Dow Jones futures rose slightly after hours, along with S&P 500 futures and Nasdaq futures after volatile market action following the Federal Reserve rate cut.
The stock market initially jumped Wednesday afternoon as the Fed cut rates by 50 basis points, with the S&P 500 and Dow Jones hitting record high. But the major indexes erased strong gains to closed modestly lower, even as Fed Chief Jerome Powell signaled more easing along with an economic soft landing.
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Fed Cuts Interest Rates By Half Point: What Traders Should Do Now
Nvidia (NVDA) fell back from its 50-day line. Apple (AAPL) rose but hit key resistance. Tesla (TSLA) flirted with an early entry but closed lower. Meta Platforms (META) also flirted with buy points before backing off.
Arista Networks (ANET) and DoorDash (DASH) are in buy zones.
Nvidia stock and DoorDash are on IBD Leaderboard. Nvidia and Arista stock are on the IBD 50.
Dow Jones Futures Today
Dow Jones futures rose 0.1% vs. fair value. S&P 500 futures climbed 0.1%. Nasdaq 100 futures advanced 0.2%.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Fed Rate Cut And Powell’s ‘Commitment’
The Fed cut rates for the first time since the Covid crisis, with a big, half-point move. Gov. Michelle Bowman was the lone official dissenter, favoring a quarter-point cut. Shortly before the Fed decision, markets saw a 59% chance of a 50-basis-point cut and 45% for 25 basis points.
The “dot plot” of policymakers signaled a total of 100 basis points of easing in 2024, meaning 50 basis points over the November and December meetings. Markets had almost fully priced in 100 basis points of cuts for the year, with a majority expecting 125 basis points.
For 2025, policymakers see another 100 basis points of Fed rate cuts, bringing the key rate down to a 3.25%-3.5% range.
Powell, speaking after the central bank announcement, signaled he still envisions a soft landing, with continued, modest economic growth. He said the Fed isn’t behind the curve, with Wednesday’s big move “a sign of our commitment not to get behind.”
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Stock Market Rally
The stock market rally finished slightly lower with the major indexes losing solid advances after the Fed rate decision and Powell’s comments.
The Dow Jones Industrial Average fell 0.25% in Wednesday’s stock market trading and the S&P 500 index lost 0.3% after both set record intraday highs. The Nasdaq composite shed 0.3%. The small-cap Russell 2000 rose a fraction, erasing big intraday gains.
Keep in mind that the stock market had rallied over the past week in anticipation of a Fed rate cut, possibly a big move. So it’s not a shock to see the major indexes give up gains.
U.S. crude oil prices dipped 0.4% to $70.91 a barrel.
The 10-year Treasury yield rose 4 basis points to 3.685%. The two-year yield, more closely tied to Fed policy, edged up 1 basis point to 3.6%.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) climbed 0.5%. The iShares Expanded Tech-Software Sector ETF (IGV) fell 0.9%. The VanEck Vectors Semiconductor ETF (SMH) lost 1.1%. Nvidia stock is the largest SMH holding by far.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) rose 0.3% and ARK Genomics ETF (ARKG) dipped 0.2%. Tesla stock is a major holding across Ark Invest’s ETFs. Cathie Wood also has built up a big stake in NVDA stock.
SPDR S&P Metals & Mining ETF (XME) retreated 0.4%. The SPDR S&P Homebuilders ETF (XHB) and the Health Care Select Sector SPDR Fund (XLV) slipped 0.2%.
The Energy Select SPDR ETF (XLE) advanced 0.2%. The Industrial Select Sector SPDR Fund (XLI) nudged down 0.1%. The Financial Select SPDR ETF (XLF) gave up 0.3%.
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Tesla Stock
Tesla stock dipped 0.3% to 227.20 on Wednesday after briefly topping an aggressive entry of 235 Wednesday afternoon. TSLA stock has a 271 consolidation buy point, according to MarketSurge.
Tesla has a busy October ahead, with third-quarter deliveries (likely on Oct. 2), the robotaxi event on Oct. 10, and Q3 earnings on Oct. 16. Meanwhile, China EV maker Nio (NIO) will formally launch its Onvo L60 crossover on Thursday, with the Model Y rival is getting lot of buzz.
Nvidia Stock
Nvidia stock fell 1.9% to 113.42, now clearly below the 50-day moving average after hitting resistance at the key level intraday once again.
It has a 131.26 buy point from an ungainly handle. Investors could use last week’s high of 120.79 as an aggressive entry.
But right now NVDA stock needs to get back above the 50-day. It’s a bad sign for AI stocks, the Nasdaq and the broader market rally if Nvidia can’t get back above its 50-day.
Apple Stock
Apple rose 1.8% to 220.69, but backed off its 50-day line. The Dow Jones tech titan has a 237.23 buy point, but could have some early entries at 23.292 or even lower. But first AAPL stock has to retake the 50-day, even amid reports of lackluster orders for the new iPhone 16.
Meta Stock
Meta Platforms stock edged up 0.3% to 537.95. Intraday, shares got to 544.20, just above a 542.81 buy point and almost above a 544.23 alternate entry from a three-weeks-tight pattern.
Stocks In Buy Zones
Arista Networks stock gave up most of its intraday gains, closing up 0.2% to 361.71. That’s moving a little higher above a 358.68 buy point from a hard-to-spot handle.
DoorDash stock climbed 2% to 132.48, back above a 131.21 cup-with-handle buy point. Shares fell down to the 21-day line intraday Tuesday, but closed in the upper half of their range.
What To Do Now
The stock market was volatile after the Fed announcement and Powell’s comments. That is why IBD cautioned investors not too aggressive if the market initially looked on strong on the Fed news.
The market may continue to assess the big Fed news through Thursday or even Friday.
So investors may want to be cautious about new buys in the very short term, though there are stocks that are actionable.
Stepping back, the broader picture is positive. The S&P 500 and Dow Jones are at record highs while the Nasdaq is recovering.
Definitely be ready to act. Have your watchlists and exit strategies up to date.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.
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