Dow Jones Futures, Meta Buy Signal, and Key Stock Movements - Stock Market Update Today

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Sep 6, 2023 - 09:50
Sep 6, 2023 - 09:51
Dow Jones Futures, Meta Buy Signal, and Key Stock Movements - Stock Market Update Today
Dow Jones Futures, Meta Buy Signal, and Key Stock Movements

Early trading on Wednesday witnessed a modest decline in Dow Jones futures, alongside S&P 500 futures and Nasdaq futures. At the same time, Roku and GitLab are showing early signs of strength, while Meta's stock may be on the verge of signaling a potential buying opportunity.

In Tuesday's market activity, the stock market rally encountered some headwinds as Treasury yields rebounded. However, major indices managed to avoid significant losses, thanks to the resilience of mega-cap stocks like Microsoft, Meta Platforms (formerly known as Facebook), and Tesla. Nonetheless, market breadth appeared relatively weak, with the Dow Jones and Russell 2000 both slipping below their respective 50-day moving averages.

Several notable stocks, including Meta, Tesla, Microsoft, General Electric, and MongoDB, are currently hovering close to potential buy points. Of particular interest is Meta's stock, which appears to be showing early signs of potential action.

Early Market Movers

In recent developments, Roku announced its intention to reduce its workforce by 10% while also raising its revenue outlook for the third quarter. Analysts had expected $829 million in revenue, but Roku's new guidance suggests a range of $835 million to $875 million.

Meanwhile, software firms Zscaler and Asana reported earnings, as did software development platform GitLab. Despite better-than-expected results from Zscaler, its stock faced a modest decline. Zscaler's stock is currently in a consolidation phase, with a potential entry point around 162.67 or 164.29.

Asana's stock, on the other hand, experienced a sharp decline despite exceeding earnings estimates. The company's work management software has a buy point at 26.27. Asana's stock closed at 21.64 on Tuesday, just below its 50-day moving average. Investors are closely watching Asana's performance, as it may set the tone for peers like (MNDY) and Smartsheet (SMAR), with the latter reporting earnings on Thursday.

GitLab's stock surged following a positive earnings report, with earnings and revenue surpassing expectations. The stock closed at 49.74 on Tuesday, a 1.2% increase. GitLab's stock is forming a cup base within a larger consolidation, with a buy point at 54.60.

Market Analysis and Outlook

The market outlook for Wednesday reveals that Dow Jones futures are currently down by 0.15%, S&P 500 futures have slipped 0.2%, and Nasdaq 100 futures are down 0.25%. The 10-year Treasury yield has slightly dipped to 4.25%, and crude oil prices have also seen a marginal decline.

Key economic events for the day include the release of the ISM services index at 10 a.m. ET, with economists anticipating a slight dip to 52.4, although it is expected to remain above the neutral level of 50. Additionally, at 2 p.m. ET, the Federal Reserve will issue its Beige Book report, providing insights into anecdotal economic conditions.

However, it's important to note that premarket movements in Dow futures and other indices may not necessarily translate directly into actual trading results during the regular stock market session.

Stock Market Performance Recap

On Tuesday, the stock market experienced a slight setback, primarily driven by the resurgence of Treasury yields. Despite this, the Nasdaq showed resilience in the face of selling pressure.

The Dow Jones Industrial Average retreated by 0.6% during Tuesday's trading session, while the S&P 500 index declined by 0.4%. Notably, Tesla's stock emerged as the top performer. The Nasdaq composite saw a marginal decline of 0.1%, while the small-cap Russell 2000 witnessed a more substantial drop of 2.1%.

In terms of commodities, U.S. crude oil prices surged by 1.3% to reach $88.69 per barrel. This surge was driven by Saudi Arabia's announcement of extending its voluntary production cut of 1 million barrels per day until the end of the year. As a result, crude oil futures have experienced a remarkable 9.9% surge over an eight-session winning streak.

Moreover, the 10-year Treasury yield surged by 9 basis points to 4.27%, following a similar gain observed on Friday. In light of rising yields and weaker economic data from China and Europe, the U.S. dollar continued its upward momentum.

ETF Performance

Among growth-focused exchange-traded funds (ETFs), the Innovator IBD 50 ETF (FFTY) experienced a 0.5% decline. In contrast, the iShares Expanded Tech-Software Sector ETF (IGV) advanced by 0.45%, largely driven by the performance of major components like Microsoft. Additionally, the VanEck Vectors Semiconductor ETF (SMH) showed a modest rise of 0.2%.

Turning to more speculative stocks, the ARK Innovation ETF (ARKK) climbed by 0.9%, while the ARK Genomics ETF (ARKG) faced a decline of 1.8%. It's worth noting that Tesla's stock is the top holding across Ark Invest's ETFs.

In other sectors, the SPDR S&P Metals & Mining ETF (XME) retreated by 1.3%, while the Global X U.S. Infrastructure Development ETF (PAVE) experienced a notable slump of 2.7%. The U.S. Global Jets ETF (JETS) declined by 1.7%, and the SPDR S&P Homebuilders ETF (XHB) saw a significant selloff of 3.9%. Conversely, the Energy Select SPDR ETF (XLE) witnessed a gain of 0.5%, while the Health Care Select Sector SPDR Fund (XLV) faced a decline of 1%.

Within the industrial sector, the Industrial Select Sector SPDR Fund (XLI) retreated by 1.7%, with General Electric holding a substantial position in the fund. Additionally, the Financial Select SPDR ETF (XLF) sank by 1%, while the SPDR S&P Regional Banking ETF (KRE) lost 2.3%.

Stocks Near Potential Buy Points

Several individual stocks are currently poised near potential buy points, indicating the possibility of upcoming investment opportunities. For instance, Microsoft's stock registered a 1.5% gain on Tuesday, closing at 333.55. It managed to cross above its 50-day moving average for the first time in a month. Investors are closely watching this development, as it may lead to actionable signals. MarketSmith analysis suggests a consolidation buy point at 336.78 for MSFT stock.

In the case of Meta, the stock climbed by 1.3% on Tuesday, closing at 300.12. It finally managed to close above the 50-day moving average, after encountering resistance for several sessions. Investors are eyeing a potential early entry point, which could materialize if the stock surpasses Friday's high of 301.74. Furthermore, Meta is on track to establish a base with a 326.29 buy point by the end of the week.

Tesla's stock experienced a bounce from the 21-day moving average and reclaimed the 50-day moving average with a 4.7% surge, closing at 256.49. The stock had faced a 5.1% decline on Friday, following the announcement of a Model 3 upgrade in China and price reductions for Model S, Model X, and Full Self-Driving features. Investors might consider the high of 261.18 reached last week as a potential early entry point for TSLA stock, which has an official buy point at 299.29.

General Electric's stock declined by 1.2% to reach 112.88, nudging below the 21-day moving average while remaining just above the 50-day and 10-week moving averages. General Electric has established a buy point at 117.96 based on a flat base formation, marking its first consolidation since a breakout in January. Investors might consider 115.85 as a potential early entry point for GE stock.

Finally, MongoDB's stock inched up by 0.3% to reach 394.13, holding above the 50-day moving average. On Friday, the stock experienced a gap-up following strong earnings results, reaching an intraday high of 414. While MDB stock closed up 3% at 392.88, it remained near session lows. Investors are closely monitoring the stock, which has a buy point at 439, and they may consider last week's high as an early entry point from the 50-day moving average and a trendline.

Market Rally Analysis

In Tuesday's trading session, the stock market rally displayed resilience in the face of rising Treasury yields, particularly in the Nasdaq. However, market breadth appeared weak, especially given the relatively modest losses observed in major indices. On the Nasdaq, losers outnumbered winners by nearly 3-to-1, while on the NYSE, the ratio was 7-to-2 in favor of losers. New lows surpassed new highs.

The Russell 2000, representing small-cap stocks, retreated below its 50-day moving average. The Invesco S&P 500 Equal Weight ETF (RSP) experienced a 1.2% decline, notably worse than the S&P 500. This came after the RSP closed just below the 50-day moving average on the preceding Friday.

The Dow Jones also dipped slightly below its 50-day moving average. While the Nasdaq and S&P 500 still maintain some distance above the 50-day line, the proximity raises questions about their future performance.

Notably, energy stocks performed well, while the broader tech sector held up relatively well. On the downside, housing-related stocks, including homebuilders, faced significant challenges. Steel manufacturers, industrial companies, and travel-related stocks also witnessed declines.

It is evident that stocks are closely tracking the movements of Treasury yields. Should yields continue to rise, the market rally may encounter greater challenges.

What To Do Now

Tuesday's market activity revealed a shift in sentiment, with more stocks registering losses compared to the previous week. However, many stocks, including Tesla, Meta, General Electric, and several others, are approaching potential entry points. Investors should remain vigilant and consider adding exposure cautiously. It's crucial to be prepared to step back should the market or specific positions face adversity.

Also Read: Wall Street Opens Cautiously Amid Concerns Over China's Economic Data: Today Stock Market News

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