The stock market weakened slightly in the past hour of trading, with the major indexes off the highs of the day. Investors are unsure ahead of the Federal Reserve’s meeting this week.
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Eyes and ears will be on the Fed this week, with the latest meeting of the Federal Open Market Committee on Tuesday and Wednesday. The tone taken by Federal Reserve Chair Jerome Powell during his post-meeting media conference will once again be key.
The CME FedWatch tool shows the Fed will most likely not raise rates and currently shows the likelihood of rates standing pat at the November meeting at nearly 66%. The current target rate is 5.25%-5.5%.
The benchmark 10-year Treasury yield shed 1 basis point to 4.32%.
The Nasdaq continued to struggle, now up 0.2% in afternoon stock market action.
The Dow Jones Industrial Average edged up 0.2% and the S&P 500 added 0.3%. The S&P and Nasdaq remain below their 50-day moving averages. The small-cap Russell 2000 pulled back 0.3% and tested its 200-day moving average.
Volume fell on the NYSE and the Nasdaq vs. the same time on Friday, but Friday’s trading was heavy due to witching options and futures expirations.
The Nasdaq 100-tracking Invesco QQQ Trust ETF (QQQ) reversed course and added 0.2%. The Innovator IBD 50 ETF (FFTY) also changed course and gained 0.1%.
Global GDP Strength In Some Regions
S&P Global Market Intelligence raised slightly its global real GDP estimate to 2.6% in 2023, with varying results across regions. The U.S. is expected to show strength, along with Japan, India and Brazil. S&P Global sees pressure in the eurozone with a looming recession and a drop in mainland China’s GDP. It forecasts September global GDP growth at 2.3%.
S&P Global projects higher global inflation in 2023 and 2024, due in part to higher crude prices. It also believes that interest rates are either at or close to top levels and doesn’t see rate cuts until mid-2024.
Stock Market Action: Chinese EV Stock Slumps
IBD 50 stock Li Auto (LI) sold off 2% and fell back below its 50-day line. The Chinese EV stock has wavered around the line in mostly light volume since mid-August, following its steep drop after the company reported its Q2 earnings on Aug. 8.
Tesla (TSLA) shed 2.5%. The company is in early discussions with Saudi Arabia for an EV factory.
BWX Technologies (BWXT) rose 2.1% and hit the 76.26 buy point of a flat base, but in light volume. Shares are just in the 5% buy zone that goes to 80.01. The nuclear component manufacturer’s relative strength line hit a 52-week high as shown by the blue dot on its MarketSmith charts.
Vita Coco (COCO) pared losses and is now down 0.5%, following a two-day sell-off. The negative action triggered a 7% sell signal from the stock’s move above the 29.70 buy point of a cup base. The coconut water stock is slightly below its 50-day line.
Pure Storage (PSTG) also trimmed losses and is off 0.8%, on track for a five-day losing streak. The stock has flashed a 7% sell signal from a 39.19 buy point of a flat base. The data storage stock fell further below the 50-day line.
IPO Stock Tanks
Thursday IPO Arm Holdings (ARM) sank 8.8%. Bernstein started coverage on the semiconductor intellectual-property stock with an underperform rating and a 46 price target. The IPO stock priced 95.5 million shares at $51 apiece, making it the biggest IPO of 2023 so far.
Alteryx (AYX) shares popped 5.9% after Morgan Stanley upgraded the data analytics software firm to overweight from equal weight and maintained its 54 price target. The stock reclaimed its 50-day line on the move. Shares jumped 13.8% in huge volume Sept. 6 on news that the company was considering a potential sale.
DoorDash (DASH) gained 2.5% after Mizuho Securities upgraded the delivery service to buy from neutral and raised its price target to 105 from 90. The stock retook its 50-day line Monday.
Stock Market Movers: Chip Stock Lifts On Upgrade
IBD 50 stock Novo Nordisk (NVO) sank 1.7% after Reuters reported that the Food and Drug Administration found “objectionable conditions” at a plant that makes diabetes and weight-loss drugs. The stock gapped below its 50-day line.
PayPal (PYPL) slid 1.3% after MoffettNathanson downgraded the digital payments stock to market perform from outperform and cut its price target to 75 from 85.
Micron (MU) rose 1% after Deutsche Bank upgraded the chip stock to a buy from a hold rating and raised its price target to 85 from 65. Shares have been trying to break out past a 71.16 buy point of a cup-with-handle base.
Shares of Clorox (CLX) eased larger losses, now down 0.3% on news that a cyberattack previously announced in August is disrupting operations, according to the Wall Street Journal. The company said the attack will have a “material impact” in its fiscal first-quarter financial results. The consumer products stock fell further below its 50-day line.
Follow Kimberley Koenig for more stock market news on X, the platform formerly known as Twitter, @IBD_KKoenig.
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