Dow Jones futures showed slight gains Sunday evening, alongside a modest uptick in S&P 500 futures, while Nasdaq futures remained relatively stable. All eyes are on the Federal Reserve meeting set for September 17-18, marking the first rate cut since the onset of the Covid pandemic in 2020.
After a dramatic week, the stock market experienced a remarkable turnaround, with the S&P 500 and Nasdaq both recording their most significant weekly gains for the year, successfully reclaiming their 50-day moving averages following a previous week of declines. The S&P 500 and Dow are nearing their all-time highs, and a number of leading stocks are now signaling potential buying opportunities.
Investor sentiment is buoyant, driven primarily by the anticipated Fed rate cuts and promising developments in artificial intelligence (AI). Nvidia’s CEO, Jensen Huang, has noted unprecedented demand for the company’s AI chips, with production of the upcoming Blackwell chips underway, propelling Nvidia’s stock upwards and positively impacting broader market performance.
Among the stocks flashing buy signals are Arista Networks (ANET), Interactive Brokers (IBKR), Shift4 Payments (FOUR), DoorDash (DASH), Royal Caribbean (RCL), Meta Platforms (META), Sea Limited (SE), and Microsoft (MSFT). This surge yields a total of 25 stocks currently in buy territory, as highlighted throughout this analysis.
With the positive market momentum, investors have had the opportunity to execute purchases, but caution is warranted with the upcoming Fed meeting looming.
In Dow Jones futures, there’s a notable increase of 0.2% against fair value, while S&P 500 futures increased by 0.1% and Nasdaq 100 futures remain steady.
As we approach the Fed meeting scheduled for midweek, an official statement is anticipated at 2 PM ET on Wednesday, followed by Fed Chair Jerome Powell’s comments at 2:30 PM ET.
The consensus is that a rate cut is forthcoming; however, market predictions vary between a 25 basis points and 50 basis points reduction, creating a scenario for a potential surprise.
Key economic indicators are also set to be released, including the Fed’s updated “dot plot” guiding future interest rate expectations, which investors will scrutinize for hints about the Fed’s future trajectory.
During the recent trading week, the stock market displayed resilience, rebounding after a rough stretch. The Dow Jones Industrial Average saw an impressive 2.6% rise, with the S&P 500 climbing 4% and the Nasdaq composite soaring 5.95%, marking a watershed moment for the major indexes.
The reversal started midweek, with a robust upward move post a weaker start. Notably, the S&P 500 successfully closed above its 50-day line, while the Nasdaq followed suit shortly afterward. The momentum has carried the indexes near record highs, with significant numbers of leading tech stocks also breaking into buy zones.
Treasury yields reflected a cooling market sentiment, dropping six basis points to 3.65%, while crude oil futures climbed by 1.45% to $68.65 per barrel, rebounding from recent lows.
Growth ETFs have also been on an upward trajectory. The Innovator IBD 50 ETF (FFTY) surged 6.95% last week, with the iShares Expanded Tech-Software Sector ETF (IGV) gaining 4.8%, bolstered by significant Microsoft holdings. The VanEck Vectors Semiconductor ETF (SMH) experienced a stellar 10.2% climb, significantly influenced by Nvidia.
Turning to individual stocks, Arista Networks’ shares skyrocketed 14.5% last week, breaking through multiple resistance points. Similarly, both Meta and Interactive Brokers demonstrated impressive gains, now displaying actionable buy setups.
DoorDash stock also saw a rise, completing a cup-with-handle pattern signaling potential growth, as did Sea, which maintained robust levels around its buy point.
April’s performance highlights the vitality of the stock market environment, as strategies focusing on tech growth and AI remain crucial in guiding investment decisions.
Finally, while the revived stock market is an encouraging sign for investors, keeping a close eye on the Federal Reserve’s forthcoming policy decisions will be critical in navigating potential risks associated with upcoming economic shifts.
This is a prime time for investors to capitalize on favorable buying opportunities while navigating a market brimming with promise. Stay tuned for daily insights to remain aligned with evolving market trends and leading stock opportunities.