Dow Jones futures fell modestly Monday morning, along with S&P 500 futures and Nasdaq futures, with earnings season still in full swing. But the focus this week will be on a pivotal Federal Reserve meeting, as well as the October jobs report.
The stock market rally had a volatile week but ultimately showed resilience and strength amid sell-offs in Microsoft, Meta Platforms, Amazon.com and Google parent Alphabet. The Dow Jones, Russell 2000 and, ultimately, the S&P 500, cleared their 50-day lines. The Nasdaq did not, but rebounded for strong weekly gains as Apple soared on its quarterly results.
Earnings season remains packed with top companies reporting. Arista Networks, Albemarle, CF Industries, Cheniere Energy and Quanta Services report this coming week. ANET stock, Albemarle, CF, Cheniere and Quanta Services are all close to potential buy points.
Here's a bonus stock: On Semiconductor, often known as Onsemi, reported better-than-expected Q3 results before Monday's open. ON stock closed Friday near a trendline entry, but fell slightly in premarket trade. This EV chipmaker has shown wild stock action in the past few months.
LNG stock is on IBD Leaderboard, while ALB stock and CF Industries are on the Leaderboard watchlist. Arista Networks and CF stock are on the IBD 50 list.
The video embedded in this article highlighted a pivotal market week, while also analyzing Arista Networks, Albemarle and LNG stock.
Fed Meeting
The Federal Reserve meets on Nov. 1-2, with policymakers set to raise rates yet again. Some relatively tame inflation data and various central bank moves and signals around the world have bolstered hopes that the Fed will soon pivot to smaller rate hikes.
Markets still strongly expect that the Fed will increase rates by 75 basis points for a fourth straight meeting, though there is now a small chance of just a half-point move. But for the December meeting, the betting has shifted toward a half-point Fed rate hike.
So investors will pay close attention to the Fed policy statement at 2 p.m. ET Wednesday, and especially Fed chief Jerome Powell's news conference at 2:30 p.m., for any Fed pivot hints.
But there will still be a lot of Fed-moving economic data before the year-end Fed meeting, including two jobs reports. The October jobs report is due this coming Friday, three days after the September JOLTS survey. Signs of an easing labor market could reinforce Fed pivot hopes. But robust hiring and falling unemployment could signal further big rate hikes and a higher end point.
Economists expect October nonfarm payrolls to rise 210,000. That would be a solid gain, but the third straight month ofslowing hiring and the smallest increase since December 2020.
Dow Jones Futures Today
Dow Jones futures declined 0.5% vs. fair value. S&P 500 futures sank 0.5% and Nasdaq 100 futures fell 0.6%. Futures are off overnight lows.
The 10-year Treasury yield rose 3 basis points to 4.04%.
Crude oil futures fell more than 1%, while natural gas prices spiked more than 10%. Copper futures sank over 1%.
China manufacturing and services PMI indexes fell back below the break-even 50 level, signaling contraction. Increasing Covid curbs in the past few weeks are taking their toll on the Chinese economy, along with overseas weakness.
Leftist former leader Luiz Inacio Lula da Silva won Sunday's runoff presidential election, narrowly defeating right-wing President Jair Bolsonaro. Petrobras, the state-owned oil giant, tumbled on concerns that Lula will shift its focus to social needs over profits and shareholder returns.
Wheat futures jumped as Russia exited a deal letting Ukraine ship crops from the Black Sea.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock Market Rally
The stock market rally had some big earning-related swings and divergence during the week, but ultimately the major indexes all rose strongly.
The Dow Jones Industrial Average soared 5.7% in stock market trading, its fourth straight weekly gain. The S&P 500 index gained nearly 4%. The Nasdaq composite rose 2.2%, including a 2.9% Friday spike. The small-cap Russell 2000 shot up over 6%.
Apple stock rose 5.75% last week, including a 7.6% surge on Friday. Shares of the Dow Jones, S&P 500 and Nasdaq titan vaulted above their 50-day line and closed just below their 200-day. But AAPL stock needs to make more progress on the right side of a base. Microsoft stock, which tumbled 7.7% on Wednesday, ultimately closed the week down 2.6%. Google stock sank 4.8% this past week while Meta crashed 23%. Amazon stock skidded 13%, even after paring Friday's losses.
The 10-year Treasury yield plunged 20 basis points to end at 4.01% Friday, ending a 12-week winning streak. The 10-year yield did rebound from Thursday's intraday low of 3.91%, around the 21-day line.
Meanwhile, the 3-month Treasury yield is at 4.09%, now above the 10-year yield. That's a stronger recession signal than the two-year/10-year inversion, which began several weeks ago.
U.S. crude oil futures rose 3.4% to $87.90 a barrel last week.
ETFs
Among the best ETFs, the Innovator IBD 50 ETF rose 3% last week, while the Innovator IBD Breakout Opportunities ETF was up 4.8%. The iShares Expanded Tech-Software Sector ETF popped 4%, even with MSFT stock a major holding. The VanEck Vectors Semiconductor ETF advanced 3.45%, with all of that coming on Friday.
SPDR S&P Metals & Mining ETF edged up 0.7% last week. The Global X U.S. Infrastructure Development ETF jumped 5.5%. U.S. Global Jets ETF ascended 5.6%. SPDR S&P Homebuilders ETF spiked 7.1%. The Energy Select SPDR ETF and the Financial Select SPDR ETF climbed 2.7%. The Health Care Select Sector SPDR Fund popped 5%, retaking its 200-day line.
Reflecting more-speculative story stocks, ARK Innovation ETF jumped 8.4% last week and ARK Genomics ETF vaulted 10%.
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Stocks Near Buy Points
ANET stock jumped 9.9% to 121.47 in the heaviest weekly volume in eight months, rebounding above its 50-day and 200-day moving averages. Essentially all that weekly gain came on Thursday, with Arista Networks seen as a notable beneficiary from Meta Platforms' metaverse spending splurge. ANET stock has cleared a short trendline, offering an early entry. A move above Thursday's intraday high of 126.53 might offer another entry from a longer trendline. But earnings are on tap Monday night.
ALB stock popped 3.8% to 280.16 last week, reclaiming its 50-day line. The price action has been encouraging over the past two weeks, but volume has been light. Albemarle stock has a 308.34 buy point. A strong move over the Oct. 26 high of 287.07 could offer an entry for the lithium giant. Albemarle earnings are due Wednesday night. Complicating the matter: Livent reports Tuesday night. LTHM stock has a similar chart.
LNG stock dipped 0.75% to 174.48 last week, but once again rebounded from the 21-day and 10-week lines. Cheniere Energy stock, one of several LNG stocks near buy points, now has a short cup-with-handle base with a 178.69 entry. Cheniere earnings are due Thursday.
CF stock fell 1.6% to 105.68 last week, reversing modestly lower Friday after trying to make a decisive move above the 50-day line and short-term levels. But it held the 10-, 21- and 50-day lines, which are closely stacked together. Clearing Friday's high of 110.59 could offer an early entry, with 119.70 the official buy point. CF earnings are due Wednesday. Fellow fertilizer plays Nutrien and Intrepid Potash also report Wednesday, but those stocks don't look as healthy.
Quanta Services stock popped 5.8% to 141.18 last week, reclaiming its 50-day line. Shares jumped 8.1% in the prior week. PWR stock could be forming a handle on a daily chart, which lines up with a short trendline. For now, Quanta stock has a cup base with an official buy point of 149.43, according to MarketSmith analysis. Quanta Services, which provides infrastructure services for the utility industry, reports on Thursday.
"Bonus stock" On Semiconductor beat third-quarter earnings and sales forecasts modestly, and guided in line for Q4. ON stock fell slightly in premarket trade.
Onsemi rose 2.7% last week to 67.48, moving back above its 50-day moving average. It's not far from a downward-sloping trendline from its late August peak. Onsemi stock showed some resilience given that fellow EV chip play Wolfspeed crashed on guidance this past week.
ON stock has such big daily and weekly moves that perhaps it should be called On-and-Off Stock.
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Market Rally Analysis
The stock market rally showed resilience in the face of major losses from tech megacaps. The S&P 500, after hitting resistance at the 50-day moving average, pushed decisively higher on Friday. The Russell 2000 is moving toward its 200-day line while the Dow Jones actually topped that level Friday as its win streak stretches to six sessions and four weeks.
The Nasdaq is lagging, but did move back above its 21-day line on Friday and rose strongly for the week.
While the past week was encouraging, we still don't know if this is a bear market rally or something more.
Can the Nasdaq now move above the 50-day line, then make a run at the 200-day line and beyond?
While earnings grabbed the headlines, tumbling Treasury yields and a weaker dollar were key tailwinds for stocks this past week. Those reflect Fed pivot hopes.
The Fed rate hike this coming Wednesday and the October jobs report on Friday will be key for the market rally.
Meanwhile, in a bit of a reversal, while the key indexes rev higher, leading stocks looked a little less stellar.
As AlphaTrends' Brian Shannon said on IBD Live Friday, it's "pretty skinny" out there when it comes to buying opportunities.
Energy names are still doing well, with LNG stock near a buy point. So are some defensive growth names in the health care space. Discounters, auto parts retailers, insurers and a few restaurants are standouts, with many of those defensive plays. But many of those names, including Eli Lilly and O'Reilly Automotive, are already extended.
Traditional high-growth names are not faring especially well. There were some notable reversals or sell-offs in that space. The cloud-computing weakness for Microsoft's Azure and Amazon Web Services slammed cloud software stocks. But the Meta spending splurge is helping ANET stock, Pure Storage and perhaps some chipmakers such as Nvidia. Intel jumped on poor results and guidance, suggesting that bad news is bad news for INTC and chip stocks generally. But those are generally beaten down.
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What To Do Now
The stock market rally had some big headwinds this past week, and ultimately handled them well. But the Fed meeting looms large this week, along with the ongoing earnings flood.
Investors can add some exposure, but may choose to wait for at least the Fed meeting. In the case of ALB stock, Arista Networks, CF Industries and many others, investors likely should wait for earnings results. The still-limited number of stocks that are actionable right now also is a reason to be cautious about adding new positions. Ongoing intraday, daily and weekly volatility for the major indexes and individual stocks adds to the difficulty level.
But, the stock market rally is acting well. Investors should be taking part. Build your watchlists, making sure to have a diverse gathering of quality stocks.
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