Dow Jones winning streak is longest in 6 years, Tesla rebounds; Fed Meeting, Tech Titans On Tap
Dow Jones futures were little changed after hours, along with S&P 500 futures and Nasdaq futures. Cadence design systems (CDNS) overall earnings after closing. On Tuesday, the Federal Reserve starts its last policy meeting, with reports from Microsoft, Google, GE and GM.
X
The stock market rally enjoyed modest gains on Monday, with the Dow Jones’ 11-session winning streak the longest in six years.
Tesla ( TSLA ) bounced back above a key level, shrugging off an analyst downgrade and further reports of a possible factory in India. China’s shares jumped on Tuesday on hopes of new stimulus. VIP shop (VIPS) and Trip.com (TCOM) flashed buy signals, with internet and EV players.
Cool meeting
The two-day Fed meeting starts on Tuesday, with a policy announcement on Wednesday at 2 p.m. ET. Markets have a Fed rate hike locked in at a quarter point, but see only a modest chance of another move before the end of the year. How strongly will Fed Chair Jerome Powell and policymakers argue for the additional rate hike?
Dow Jones Futures today
Dow Jones futures were little changed relative to fair value. S&P 500 futures and Nasdaq 100 futures rose higher.
Keep in mind that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular session.
Key income
Cadence Design reported Monday night, which also has implications for rival chip design software firms Synopsis (SNPS). Both Cadence Design and SNPS shares are near buy points.
CDNS stock fell solidly after Cadence Design earnings just topped with revenue roughly in line. Shares fell 0.65% to 214.27 on Monday, falling below a 242.65 buy point from a brief consolidation just above a flat base. SNPS shares fell slightly in late trading. Synopsys stock is working with a handle just below a 468.03-cup base, according to MarketSmith analysis.
Car and mobile chip maker NXP Semiconductor (NXPI) and specialist in clinical studies Medpace (MEDP) topped the readings late Monday after both closed modestly extended from the buy zones. NXPI shares rose overnight while MEDP shares fell on weak guidance.
Nucor (NUE) had mixed results. NUE stock fell slightly in late trading, not far from a buy point.
F5 (FFIV) reported strong results. FFIV stock jumped overnight, signaling a move above multiple resistance areas to a 10-month high.
On Tuesday, the earnings season kicks into high gear. General Motors (GM), General Electric (GE) and RTX (RTX), formerly Raytheon Technologies, reports before the opening. GE shares are in buy territory, while GM shares and Nucor are near possible entries. The RTX share is within a consolidation.
Microsoft (MSFT), Google parent Alphabet (GOOGL) and Visa (V) overall income late Tuesday. Microsoft is near record highs, while Google stock is working on a handle entry. Visa shares are in a buy zone.
Tesla is on the IBD Leaderboard. Microsoft shares, Cadence Design and SNPS shares are on the IBD Long-Term Leader list. TSLA stock is on the IBD 50. CDNS stock and Tesla are on the IBD Big Cap 20.
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Stock market rally
The stock market recovery had a modestly positive session on Monday.
The Dow Jones Industrial Average rose 0.5% in Monday’s trading, hitting a new 15-month high. The S&P 500 rose 0.4% while the Nasdaq composite rose 0.2%, just below a rising 10-day line. The small-cap Russell 2000 climbed 0.3%.
Gainers beat losers on the NYSE, while advancers lagged behind the decline on the Nasdaq.
The Invesco S&P 500 Equal Weight ETF (RSP) rose 0.3%, just below the S&P 500.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) fell 0.3% against the Nasdaq 100’s 0.2% gain. That reflects how megacaps, especially TSLA shares, boosted the Nasdaq on Monday.
Growth stocks may still be in the midst of a decline, but the overall market is not showing a broad retreat.
U.S. crude oil prices rose 2.2% to $78.74 a barrel, a three-month high. Copper futures rose 1 percent. China stimulus hopes boosted industrial commodities.
The 10-year government yield rose about 2 basis points to 3.855%.
The US dollar rose for a fifth straight session after falling earlier this month.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF ( FFTY ) fell 1.1%, while the Innovator IBD Breakout Opportunities ETF ( BOUT ) rose 0.1%.
The iShares Expanded Tech-Software Sector ETF ( IGV ) fell 0.3%. The MSFT share is a large IGV holding. The VanEck Vectors Semiconductor ETF ( SMH ) rose 0.1% higher. Cadence Design and SNSPS shares are in both IGV and SMH ETFs.
Reflecting more speculative stocks, the ARK Innovation ETF ( ARKK ) retreated 1.1% and the ARK Genomics ETF ( ARKG ) fell 2.2%. TSLA stock is the No. 1 holding across Ark Invest’s ETFs.
The SPDR S&P Metals & Mining ETF (XME) rose 1.2%, with the NUE stock a key entry. The US Global Jets ETF (JETS) fell 1.2%. The SPDR S&P Homebuilders ETF ( XHB ) rose 0.4%. The Energy Select SPDR ETF (XLE) rose 1.6% and the Health Care Select Sector SPDR Fund (XLV) fell 0.2%.
The Industrial Select Sector SPDR Fund ( XLI ) rose 0.2%.
The Financial Select SPDR ETF ( XLF ) rose nearly 1%, with Visa stock a key holding. SPDR S&P Regional Banking ETF (KRE) rose 2.5%
Top five Chinese stocks to watch now
Tesla shares
Tesla shares fell at Monday’s open on a UBS downgrade, but reversed higher to close up 3.5% at 269.06, reclaiming the 21-day line. The EV giant is said to be in further talks with India about setting up a plant there. Shares may be working on a handle after falling late last week following earnings that raised investor concerns about profit margins.
What to do now
The stock rally continues to increase, although growth was mixed on Monday. Many stocks still appear stretched, or pull back, often to key support levels. With the earnings flood starting to hit and the Fed meeting on tap, investors may be wary of new purchases.
Many stocks are not far from being actionable from a number of sectors, so run your screens and have your watchlists ready.
Read The Big Picture every day to stay in sync with market direction and leading stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock exchange updates and more.
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