Dow Jones futures were higher ahead of Tuesday's open, as the Federal Reserve's two-day meeting gets set to start. The Dow Jones Industrial Average had its best month since 1976, surging nearly 14% in October.
Late Monday, Arista Networks and Apple supplier NXP Semiconductors were key earnings movers. ANET stock fell 1% in extended trade, while NXPI shares rose around 1%.
The Fed's two-day meeting kicks off Tuesday, with an interest-rate decision set for Wednesday afternoon. Investor sentiment shows an 85% probability of a 75-basis-point hike, according to the CME.
The Fed says it won't pivot — meaning slow its pace of rate increases —until the strong labor market shows clear signs of slowing. But once the job market begins to roll over, Fed strategy and a broad array of economy factors are likely to change. This places Friday's jobs report under increased scrutiny.
Stock Market Today
On Monday, the Dow Jones Industrial Average fell 0.4% and the S&P 500 lost 0.7%. The tech-heavy Nasdaq composite sold off 1%.
Among exchange traded funds, the Nasdaq 100 tracker Invesco QQQ Trust moved down 1.2% and SPDR S&P 500 dropped 0.7%.
EV giant Tesla declined 0.4% Monday. Among Dow Jones stocks, Apple traded down 1.5% and Microsoft lost 1.6% in today's stock market.
Among the top stocks to buy and watch, Dycom, Cheniere Energy, Dollar General and Pure Storage — as well as Dow Jones names Chevron and UnitedHealth Group — are among the top stocks to buy and watch. Keep in mind that the ongoing stock market rally is the perfect time for investors to look for stocks in their buy zones.
Cheniere 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 In The Current Stock Market Rally
Dow Jones Futures Today: Treasury Yields, Oil Prices
Ahead of Tuesday's opening bell, Dow Jones futures rose 0.5% above fair value, while S&P 500 futures moved up 0.8%. Nasdaq 100 futures gained 1.1% vs. fair value. Remember that overnight action in Dow Jones futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
The 10-year Treasury yield ticked higher to 4.07% Monday, recovering a part of last week's losses. Meanwhile, U.S. oil prices declined 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 coming from energy giant BP, Eli Lilly, Uber Technologies and Dow Jones stock Pfizer. All four are set to report Tuesday morning. Advanced Micro Devices and Airbnb will report after the close Tuesday.
Earnings reports cause many of the biggest moves in stocks, and they require special focus. Strong earnings can fuel top stocks above new buy points and into buy zones, while a less-than-impressive announcement can send shares tumbling below key support levels.
The stock market's reaction to an earnings release can often tell you more than the earnings themselves. If the results seem strong but the stock slides anyway, investors may be concerned about the sustainability of growth, rising costs or other potential negatives.
With the market in rally mode, investors should be tracking companies that handily beat earnings results and have strong upside reactions. They could be among the stock market's leaders if the market is able to extend its recent gains.
What To Do In The Ongoing Stock Market Rally
Now is an important time to read IBD's The Big Picture column. Following recent gains, investors have the green light to buy top stocks breaking out past correct buy points. But not all follow-throughs work, so it's important to raise exposure slowly and methodically, as the new uptrend proves itself.
But not every follow-through results in a sustained uptrend, which is why investors need to gauge their level of exposure in the days and weeks that come after this signal, especially with the extra risk from the upcoming Fed meeting. You want to buy in sync with the market so that you don't overcommit to an uptrend that may reverse on you.
Remember, don't panic if you miss the first couple of breakouts. The Nasdaq is still more than 30% off its all-time high. If this stock market rally is real and meaningful, then there will be plenty of time to buy stocks and make money over the coming weeks and potentially months.
And if the stock market starts to break down again, you can reduce 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 range past a double bottom's 93.12 buy point, according to IBD MarketSmith pattern recognition.
Health care giant UnitedHealth is breaking out past a cup with handle's 553.23 buy point, according to IBD MarketSmith. Shares rallied 0.75% Monday, closing just above the stock's latest entry.
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. LNG stock moved up 1.1% 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% Monday, ending below the entry. If the stock retakes this critical level, the 5% chase zone will go up to 272.74.
Dycom is trying to break out past a cup base's 120.55 buy point. Shares slipped 1.85% 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 31.62 buy point following three days of gains. The stock was up 1.15% Monday.
Join IBD experts as they analyze leading stocks in the current stock market rally on IBD Live
Tesla Stock
Tesla stock dropped 0.4% Monday, snapping a four-day win streak. The stock is rebounding after hitting a new 52-week low last week.
Still, shares are about 45% off their 52-week high and sharply below their 50- and 200-day moving average lines.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares declined 1.5% 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% Monday, giving up a part of Friday's 4% rebound. Shares are near their Oct. 13 52-week low. The software giant remains 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.
