to see gains as Elon Musk promoted the concept of robotaxis, propelling the company's stock closer to a significant resistance level. Nvidia and ARM stock remained prominent on IBD Leaderboard, while Arm Holdings and Nvidia stock featured on the IBD 50. Nvidia stock also appeared on the IBD Big Cap 20.

At 8:30 a.m. ET, the Labor Department is set to release the consumer price index, with expectations of a 0.3% increase in consumer prices overall, as well as CPI excluding food and energy. Year-over-year, overall CPI inflation is projected to rise by 3.5%, while core CPI inflation is anticipated to decline slightly to 3.7%.

Moreover, the Fed minutes for the March meeting are scheduled for release at 2 p.m. ET. Additionally, the March producer price index report is expected on Thursday, adding to the mix of significant economic indicators.

Market analysts have noted that these key economic reports come at a time when the likelihood of a Fed rate cut in June has become uncertain.

In pre-market trading, Dow Jones futures saw a slight uptick, while S&P 500 futures and Nasdaq 100 futures increased by 0.1%. Traders were eagerly anticipating the CPI inflation report, which could influence the direction of Dow Jones futures and Treasury yields. It is important, however, to bear in mind that overnight movements in futures may not necessarily translate into actual trading during regular market sessions.

During Tuesday's stock market session, the Dow Jones Industrial Average closed with a marginal decrease, while the S&P 500 index and the Nasdaq composite experienced slight gains. The small-cap Russell 2000 also saw a modest increase.

While major indexes had a relatively subdued day, certain leaders faced pressure as Royal Caribbean stock dropped below a buy point and Deckers Outdoor closed below the 50-day line. Cava Group saw a significant drop, testing its 10-week line.

However, there were several stocks that performed well or showed resilience. Notably, U.S. crude oil prices experienced a 1.4% decrease, while the 10-year Treasury yield fell by six basis points to 4.365%. Among growth ETFs, the iShares Expanded Tech-Software Sector ETF and VanEck Vectors Semiconductor ETF showed modest gains. ARK Innovation ETF and ARK Genomics ETF, which focus on speculative story stocks, also experienced gains. SPDR S&P Metals & Mining ETF rose, while the Global X U.S. Infrastructure Development ETF fell slightly. U.S. Global Jets ETF ascended, while SPDR S&P Homebuilders ETF edged down. The Energy Select SPDR ETF closed marginally higher, and the Health Care Select Sector SPDR Fund advanced. The Industrial Select Sector SPDR Fund and the Financial Select SPDR ETF experienced slight dips.

Nvidia stock hit its lowest levels since March 1, reaching a low point of 830.22 on Wednesday. However, the chip leader managed to find support around the 10-week line, closing with a 2% decrease at 853.54. The stock may offer a buying opportunity if it shows a strong rebound off the 10-week line, marking its first test since an early January breakout. Nvidia is expected to establish a flat base with a potential buy point of 974 after this week. The company faces increasing competition in the AI space, which may impact its sales and pricing as customers look to diversify their AI chip suppliers.

During a cloud-computing event held by Google on Tuesday, the company unveiled a new AI processor utilizing Arm designs. As a result, Google's stock experienced a 1.1% increase and remained close to a handle buy point. In contrast, Arm stock initially rose but later reversed to close with a 1.9% decrease. The stock has been finding support at the 21-day line, trading above the 50-day line but below the 10-week line. MarketSurge suggests a consolidation buy point of 164 for Arm, although a safer entry point might be found along a downward-sloping trendline or at the 145 level.

Intel announced its Gaudi 3 AI chip as a direct competitor to Nvidia. Despite hitting 2024 lows intraday, Intel stock rose by 0.9% but continued to trade below important moving averages.

Tesla's stock gained momentum, rising by 2.25% on Tuesday following Monday's 4.9% jump. The company's shares rebounded from an 11-month low after Elon Musk hinted at an upcoming robotaxi unveiling on August 8. However, the details of this venture remain uncertain, given that Tesla's Full-Self Driving technology is not yet ready for fully autonomous operation. TSLA stock is approaching its 10-week moving average, which has previously acted as resistance in 2024.

Taiwan Semiconductor is scheduled to unveil its March and first-quarter sales figures early Wednesday. Being a prominent chip manufacturer for Nvidia, Apple, Broadcom, and Google, among others, Taiwan Semi's reports are expected to have a broad impact on the sector. In pre-market trading, TSM stock rose by 1.8%, extending its 1% gain from Monday but closing off highs. The stock is currently working on a possible new base.

Delta Air Lines is expected to release its earnings data before the market opens, with a projected 45% increase in earnings compared to the previous year and a 6% rise in first-quarter revenue. Delta's performance will kick off the earnings season for U.S. carriers. On Tuesday, Delta's stock increased by 0.7% to 47.32, with a cup-with-handle buy point of 49.20.

As the market awaits clear direction, investors are advised to exercise patience in a sideways market. The outcome of the CPI inflation report and the upcoming earnings season may result in significant market movements. Therefore, investors should focus on creating watchlists, given that leading stocks across various sectors are testing critical support levels and forming potential bases.

Stay informed about the market direction and leading stocks and sectors by following The Big Picture on a daily basis. For regular stock market updates, you can follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson.