Dow Jones futures rose slightly Monday morning. S&P 500 futures tilted lower while Nasdaq futures fell, led by Apple. The Federal Reserve meeting takes center stage this week, with policymakers set to cut rates for the first time since the Covid crisis in 2020.
The stock market rally had a dramatic revival, with the S&P 500 and Nasdaq composite posting their best weekly gains of the year to reclaim their 50-day lines after selling off in the prior week. The S&P 500 and Dow Jones are close to all-time highs. A large number of leading stocks flashed buy signals.
Investors are upbeat about Fed rate cuts and artificial intelligence, the two big catalysts for the stock market rally this year.
Nvidia CEO Jensen Huang said last week that demand for the company's AI chips is "incredible" and said production of its next-generation Blackwell chips is in full swing. Nvidia stock surged for the week lifting other AI plays and the broader market.
Arista Networks, Interactive Brokers, Shift4, DoorDash, Royal Caribbean, Meta Platforms, Sea and Microsoft are flashing buy signals. All have peers that are also actionable or close to being so, for a combined total of 25 stocks in buy areas highlighted in this article.
It's been a time for investors to be making buys, though the Fed meeting bears watching.
Nvidia, DoorDash and Meta stock are on IBD Leaderboard. Interactive Brokers stock is on SwingTrader. Microsoft stock is on IBD Long-Term Leaders. Nvidia, Arista Networks, Meta Platforms and Royal Caribbean stock are on the IBD 50. Arista stock is on the IBD Big Cap 20. Shift4 stock is on IBD Sector Leaders.
Interactive Brokers was Friday's IBD Stock Of The Day. DoorDash stock was Thursday's pick. Sea stock was the Sept. 6 selection.
Apple iPhone 16 Pre-Orders
Apple iPhone 16 preorders after the first weekend are around 37 million, according to Ming-Chi Kuo, an analyst at TF International Securities. But the Pro and Pro Max variants underwhelmed.
Apple stock fell modestly from near the 50-day line on reports.
Dow Jones Futures
Dow Jones futures rose 0.2% vs. fair value. S&P 500 futures lost 0.1% and Nasdaq 100 futures declined 0.45%. Apple stock is a Dow Jones, S&P 500 and Nasdaq 100 giant. Nvidia was a slight drag on the S&P 500 and Nasdaq.
Crude oil futures climbed nearly 1%.
The 10-year Treasury yield nudged down to 3.63%.
China economic data over the weekend signaled further slowdown in August. Industrial production rose 4.5% vs. a year earlier, down from July's 5.1% and just below estimates. Retail sales growth slowed to 2.1% from July's 2.7%, below consensus for 2.3%. Year-to-date fixed asset investment came in at 3.4%, below the Jan.-July reading of 3.6%. But that also revived hope that China will finally return to big stimulus.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Fed Meeting Sept. 17-18: How Much Will Powell Cut Rates?
The Federal Reserve meets on Tuesday-Wednesday. An official statement is due at 2 p.m. ET on Wednesday. Fed chief Jerome Powell will speak at 2:30 p.m. ET.
It's a foregone conclusion that the Fed will cut interest rates. But markets have been split on whether the first Fed rate cut will be 25 basis points or 50, so it's going to be a semi-surprise either way. However, the odds for a larger move rose to 63% early Monday.
Markets have almost fully priced in 100 basis points of cuts by year-end, with over 50% odds of 125 basis points.
Fed policymakers will release an updated "dot plot" indicating where they think rates are headed, along with economic projections. Investors will pay close attention to Powell's comments for clues about the pace of future Fed rate cuts.
A small Fed rate cut or Powell signaling that future moves will be gradual could disappoint markets.
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Stock Market Rally
The stock market rally was a positive expectations breaker this past week after the prior week's ugly, expectations-breaker sell-off.
The Dow Jones Industrial Average popped 2.6% in last week's stock market trading. The S&P 500 index leapt 4% and the Nasdaq composite vaulted 5.95%, their best weekly gains of the year. The small-cap Russell 2000 jumped 4.4%.
On Friday, Sept. 6, the Nasdaq closed decisively below the low of its Aug. 13 follow-through day, a highly bearish sign. The S&P 500 did not, but wasn't far off.
Stocks bounced back this past week, but Wednesday was the turning point. After selling off to start the session, the indexes reversed higher powerfully, with the S&P 500 closing above its 50-day. The Nasdaq followed Thursday.
On Friday, the Dow and S&P 500 moved to just below record highs. The Russell 2000 and S&P MidCap 400 gapped above that key level after nearly touching their 200-day lines Wednesday morning.
A large number of leading stocks, including a number of tech names, raced into buy areas during the week
The 10-year Treasury yield fell 6 basis points to 3.65%. U.S. crude oil futures rose 1.45% to $68.65 a barrel after hitting a 52-week low on Tuesday.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF soared 6.95% last week. The iShares Expanded Tech-Software Sector ETF jumped 4.8%, with Microsoft stock a major holding. The VanEck Vectors Semiconductor ETF spiked 10.2%, with Nvidia stock the dominant component.
SPDR S&P Metals & Mining ETF rebounded 8.2%. The U.S. Global Jets ETF ascended 3.7%. SPDR S&P Homebuilders ETF rallied 6.5%. The Energy Select SPDR ETF gained 3.7% and the Health Care Select Sector SPDR Fund added 1.4%.
The Industrial Select Sector SPDR Fund advanced 3.7%. The Financial Select SPDR ETF edged up 0.5%.
Time The Market With IBD's ETF Market Strategy
Arista Stock
Arista Networks stock surged 14.5% last week to 359.76. On Wednesday, its shares cleared the 50-day line, and they offered an early entry Thursday by clearing a trendline. On Friday, ANET stock topped a 358.68 buy point from an awkward handle.
Related stocks: Fellow AI hardware plays Broadcom and Taiwan Semiconductor have cleared early entries. Nvidia stock vaulted 15.8% last week, offering an aggressive entry above the 50-day, but shares were testing that key level early Monday.
Meta Stock
Meta stock gained 4.9% last week to 524.62. Shares rebounded from their 50-day on Wednesday, then became actionable as they cleared the 21-day line and short downtrend. Meta stock has a 542.81 buy point. Investors also could use 544.23 as an alternate entry.
Related stocks: Online ad play Trade Desk rebounded bullishly from the 10-week line last week and reclaimed a buy point from a very V-shaped consolidation.
Interactive Brokers Stock
Interactive Brokers stock popped 4.5% to 128.07. Shares briefly cleared a 128.98 handle buy point on Friday, backing off but still offering an early entry. IBKR stock found support at the 50-day on Wednesday.
Related stocks: Stifel Financial and Piper Sandler offer early entries, while Robinhood Markets has broken out.
Shift4 Stock
Shift4 stock leapt 9.5% to 82.92, rebounding from the 10-week line. Shares broke the downtrend of a handle on Thursday. On Friday, FOUR stock topped the 84.26 cup-with-handle buy point intraday.
Related stocks: Restaurant payments rival Toast and buy now, pay later specialist Affirm Holdings are actionable. Mastercard is in a traditional buy zone.
DoorDash Stock
DoorDash stock climbed 6.3% to 131.35 last week, just clearing a 131.21 cup-with-handle buy point on Friday, according to MarketSurge. Shares were already actionable after rebounding from the 21-day line and breaking the downtrend of the handle.
Related stocks: Instacart parent Maplebear is just below a handle buy point and arguably actionable. Uber gapped above its 50-day and 200-day lines on Friday, offering an aggressive entry.
Royal Caribbean Stock
Royal Caribbean stock rose 7.3% to 167.96, teasing a 169.47 cup-with-handle buy point on Friday. RCL stock is actionable from breaking trendlines from the top of the base and the handle. The cruise line giant reclaimed its 21-day and 50-day lines on Wednesday.
Related stocks: Online travel giant Booking Holdings is on the cusp of a breakout. United Airlines is in a buy zone.
Sea Stock
Sea stock gained 5.2% to 81.18. The Southeast Asian e-commerce and gaming giant held its 76.60 buy point and 21-day line in the prior week. This week, shares rose off the 21-day line and broke a short downtrend. Technically, Sea stock is slightly extended, but is still actionable.
Related stocks: South Korean e-commerce giant Coupang is in a buy zone.
Microsoft Stock
Microsoft stock rebounded 7.2% to 430.59, back above the 200-day line and then the 50-day, as well as a short-term high. While well below the 468.35 consolidation buy point, MSFT stock is actionable here as a Long-Term Leader. The relative strength line, though still recovering, is above its 50-day moving average.
Related stocks: ServiceNow, another software giant with generative AI offerings for end users, is in a buy zone. Amazon.com, a Microsoft Azure rival with Amazon Web Services, is actionable after clearing the 50-day.
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What To Do Now
The stock market rally is back on track. The major indexes look strong and leading stocks look better.
Investors should have been taking advantage of buying opportunities, especially in the past few days. Continue to do so if the market and your holdings act well.
While AI and other tech growth stocks are back in play, many other sectors continue to look strong. That should be reflected in your watchlists and your portfolio.
The Fed meeting and Powell's comments are a big risk event, however.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.
