Dow Jones futures are set to open Sunday evening, alongside S&P 500 and Nasdaq futures. The upcoming Federal Reserve meeting takes center stage, as policymakers prepare for the first rate cut since the onset of the Covid-19 pandemic in 2020.
The stock market rally has experienced a significant rebound, with the S&P 500 and Nasdaq composite recording their best weekly performances of the year. Both have reclaimed their 50-day moving averages following a previous sell-off. The S&P 500 and Dow Jones are approaching all-time highs, and numerous leading stocks have provided bullish buy signals.
Investor sentiment is positive, buoyed by anticipated Fed rate cuts and developments in artificial intelligence—two key drivers behind this year’s stock rally.
Nvidia’s CEO, Jensen Huang, recently emphasized the extraordinary demand for the company’s AI chips, announcing that production of its next-generation Blackwell chips is progressing smoothly. As a result, Nvidia’s stock has surged, subsequently lifting enthusiasm for other AI-related companies and the broader market.
Among the stocks flashing buy signals are Arista Networks, Interactive Brokers, Shift4, DoorDash, Royal Caribbean, Meta Platforms, Sea, and Microsoft. These stocks, along with several peers, add up to a total of 25 equities entering favorable buy zones.
Investors have been taking advantage of these buying opportunities, particularly in recent days, as long as the market maintains a strong upward trajectory.
As the Fed meeting looms, it’s essential to keep an eye on developments. Dow Jones futures will open at 6 p.m. ET, as will S&P 500 and Nasdaq 100 futures.
The Federal Reserve will convene on September 17 and 18, with an official statement expected at 2 p.m. ET on Wednesday. Fed Chair Jerome Powell will address the market at 2:30 p.m. ET.
A rate cut is widely accepted as a likely outcome; however, markets are uncertain whether the cut will be 25 or 50 basis points. Either decision is expected to create ripples in the market.
Current forecasts suggest 100 basis points of cuts are on the table by year-end, with over 50% probabilities for 125 basis points of cuts. Investors will pay close attention to the Fed’s “dot plot” for insights on future rate expectations.
Last week’s market showed encouraging signs as major indexes transacted strongly. The Dow Jones Industrial Average rose by 2.6% while the S&P 500 jumped 4%. The Nasdaq composite saw an impressive 5.95% increase, marking their best weekly gains to date. Small-cap indices also saw significant rises, indicating broad market support.
The week prior had issued a warning as the Nasdaq closed below a crucial low, marking a bearish phase. However, a critical turnaround occurred midweek, with the indexes rebounding strongly to reclaim their 50-day lines.
Stocks that have prominently entered buy zones include Nvidia, DoorDash, and Meta, which are highlighted on IBD Leaderboard. Other stocks like Interactive Brokers are under the watchful eye of SwingTrader, while Microsoft is acknowledged as a Long-Term Leader.
Sector strength has been palpable, alongside tech stocks regaining momentum, suggesting an enduring wave of investor optimism.
As we transition into fresh trading opportunities, staying aligned with market movements and leading stock performance is pivotal. Investors are encouraged to continue exploring prospects in sectors demonstrating solid potential for growth.
Focusing on the performance of exchange-traded funds (ETFs), several growth ETFs made significant strides last week. For instance, the Innovator IBD 50 ETF surged 6.95%, while the iShares Expanded Tech-Software Sector ETF rose by 4.8%, thanks to its featuring of hefty holdings like Microsoft.
Overall, as the stock market gears up for another round of potential rate cuts and consequent upward mobility, being on the lookout for actionable investment opportunities is paramount. With a keen eye on developments from the Federal Reserve, the strategy going forward should be to capitalize on favorable trends while remaining alert to shifts in market sentiment. Following those signals could lead to fruitful investments as we foresee a pivotal phase in the market landscape ahead.