The Dow Jones Industrial Average hit new highs Wednesday after Fed Chair Jerome Powell delivered rate cut news. Meanwhile, Tesla overtook some other Magnificent Seven members as it rallied despite a recall. And Roblox cleared an entry on a bullish Wall Street call while Netflix neared a buy point.
Other stocks looked bullish amid the positive action. Tempur Sealy cleared a breakout while new Leaderboard member Elf Beauty touched a potential entry.
Fed Chair Powell Says This, Yields Plunge
Investors were on tenterhooks ahead of the latest Federal Reserve meeting. But while the Federal Open Market Committee held rates steady, the panel sparked exuberant action when it indicated at least three rate cuts were possible in 2024.
Three reductions came in below market expectations for four cuts next year. But it was also higher than the FOMC's previous guidance.
Fed Chair Powell was careful not to strike a triumphant tone at the post-meeting news conference, but still gave heartening commentary.
"Inflation has eased from its highs, and this has come without a significant increase in unemployment. That's very good news," he said. "But inflation is still too high. Ongoing progress in bringing it down is not assured and the path forward is uncertain."
Powell also said that the Fed policy rate was "likely at or near its peak for this tightening cycle." And while he also said that central bankers have not taken further hikes off the table if needed, he also said that is "not likely that we will" raise rates.
Treasury yields plummeted on the news. The 10-year Treasury note dived 19 basis points to 4.02% while the 30-year fell 13 basis points to 4.18%. The 5-year yield plunged 26 basis points to 3.97% while the 2-year cratered 29 basis points to 4.44%.
Nasdaq Rallies, Small Caps Explode
The tech-heavy Nasdaq jumped following the Fed decision, surging 1.4%. Vertex was a top performer vaulting 13.2% after positive Phase 2 study results for a pain drug to treat diabetic peripheral neuropathy. This allowed it to soar well above a buy point for aggressive investors at 367.
The benchmark S&P 500 also took off, closing up 1.4%. Albemarle was a highlight here as it jumped 9.5%.
All of the S&P 500 sectors made strong gains. Utilities and real estate fared best on the stock market today while technology and communication services turned in the slimmest margins.
Small caps obliterated the bears, with the Russell 2000 rocketing 3.5%. Growth stocks also impressed, as the Innovator IBD 50 ETF popped 2.1%.
Dow Jones Today: Walgreens Stock Rockets
The Dow Jones Industrial Average rallied more than 512 points, or 1.4%. It closed above the 37,000 mark for the first time and ended near the highs of the day.
Walgreens Boots Alliance was the top performer as it vaulted 7.4%. It now sits clear of its 50-day moving average but is well below its declining 200-day line.
Home Depot and Dow Inc. were also strong components on the much-watched index. HD jumped 3.1% while DOW closed with a 3% gain.
Verizon Communications was the worst performer in the Dow Jones today. Even here, VZ stock only lost 0.8%.
Magnificent Seven: Tesla Stock Rallies Despite Recall
Tesla stock fought its way out of negative territory to close higher, though overtaking some other Magnificent Seven members in the process. It ended the day up 1% and is also back above its 50-day moving average and a potential entry of 278.98.
It was initially forced lower amid recall news. The electric vehicle giant is preparing to release a software update for more than 2 million of its vehicles over concerns about their Autopilot system. This comes after a two-year probe by the National Highway Traffic Safety Administration.
Apple was the top performer among this group of stocks, rising 1.7%. It moved higher in a cup-with-handle buy zone above a 192.93 entry.
Nvidia rose 0.9%. The AI stock is above its 50-day line and trading in a buy zone above a 467.09 entry. E-commerce giant Amazon.com had a similar gain.
Google-parent Alphabet ended the session flat as did Microsoft. MSFT remains in a buy zone above a 366.78 cup base entry.
Roblox Stock Clears Entry On This Call
Roblox stock rallied into the close and ended the day up 3%. This was enough to see it clear a 42.20 handle buy point within a double-bottom base.
It got a boost after Wells Fargo initiated Roblox stock as overweight with a 49 price target. Analyst Ken Gawrelski touted potential advertising upside from its "growing audience platform."
The relative strength line for RBLX stock spiked and it boasts an RS Rating of 91 out of 99. Roblox stock has been making up ground from its Nov. 25 low of 24.88, and is now up about 74% off that level.
Overall performance is not ideal though, with its IBD Composite Rating coming in at 65 out of 99. Earnings performance is its weakness, with its EPS Rating a mere 19.
Roblox stock holds the No. 6 spot in the 20-stock Computer Software Gaming industry group. Other members include NetEase, Electronic Arts and Nintendo.
Dow Hits New High In Fed-Led Rally; Adobe Falls Late
Outside Dow Jones: Netflix Eyes Entry
With the market in a confirmed uptrend, now is a time to keep a close eye on breakouts.
Netflix stock made sharp progress toward a buy point Wednesday, rising 3.7%. The stock now sits close to a consolidation pattern entry of 485, MarketSmith analysis shows. Overall performance is strong, the IBD Composite Rating coming in 90.
Elf Beauty is in a buy zone after popping 8.2%. It now sits just above a 139.85 buy point. This bullish move won the stock a spot on the prestigious IBD Leaderboard list of top stocks.
Finally, Tempur Sealy is in a buy zone after clearing a cup base entry of 47.70. The RS line is also spiking here. Overall performance is strong for TPX stock. It is also among the top 13% of stocks in terms of price performance over the past 12 months.
Please follow Michael Larkin on X, formerly known as Twitter, at @IBD_MLarkin for more analysis of growth stocks.
