Dow Jones futures rose sharply early Thursday, along with S&P 500 futures and Nasdaq futures, after volatile market action following the Federal Reserve rate cut.
The stock market initially jumped Wednesday afternoon as the Fed cut rates by 50 basis points, with the S&P 500 and Dow Jones hitting record high. But the major indexes erased strong gains to close modestly lower, even as Fed Chief Jerome Powell signaled more easing along with an economic soft landing.
But markets often have a day two or day 3 reaction to Fed meeting announcements.
Dow Jones Futures Today
Dow Jones futures rose 1.1% vs. fair value. S&P 500 futures leapt 1.6%. Nasdaq 100 futures jumped 2.1%.
The Japanese yen weakened vs. the dollar overnight. A strengthening of the yen — an unwinding of the yen-carry trade — has been a drag on U.S. and global markets in the past couple of months. The Bank of Japan began a two-day meeting on Thursday, with analysts expecting no change.
The 10-year Treasury yield rose a few basis points to 3.72%.
Crude oil futures rose nearly 1%. Copper and gold rallied, while bitcoin jumped.
Remember that premarket action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Still, futures suggest a strong open. If that holds, investors want to be ready to take advantage of what could be a number of buying opportunities.
Fed Rate Cut And Powell's 'Commitment'
The Fed cut rates for the first time since the Covid crisis, with a big, half-point move. Gov. Michelle Bowman was the lone official dissenter, favoring a quarter-point cut. Shortly before the Fed decision, markets saw a 59% chance of a 50-basis-point cut and 45% for 25 basis points.
The "dot plot" of policymakers signaled a total of 100 basis points of easing in 2024, meaning 50 basis points over the November and December meetings. Markets had almost fully priced in 100 basis points of cuts for the year, with a majority expecting 125 basis points.
For 2025, policymakers see another 100 basis points of Fed rate cuts, bringing the key rate down to a 3.25%-3.5% range.
Powell, speaking after the central bank announcement, signaled he still envisions a soft landing, with continued, modest economic growth. He said the Fed isn't behind the curve, with Wednesday's big move "a sign of our commitment not to get behind."
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Stock Market Rally
The stock market rally finished slightly lower with the major indexes losing solid advances after the Fed rate decision and Powell's comments.
The Dow Jones Industrial Average fell 0.25% in Wednesday's stock market trading and the S&P 500 index lost 0.3% after both set record intraday highs. The Nasdaq composite shed 0.3%. The small-cap Russell 2000 rose a fraction, erasing big intraday gains.
Nvidia fell back from its 50-day line. Apple rose but hit key resistance. Tesla flirted with an early entry but closed lower. Meta Platforms also flirted with buy points before backing off.
Arista Networks and DoorDash are in buy zones.
U.S. crude oil prices dipped 0.4% to $70.91 a barrel.
The 10-year Treasury yield rose 4 basis points to 3.685%. The two-year yield, more closely tied to Fed policy, edged up 1 basis point to 3.6%.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF climbed 0.5%. The iShares Expanded Tech-Software Sector ETF fell 0.9%. The VanEck Vectors Semiconductor ETF lost 1.1%. Nvidia stock is the largest SMH holding by far.
Reflecting more-speculative story stocks, ARK Innovation ETF rose 0.3% and ARK Genomics ETF dipped 0.2%. Tesla stock is a major holding across Ark Invest's ETFs. Cathie Wood also has built up a big stake in NVDA stock.
SPDR S&P Metals & Mining ETF retreated 0.4%. The SPDR S&P Homebuilders ETF and the Health Care Select Sector SPDR Fund slipped 0.2%.
The Energy Select SPDR ETF advanced 0.2%. The Industrial Select Sector SPDR Fund nudged down 0.1%. The Financial Select SPDR ETF gave up 0.3%.
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Tesla Stock
Tesla stock dipped 0.3% to 227.20 on Wednesday after briefly topping an aggressive entry of 235 Wednesday afternoon. TSLA stock has a 271 consolidation buy point, according to MarketSurge.
Shares rose back toward the 235 early entry in Thursday's premarket trade. Tesla China registrations were solid in the latest week.
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 Thursday, with the Model Y rival is getting lot of buzz.
Nvidia Stock
Nvidia stock fell 1.9% to 113.42, now clearly below the 50-day moving average after hitting resistance at the key level intraday once again.
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.
But right now NVDA stock needs to get back above the 50-day.
Shares rose modestly in premarket action, suggesting a move back to the 50-day.
Apple Stock
Apple rose 1.8% to 220.69, but backed off its 50-day line. The Dow Jones tech titan has a 237.23 buy point, but could have some early entries at 232.92 or even lower. But first AAPL stock has to retake the 50-day, even amid reports of lackluster orders for the new iPhone 16.
Shares are testing their 50-day in premarket trade.
Meta Stock
Meta Platforms stock edged up 0.3% to 537.95. Intraday, shares got to 544.20, just above a 542.81 buy point and almost above a 544.23 alternate entry from a three-weeks-tight pattern.
Meta is set to clear both entries at Thursday's open.
Stocks In Buy Zones
Arista Networks stock gave up most of its intraday gains, closing up 0.2% to 361.71. That's moving a little higher above a 358.68 buy point from a hard-to-spot handle.
DoorDash stock climbed 2% to 132.48, back above a 131.21 cup-with-handle buy point. Shares fell down to the 21-day line intraday Tuesday, but closed in the upper half of their range.
What To Do Now
The stock market was volatile after the Fed announcement and Powell's comments. That is why IBD cautioned investors not too aggressive if the market initially looked on strong on the Fed news.
The market may continue to assess the big Fed news through Thursday or even Friday. Premarket futures suggest a strong Thursday open.
Investors may want to be cautious about new buys amid the volatility, but there are stocks that are actionable.
Stepping back, the broader picture is positive. The S&P 500 and Dow Jones are essentially at record highs while the Nasdaq is recovering.
Definitely be ready to act. Have your watchlists and exit strategies up to date.
Nvidia stock and DoorDash are on IBD Leaderboard. Nvidia and Arista stock are on the IBD 50.
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