Dow Jones futures saw a modest rise Sunday evening as momentum builds ahead of a crucial Federal Reserve meeting. This marks a pivotal moment, with expectations swirling about the Fed’s first interest rate cut since the fallout from the Covid pandemic in 2020.
The stock market has experienced a significant turnaround, with the S&P 500 and Nasdaq composite achieving their most robust weekly gains of the year, successfully reclaiming their 50-day moving averages after a previous week of selling pressure. Notably, both the S&P 500 and Dow Jones are approaching all-time high territory, while a host of leading stocks are signaling buy opportunities.
Investors are optimistic about upcoming Fed rate reductions and advancing technologies such as artificial intelligence—two key catalysts driving the current stock market rally.
Nvidia’s CEO, Jensen Huang, recently described the demand for the company’s next-generation AI chips as “incredible,” with production ramping up on its latest Blackwell chips. This surge has propelled Nvidia’s stock, boosting investor sentiment across other AI-related equities and the broader market.
Several key stocks are flashing buy signals, including Arista Networks (ANET), Interactive Brokers (IBKR), Shift4 (FOUR), DoorDash (DASH), Royal Caribbean (RCL), Meta Platforms (META), and Microsoft (MSFT). This group alone comprises a total of 25 stocks now trading within favorable buying ranges.
As purchasing opportunities arise, the upcoming Fed meeting looms as a critical factor to monitor. Featured stocks such as Nvidia, DoorDash, and Meta are highlighted on IBD Leaderboard, while Interactive Brokers is spotlighted in the IBD SwingTrader portfolio. Microsoft stands out as an IBD Long-Term Leader.
The latest futures indicate that Dow Jones futures are up by 0.2% against fair value, while S&P 500 futures have climbed 0.1% and Nasdaq 100 futures have also edged higher. Additionally, crude oil futures have experienced a slight increase.
Attention is now directed toward the Fed’s meeting scheduled for September 17–18, expectations revolve around a likely interest rate cut, but there remains deliberation over whether the reduction will amount to 25 or 50 basis points. Most financial analysts anticipate up to 100 basis points of cuts by the end of the year, with over a 50% probability indicating 125 basis points could be on the table as well.
This meeting could alter market sentiment, with investors bracing for insights from the Fed’s updated “dot plot” reflecting future interest rate expectations along with the latest economic forecasts. Powell’s subsequent remarks may offer crucial indications about the trajectory of future rate cuts.
The stock market recovery remains robust, with a notable reversal in investor sentiment seen last week, following a sharp drop in the previous week. The Dow Jones Industrial Average surged 2.6% last week, the S&P 500 gained 4%, and the Nasdaq composite jumped an impressive 5.95%.
As major indexes approach record highs, the stock market appears to be regaining its footing. Last week’s dramatic comeback began after the initial selling pressure, with the S&P 500 finishing above its 50-day moving average, compelling the Nasdaq to follow suit shortly after.
A multitude of strong stocks, particularly in the tech sector, have entered actionable territories. The 10-year Treasury yield saw a slight decline to 3.65%, while crude oil futures rose 1.45% to $68.65 a barrel.
Among growth exchange-traded funds (ETFs), the Innovator IBD 50 ETF (FFTY) soared 6.95% last week. The iShares Expanded Tech-Software Sector ETF (IGV) climbed 4.8%, heavily influenced by key holdings such as Microsoft. The VanEck Vectors Semiconductor ETF (SMH) saw an impressive gain of 10.2%, bolstered by Nvidia.
In terms of performance, stocks such as Arista Networks saw a 14.5% rise to 359.76 as it broke above its 50-day moving average, with early entry opportunities apparent throughout the week. Nvidia’s stock surged 15.8%, also marking potential buy signals.
Interactive Brokers recorded a 4.5% increase to 128.07, establishing a favorable early entry point, while DoorDash climbed 6.3% to 131.35, firmly entering the actionable buy zone.
Royal Caribbean resumed a 7.3% increase to 167.96, nearing a crucial buy point, and Microsoft also showed a remarkable rebound of 7.2% to 430.59, affirming its status as a Long-Term Leader.
This market rally represents a critical opportunity for investors. With a strong stock market environment, it’s essential to seize viable buying opportunities while navigating upcoming economic news from the Fed’s assessment.
Keeping abreast of the market shifts and maintaining an up-to-date watchlist of promising stocks is crucial for successful investment endeavors.