Dow Jones futures were higher ahead of Tuesday’s open, as the Federal Reserve’s two-day meeting begins. The Dow Jones Industrial Average had its best month since 1976, rising nearly 14% in October.
Late Monday, Arista Networks (ANET) and Apple supplier NXP Semiconductors (NXPI) were important earnings factors. ANET shares fell 1% in extended trading, while NXPI shares rose around 1%.
The Fed’s two-day meeting starts on Tuesday, with a rate decision set for Wednesday afternoon. Investor sentiment shows an 85% probability of a 75 basis point increase, according to CME.
The Fed says it won’t budge — meaning slowing the pace of rate hikes — until the strong labor market shows clear signs of slowing. But as the labor market begins to roll over, the Fed’s strategy and a wide range of economic factors are likely to change. This puts Friday’s job announcement under increased scrutiny.
The stock market today
On Monday, the Dow Jones Industrial Average fell 0.4% and the S&P 500 lost 0.7%. The technology-heavy Nasdaq composite sold 1 percent.
Among exchange-traded funds, Nasdaq 100 tracker Invesco QQQ Trust ( QQQ ) fell 1.2% and the SPDR S&P 500 ( SPY ) fell 0.7%.
EV giant Tesla ( TSLA ) fell 0.4% Monday. Among Dow Jones stocks, apple (AAPL) traded down 1.5% and Microsoft (MSFT) lost 1.6% in today’s stock market.
Among the best stocks to buy and watch, Dycom (DY), Cheniere energy (LNG), Dollar General (DG) and Clean storage (PSTG) – as well as Dow Jones names Chevron (CVX) and UnitedHealth Group (UNH) — is among the best stocks to buy and watch. Remember, the ongoing stock market rally is the perfect time for investors to look for stocks in their buy zones.
Chenière is an IBD Leaderboard stock. Dollar General is an IBD SwingTrader stock. Pure Storage was featured in this week’s Stocks Near A Buy Zone column, along with three other top stock ideas.
4 top growth stocks to buy and watch nowra stock market rally
Dow Jones Futures Today: Treasury Yields, Oil Prices
Ahead of Tuesday’s opening bell, Dow Jones futures were up 0.25% above their real value, while S&P 500 futures were up 0.3%. Nasdaq 100 futures rose 0.4% relative to fair value. Keep in mind that overnight action in Dow Jones futures and elsewhere does not necessarily translate into actual trading in the next regular session.
The 10-year Treasury yield ticked up to 4.07% on Monday, recovering some of last week’s losses. Meanwhile, US oil prices fell 2% as West Texas Intermediate futures traded near $86 a barrel.
Earnings Season: AMD Earnings On Deck
Third quarter earnings season continues this week, with key reports from the energy giant BP (BP), Eli Lilly (LLY), Uber technologies (UBER) and Dow Jones stocks Pfizer (PFE). All four must report from Tuesday morning. Advanced Micro Devices (AMD) and Airbnb (ABNB) will report after close on Tuesday.
Earnings reports cause many of the biggest moves in stocks, and they require special focus. Strong earnings can propel top stocks above new buy points and into buy zones, while a less-than-impressive announcement can cause stocks to fall below key support levels.
The stock market’s reaction to an earnings announcement can often tell you more than the earnings themselves. If results appear strong but the stock still falls, investors may be concerned about the sustainability of growth, rising costs or other potential negative factors.
With the market in rally mode, investors should track companies that easily beat earnings results and have strong upside reactions. They could be among the stock market leaders if the market is able to extend recent gains.
What to do in the ongoing stock market rally
Now is an important time to read IBD’s The Big Picture column. After recent gains, investors have the green light to buy top stocks that break out previous correct buy points. But not all follow-ups work, so it’s important to increase your exposure slowly and methodically as the new uptrend emerges.
But not every follow-up results in a sustained uptrend, and so investors need to gauge their level of exposure in the days and weeks that follow this signal, especially with the added risk of the upcoming Fed meeting. You want to buy in sync with the market so you don’t commit to an uptrend that could turn you around.
Remember, don’t panic if you miss the first few pimples. The Nasdaq is still more than 30% off its all-time high. If this rally is real and meaningful, there will be plenty of time to buy stocks and make money in the coming weeks and potentially months.
And if the stock market starts to break down again, you can reduce your exposure without losing too much capital.
Five Dow Jones Stocks to Buy and Watch Now
Dow Jones stocks to watch: Merck, UnitedHealth
Dow Jones member and IBD 50 stock Merck is out of buy territory after a double-bottom buy point at 93.12, according to IBD MarketSmith pattern recognition.
Healthcare giant UnitedHealth breaks out past a cup with the handle’s 553.23 buy point, according to IBD MarketSmith. Shares rose 0.75% on Monday, closing just above the stock’s last close.
Top stocks to watch: Cheniere, Dollar General, Dycom, Pure Storage
IBD Leaderboard stock Cheniere Energy is just shy of a cup with handle’s 178.69 buy point, according to IBD MarketSmith chart analysis. The LNG share rose 1.1 percent on Monday.
IBD Swing Trader stock Dollar General is trying to break out past a 259.75 buy point in a cup base. DG shares lost 2.1% on Monday, ending below the session. If the stock recovers this critical level, the 5% hunting zone will go up to 272.74.
Dycom is trying to break out past a cup base buy point at 120.55. Shares fell 1.85% on Monday, falling below the buy point and out of the 5% buy zone that goes up to 126.58.
Friday’s IBD Stock Of The Day, Pure Storage, is approaching a buy point at 31.62 after a three-day rally. The share rose 1.15 percent on Monday.
Join IBD experts as they analyze leading stocks in the current stock market rally on IBD Live
Tesla shares fell 0.4% on Monday, snapping a four-day winning streak. The stock is on the way back up after hitting a new 52-week low last week.
Still, shares are about 45% off their 52-week high and sharply below the 50- and 200-day moving average lines.
Dow Jones Leaders: Apple, Microsoft
Among the Dow Jones stocks, Apple shares fell 1.5% on Monday and are about 16% off their 52-week high. Last week, the stock bullishly regained its 50-day line. Now shares are testing resistance at their long-term 200-day line.
Microsoft fell 1.6% on Monday, giving up some of Friday’s 4% decline. The shares are near their 52-week low on October 13. The software giant is still more than 30% off its 52-week high.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.
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