Dow Jones Futures: Stock Market Still Changing With Fed Set To Speed Up; Apple, Tesla, Rivian in focus
Dow Jones futures open Sunday night, along with S&P 500 futures and Nasdaq futures, with a central Fed meeting in focus. A market rally attempt is underway, led by Apple stock and Microsoft, with strong gains for the major indices and the S&P 500 approaching a record high.
But market breadth remains a concern. And the market upswing is set to arrange a follow-up day to confirm the new trend. Until then, investors should be careful about making new purchases.
apple (AAPL), Microsoft (MSFT), Advanced micro devices (AMD), NXP Semiconductors (NXPI), Adobe (ADBE), Tesla (TSLA) and Rivian stocks are in focus this week, with implications for key sectors and the wider market. Adobe stock and Rivian Automotive (RIVN) has earnings in the coming week.
Microsoft, Adobe, AMD and Tesla shares are on the IBD Leaderboard. Adobe and Microsoft stocks are on IBD leaders for the long term. Microsoft and AMD shares are at IBD 50.
The video embedded in this article reviewed this week’s market action and analyzed Microsoft, Adobe and NXP shares.
Federal Reserve meeting
This year’s last Fed meeting is 14-15. December. After finally agreeing to start phasing out assets at the Fed summit in November, politicians have signaled that they can speed up the phasing out of bonds this week. That would lay the groundwork for interest rate hikes by the Fed before mid-2022.
The Omicron Covid variant was a potential wild card at the beginning of the month, but there is a growing consensus that it is not a game changer. With inflation at 6.8% for 39 years and initial unemployment rates at their lowest level since 1969, Fed Chairman Jerome Powell and several of his colleagues are taking a more hawkish tone.
Will the Fed move forward with a faster downsizing, or just signal that one can come early in 2022? And how will the financial markets react?
Dow Jones Futures today
Dow Jones futures open at 18.00 ET on Sunday. The same goes for S&P 500 futures and Nasdaq 100 futures.
Keep in mind that overnight trading in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.
Join IBD experts as they analyze powerful stocks in the stock market rally on IBD Live
Coronavirus cases worldwide reached 269.42 million. Covid-19 deaths peaked at 5.31 million.
Coronavirus cases in the United States have reached 50.70 million, with deaths above 817,000.
Attempts at stock exchange rally
A new stock market rise began on Monday 5 December, with the major indices returning from the recent declines and closing almost weekly highs.
The Dow Jones Industrial Average rose 4% in last week’s trading. The S&P 500 index rose 3.8 percent. The Nasdaq composite rose 3.6 percent. Apple stock and Microsoft are components from the Dow Jones, S&P 500 and Nasdaq.
Small-cap Russell 2000 advanced 2.4%
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) climbed 1.9%, while the Innovator IBD Breakout Opportunities ETF (BOUT) rose 3.5%. iShares Expanded Tech-Software Sector ETF (IGV) rose 4%, with Microsoft and Adobe’s major stock holdings. VanEck Vectors Semiconductor ETF (SMH) increased by 2.5%. AMD stock and NXP Semi are SMH components.
SPDR S&P Metals & Mining ETF (XME) rose 3.7% and Global X US Infrastructure Development ETF (PAVE) 3.5%. The US Global Jets ETF (JETS) jumped 5%, but with some major fluctuations along the way. SPDR S&P Homebuilders ETF (XHB) advanced 4.5% to new highs. Energy Select SPDR ETF (XLE) rose 3.7% and Financial Select SPDR ETF (XLF) 2.7%
ARK Innovation ETF (ARKK) reflects more speculative history stocks, rising 2.8% for the week and ARK Genomics ETF (ARKG) 4%, back from the 52-week low. But both gave up much of their weekly winnings on Thursday and Friday. The Tesla share is still the top holding of ARK Invest’s ETFs.
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Apple shares rose 10.9% last week to 179.45, and 19.6% in the last four weeks. At $ 2.94 trillion, the AAPL stock is close to a market value of $ 3 trillion. But stocks are well extended from a buying point. At some point, the AAPL stock will take a longer rest. It may provide a second chance to buy or add shares. But can the market grow without Apple stock leading?
MSFT shares have not risen as fast as Apple. But unlike its other Dow Jones titan, the Microsoft stock has been the market leader for most of 2021 – and has stronger growth prospects. Microsoft stock jumped just over 6% last week to 342.54, including Friday’s 2.8% pop. The MSFT stock breaks short-term trend lines and is still close to its 10-week line, flashing with buy signals. But market conditions are worrying.
The AMD stock returned on Tuesday, but otherwise had a difficult week, retreating 3.8% to 138.55. The stock is moving back towards its 10-week line. It can provide a buying opportunity, provided the AMD stock bounces. If AMD stock struggles at that level, it would be a bad sign for rival Nvidia (NVDA), which has held up better in recent weeks, and chip shares overall.
The NXP Semiconductor stock whipped last week, erupting sharply on Tuesday, but retreated below the buy price of 227.60 cups with a handle on a sales valuation on Wednesday. Since then, the NXP stock has traded just above the 21-day line and below the point of purchase. The stock fell 0.3% to 226.46 for the week. If there is a confirmed market upswing, there is a good chance that the car and wireless chip manufacturer will remove the point of purchase in a decisive way. But if the market turns around, NXP will most likely fall back.
The Adobe stock rose 6.15% last week to 654.45, trading just above the 50-day line and below an old buy point of 659.29 which is no longer valid. Investors can buy this long-term leader from the 50-day line, but should probably wait until earnings on Thursday. It will be an important report for software vendors in general, who are trying to pick up again after big sales.
Tesla shares rose 0.2% to 1,017.03 last week, but it was still a wild ride. The stock fell below the 50-day line and last low on Monday, but closed above that key level. A midweek rebound met resistance on the 21-day line. So, like many growth stocks, the TSLA stock was sold on Thursday, before a small bounce on Friday.
The EV giant is working on a new base, even though it needs another week to form, with a probable buying point of 1,202.05. Drawing a trend line from record highs can offer an early entry around 1150.
If Tesla can reverse decisively, it will likely reflect on, and stimulate gains among, other EV games as well as highly valued growth stocks in general. That is the key, given how narrow the market leadership has been.
But strong sales, including a clear close below the recent lows, would be a negative sign for the TSLA stock and the market. That would jeopardize the 900.50 buy point from the long cup consolidation.
The Rivian stock came out like a lion, going from a $ 75 listing price on November 9 to a high of 179.47 during the day in just five sessions. But since then, the EV startup has fallen back, and has begun to consolidate, usually between 100-120. Shares rose 9.5% to 114.66 last week.
Rivian reports earnings on Thursday for the first time since the listing. With only minimal deliveries of R1T EV pickups, Rivian’s revenue will remain low with huge losses. So investors will look for guidance on a production ramp for the R1T and when the R1S SUV will debut as well as mass production of vans for Amazon.com (AMZN), a key investor in Rivia.
Rivian will announce a new car assembly and battery factory in Georgia, Bloomberg News reported Friday night, citing sources. Local reports followed in that direction. The announcement will probably come on Thursday, the same day as the revenue.
Rivian already has a factory in Normal, Illinois.
But there is no doubt that the RIVN share is very speculative. If the Rivian stock declines, especially after earnings, it will soon have a deep listing base with a buy point of 179.57. Investors may want to look for previous listings, perhaps in the 120-125 range.
Even with its large retreat, the Rivian stock has a market value of $ 102 billion, higher than General motors (GM) ($ 91.8 billion) and Ford Motor (F) ($ 86 billion). Ford also owns a large stake in Rivian, rising to a long-term high on Friday.
The valuation of Rivian is positive for the Tesla share. If the Rivian stock can have a valuation north of $ 100 billion with only a handful of deliveries, it certainly justifies Tesla’s valuation of $ 1 trillion as the company has topped a delivery rate of $ 1 million.
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Market Rally Analysis
A new attempt at a stock market rally started the last week with strong gains, but then stopped late in the week. It’s not that unusual. In early October, the major indices retreated for three days, then retreated slightly over the next three sessions before beginning their decisive rise.
The market performed quite well on Friday given the hot inflation data and the prospect of a faster Fed downsizing. And for the week, all the major indices had strong gains, regaining their 50-day lines and closing in the upper third of their intervals. The S&P 500 index moved to a record high on Friday.
However, much of the strength of the market rally has been in Apple, Microsoft and Google, the three most valuable stocks.
Russell 2000 had a solid percentage increase for the week, although it fell back below its 200-day line on Thursday and declined on Friday as large-cap indices rose. The small-cap index closed just below the midpoint of its weekly range.
The action for growth stocks was mixed, and the FFTY ETF was also unable to hold its 200-day line.
The losers surpassed the winners once again on Friday, and continued a week-long trend with only a few exceptions. New downturns were more than new highs, especially on the Nasdaq.
Ultimately, the stock market still needs the rally attempt a follow-up day. Until there is a confirmed upward trend – or the major indices fall below the recent lows – the market direction is changing.
It is possible that the Fed meeting announcement could be a catalyst for a confirmed market upswing or a renewed sale. But a crucial move may come before the Fed meeting, or not at all.
Remember that confirmed market rallies do not always work.
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What to do now
Early last week, aggressive traders may have grabbed some stocks. The market moved higher, with at least one short-term bounce likely. But the market has now taken off.
At this point, investors should probably wait with new purchases until there is a confirmed market rally.
But it is a crucial time to be prepared. Run your monitors and work with your watch lists, identify important potential purchases if market conditions are ripe.
So stay engaged. Be ready to trade if there is a confirmed market rally – or if the major indices and leading stocks deteriorate.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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