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Dow Jones futures rose on Wednesday morning, along with S&P 500 and Nasdaq futures, after a key unit in China’s Evergrande said it would make an upcoming interest payment. Adobe’s earnings reaction and today’s key Fed meeting are also in the spotlight.
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The stock rally attempted to rebound on Tuesday after Monday’s sell-off, but faded to a mixed close. Growth stocks performed relatively well, with Nvidia (NVDA) and Break (BREAK) trading around aggressive entries. AutoNation (A) has passed just below a point of purchase.
Adobe (ADBE), FedEx (FDX) and Point correction (SFIX) titled the main results after the close. Adobe earnings slightly exceeded views, but ADBE stock fell after hours, signaling a dip below a key level. FDX stock fell solidly to new lows due to a shortfall in rising costs amid labor and supply chain issues. SFIX stock jumped in surprise earnings, but stocks have been trending down for months.
Evergrande debt payment
Evergrande’s central unit, Hengda Real Estate, will make an interest payment due on September 23 on domestic debt, alleviating fears of default, at least in the very short term. Evergrande default fears rocked financial markets around the world on Monday. The real estate-led conglomerate has $ 300 billion in debt and missed two other recent interest payments. There are fears that holders of foreign bonds will end up suffering heavy losses.
The Shanghai Stock Exchange opened lower after a long weekend, but closed slightly higher.
Fed meeting decision
Finally, the Federal Reserve concludes key two-day political meeting Wednesday afternoon. Will policymakers agree to cut back on asset purchases, or will they defer to the Fed meeting in early November in the wake of weak US job growth and Evergrande concerns? Meanwhile, will the majority of Fed policymakers support an interest rate hike in 2022? Following the announcement of the Fed meeting at 2 p.m. ET, Federal Reserve Chairman Jerome Powell will hold a press conference at 2:30 p.m. ET.
A relatively accommodating announcement from the Fed and comments from Powell could support the stock rally. But statements and the market could go the other way.
In other news, Toast’s IPO is priced at $ 40 per share, above the recently raised range of $ 34 to $ 36. That values the catering tech company at over $ 20 billion. Toast shares will begin trading as TOST on the NYSE today.
the Ministry of Justice is investigating Zoom video (ZM) take-back agreement for the customer service software manufacturer Five9 (FIVN), as Zoom’s ties to China raise national security concerns. It is according to the the Wall Street newspaper.
Adobe, Nvidia and Snap actions are enabled IBD Ranking. ADBE stock is activated Long-term leaders of EIA. Nvidia and AutoNation shares are on the MICI 50. AN’s stock was also Tuesday’s stock IBD Stock of the day.
The video embedded in this article reviewed Tuesday’s market action and analyzed Nvidia, AutoNation, and Snap stocks.
Dow Jones Futures Today
Futures contracts on Dow Jones rose 0.5% from fair value, reverting to modest losses following the announcement of Evergrande’s debt payment. S&P 500 futures were up 0.4% and Nasdaq 100 futures were up 0.3%. Adobe stock is a modest drag on S&P 500 and Nasdaq futures.
Remember that overnight action in Dow Futures and elsewhere does not necessarily translate into real exchanges in the next regular period stock Exchange session.
Join the IBD experts as they analyze the exploitable stocks in the stock market rally on IBD Live
Stock exchange rally
The stock rally started with modest gains, with the main indices generally positive during the session, before fading to become mixed at the close.
The Dow Jones Industrial Average fell 0.15% on Tuesday stock exchange trading. The S&P 500 Index fell 0.1%. The Nasdaq composite climbed 0.2%. Russell 2000 small cap advanced 0.2%.
From best ETFs, Innovator IBD 50 (FFTY) rose 1.5%, while the Innovator IBD Breakout Opportunities ETF (COMBAT) climbed 0.6%. The iShares Expanded Tech-Software Sector ETF (IGV) rose 0.2%. Adobe stock is a major IGV component. The VanEck Vectors Semiconductor ETF (SMH) edged up 0.2%. The Nvidia share is a big stake from SMH.
SPDR S&P Metals and Mining ETF (XME) fell 1%, and the Global X US Infrastructure Development ETF (PAVE) sank 0.8%. US Global Jets ETF (JETS) fell by 1%. SPDR S&P Homebuilders ETF (XHB) dropped 0.5%. The Energy Select SPDR ETF (XLE) edged up 0.2%, and the Financial Select SPDR ETF (XLF) fell 0.1%.
Reflecting stocks with more speculative stories, ARK Innovation ETF (ARKK) climbed 0.9% and ARK Genomics ETF (ARKG) changed to 1.2%.
Five best Chinese stocks to watch right now
Adobe earnings
Adobe Profits and Revenue slightly exceeded estimates for the third fiscal quarter. The software giant has also guided upward for the current fourth quarter. But Adobe stock fell 3% in pre-market trading, signaling a dip below the 50-day line for the first time since June. Shares edged up 0.7% on Tuesday to 645.89, rebounding from the 50-day period.
Nvidia stock
Nvidia stock edged up 0.6% to 212.46 on Tuesday after rebounding intraday Monday from its 50-day line. At Monday’s low, Nvidia erased a double-digit gain, a strong enough sell signal for investors who bought during the breakout in late August. If NVDA stock breaks above Monday’s intraday high of 214.33, aggressive investors could attempt to initiate a position. But you might want to wait for Nvidia to move back above its 21-day line and break a downtrend, alongside the broader market rally.
Instant Stock
Snap stock rebounded sharply from its 50 day line and broke a trendline, triggering an early buy opportunity. Shares closed 6.1% higher at 76.08, near session highs. Instant stock has a flat base with an official point of purchase of 80.95, according to MarketSmith Analysis. The relative strength line, the blue line in the charts provided, is near record highs.
Is this another false head? It’s a risk, especially in the current market climate.
AutoNation Stock
AutoNation stock rose 1.9% to 121.09 on Tuesday, closing in on a cup-base to burst. The point of purchase is 125.31. AutoNation could start to form a grip which would be a real advantage given that stocks have rallied almost straight from the bottom. The relative line of force for AN, the stock has already hit a new high, a very bullish sign.
When it’s time to sell your favorite stocks
Market rally analysis
Tuesday’s mixed action, as well as Monday’s late afternoon rebound, could have been worse. At least the market didn’t break through Monday’s lows and trigger a correction call.
But Tuesday’s weak close was not encouraging. The market rally remains under pressure and in a short term downtrend. The Nasdaq composite, which led the major indices, stopped ahead of the 50-day line, even at intra-day highs. The Dow Jones and the S&P 500 are still some distance from this key level. The Russell 2000 is still under its 200 days.
Growth stocks had a fairly good day. Some white-hot IPOs, such as Reached (UPST) and Task (TASK), has reached a record or closing highs.
What to do now
If you are a particularly aggressive trader, you may have tried snacking Break (BREAK) or an ETF such as QQQ or FFTY, but there was also no need to add exposure. The major indices are all below their 50 day lines and still tend to go down in the last few weeks. Waiting for a little more strength may mean that you are missing out on some buying opportunities. But you also avoid another down leg.
Chinese markets and the announcement of the Fed meeting on Wednesday offer possible market catalysts, but in what way?
If this stock rally is to take another sustained run, you will have a number of quality stocks rebounding from key support or giving other buy signals. If it’s a one-day pop or a short one, you’re probably not going to make any progress.
In the meantime, focus on build these watchlists. When the market rally shows real strength, you’ll want to profit quickly. Stay alert and open-minded.
Read The big picture every day to stay in tune with the market direction and major stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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