Dow Jones futures edged higher early Wednesday, along with S&P 500 futures and Nasdaq futures. The Federal Reserve interest-rate decision, rate-cut outlook and Fed chief Jerome Powell's press conference loom.
The stock market rally started off Tuesday solidly, with the S&P 500 joining the Dow Jones in new high ground. But the key indexes pulled back to finish mixed as investors turned cautious ahead of the Fed rate-cut announcement.
Nvidia hit resistance around key levels. Tesla came close to flashing an aggressive entry before slashing gains.
Arista Networks, Wingstop and Interactive Brokers are in buy areas.
Investors should be looking for setups and buying opportunities, though probably waiting for the Fed news and market reaction.
Nvidia stock is on IBD Leaderboard, with Wingstop stock on the Leaderboard watchlist. Interactive Brokers stock is on SwingTrader. Nvidia, Wingstop, Interactive Brokers and Arista stock are on the IBD 50.
Dow Jones Futures Today
Dow Jones futures climbed less than 0.1% vs. fair value. S&P 500 futures and Nasdaq 100 futures edged higher.
The 10-year Treasury yield rose to 3.68%.
Crude oil futures fell nearly 1%.
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: How Much Will Powell Cut Rates?
The Federal Reserve will release its official statement at 2 p.m. ET. The Fed is a lock to cut rates for the first time since the Covid crisis, but markets have been split over whether the first move will be 25 basis points or 50. Over the past few days, the odds have shifted toward a larger Fed rate cut, with a 63% chance of 50 basis points.
A small Fed rate cut could disappoint markets and raise concerns that policymakers are behind the curve.
Investors also will look for clues about the Fed rate-cut outlook. Markets have almost fully priced in 100 basis points of cuts by year-end, with a 59% chance of 125 basis points.
Along with the Fed meeting announcement, the central bank at 2 p.m. will release an updated "dot plot" indicating where individual policymakers think rates are headed, along with economic projections.
Meanwhile, Fed chief Jerome Powell will speak at 2:30 p.m. ET.
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Stock Market Rally
The stock market rally started off Tuesday strong but faded, with the major indexes finishing narrowly mixed.
The Dow Jones Industrial Average lost a fraction in Tuesday's stock market trading while the S&P 500 index edged higher after both hit all-time highs in the morning. The Nasdaq composite climbed 0.2% after rising nearly 1.1% at the morning high. The small-cap Russell 2000 advanced 0.7%, its fifth straight gain but near session lows.
The Invesco S&P 500 Equal Weight ETF rose 0.15%, hitting a new all-time high Tuesday morning
The indexes and many leading stocks slashing or erasing solid gains was disappointing. But it follows a strong advance over the past week. Markets turning skittish with the Fed rate-cut decision on tap isn't that surprising.
U.S. crude oil prices rose 1.6% to $71.19 a barrel.
The 10-year Treasury yield climbed 2 basis points to 3.64%.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF rose 0.6%. The iShares Expanded Tech-Software Sector ETF fell 0.45%. The VanEck Vectors Semiconductor ETF lost a fraction. Nvidia stock is the No. 1 holding in SMH.
Reflecting stocks with more speculative stories, the ARK Innovation ETF gained 0.8%, and ARK Genomics advanced 0.9%. Tesla stock is a major holding across ARK Invest's ETFs. Cathie Wood also has built up a big stake in NVDA stock in recent months.
The SPDR S&P Metals & Mining ETF edged up 0.1%. U.S. Global Jets ascended 1.8%. SPDR S&P Homebuilders stepped up 1.2%. The Energy Select SPDR ETF bounced 1.35% while the Health Care Select Sector SPDR Fund fell 1%.
The Industrial Select Sector SPDR Fund increased 0.55%. The Financial Select SPDR ETF rose 0.5%.
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Tesla Stock
Tesla stock nudged 0.5% higher Tuesday to 227.87 after bouncing off its 50-day line Monday. Shares came off intraday highs of 234.57, just below an aggressive entry of 235. TSLA stock has a 271 consolidation buy point, according to MarketSurge.
Tesla has a busy October ahead, with third-quarter deliveries (likely on Oct. 2), the robotaxi event on Oct. 10, and Q3 earnings on Oct. 16. Meanwhile, China EV maker Nio will formally launch its Onvo L60 crossover on Sept. 19. The Model Y rival is getting lot of buzz.
Nvidia Stock
Nvidia stock fell 1% to 115.59 , reversing lower after briefly retaking its 50-day line. NVDA stock closed just below its 21-day line. It has a 131.26 buy point from an ungainly handle. Investors could use last week's high of 120.79 as an aggressive entry.
Stocks In Buy Zones
Arista Networks stock gained 0.5% to 360.95 on Tuesday, holding above a 358.68 buy point from a hard-to-spot handle. ANET stock came off intraday highs of 368.14.
Interactive Brokers stock gained 1.9% to 416.66, closing above a 128.98 handle buy point. IBKR stock has risen for five straight sessions, starting with a rebound of the 50-day line.
Wingstop stock rose 1.9% to 416.66, clearing a 409.77 entry from a handle that's fractionally too low to be proper. The official WING stock buy point is 431.03.
How To Invest: When To Buy And Sell Stocks In Bull And Bear Markets
Stock Market Reaction Is What Really Matters
Despite Tuesday's fizzle, the stock market rally has been acting well heading into the Fed rate decision.
Whether the Fed cuts rates by 25 or 50 basis points, what matters is how markets respond. That may not be clear right away.
Financial markets are likely to whipsaw Wednesday afternoon after the Fed rate cut, "dot plot" and Powell's comments. The volatility could continue on Thursday or even Friday, as investors continue to chew over the implications.
That makes it difficult to make bold moves right after a Fed meeting. But if market reaction appears favorable, investors can take advantage of more stocks flashing buy signals.
A variety of sectors are acting well, so watchlists should be expanding.
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