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Business

Here’s what the Fed will do — if it follows what Powell said at last year’s Jackson Hole address

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Get out your popcorn, and get your trading apps open — after months in the waiting, Federal Reserve Chair Jerome Powell is set to deliver remarks on the economic outlook at the Kansas City Fed’s Jackson Hole economic symposium.

Expect him to inch up to the line, but not quite announce, that the Fed will end its bond-buying program. The delta variant has supressed progress on a number of economic indicators, ranging from airline travel to purchasing manager gauges of activity, so Powell will have reason to say, let’s wait for another month or two of data before committing to a taper.

But there’s another reason why the Fed should wait — the framework that Powell himself introduced at last year’s Jackson Hole, called average inflation targeting. “We will seek to achieve inflation that averages 2% over time. Therefore, following periods when inflation has been running below 2%, appropriate monetary policy will likely aim to achieve inflation moderately above 2% for some time,” he said in 2020.

Now Powell didn’t actually define the “time” element. If time means three years, inflation is still below target, as the chart shows. “It is needless to say that the hurdle rate for rate hikes due to inflation is extremely high under the new Fed framework and that this year’s US treasury rates move was unwarranted,” said Mondher Bettaieb-Loriot, head of corporate bonds at Vontobel Asset Management.

Bettaieb-Loriot may not be correct in his call that tapering’s unlikely before well into 2022; after all, during the July meeting in which “most” Fed officials said it would make sense to start reducing purchases, the 3-year rolling average of inflation was below target. Put another way, the Fed’s commitment to its new framework has been shaky. It will be interesting to see whether Powell makes a fresh commitment to it, or not.

The buzz

The Powell speech is due at 10 a.m. Eastern, and a gaggle of other policymakers will be interviewed on the major business news networks through the day. Ahead of that, there’s data on the PCE price index for July, as well as trade in goods data from July.

There were a number of corporate earnings releases delivered late Thursday. Gap
GPS,
-4.11%
surged as the retailer’s earnings came in well ahead of estimates, with online sales now representing a third of total revenue. Peloton Interactive
PTON,
-1.86%
shares slumped on the exercise bike company’s outlook and price cuts. Enterprise software provider VMware
VMW,
+0.20%
also slumped after its latest results.

The two U.S. major makers of personal computers, HP
HPQ,
-0.99%
and Dell
DELL,
-0.50%,
also reported results, with HP missing estimates on sales. Read: The PC boom is wobbly as the most important time of year approaches

Apple
AAPL,
-0.55%
will allow app makers to direct consumer payments outside of its App Store, a response to a number of antitrust lawsuits against it.

Microsoft
MSFT,
-0.97%
has warned thousands of its cloud customers that their databases may have been exposed to intruders, according to an email obtained by Reuters.

Tesla
TSLA,
-1.41%
is trying to sell electricity directly to consumers in Texas, according to Texas Monthly.

China plans to ban U.S. initial public offerings for data-heavy tech firms, The Wall Street Journal reported.

Evacuations resumed in Afghanistan after the deadly bombings in Kabul.

The markets

U.S. stock futures
ES00,
+0.26%

YM00,
+0.20%
nudged higher ahead of the Powell speech. The yield on the 10-year Treasury
TMUBMUSD10Y,
1.345%
slipped to 1.34%.

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Business

Dow Jones Futures: Market Rally Retreats Before Fed Chief Powell; Tesla Shows Bullish Action Amid Self-Driving Claims

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Dow Jones futures were little changed Thursday night, along with S&P 500 futures and Nasdaq futures, with Marvell Technology (MRVL), Peloton Worldwide (PTON) and Bill.com (BILL) among the big earnings overnight. The stock market rally fell modestly Thursday, ending a winning streak, ahead of Fed chief Jerome Powell’s much anticipated speech on Friday.




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Tesla (TSLA) retreated slightly on Thursday. Tesla CEO Elon Musk said FSD Beta could open up broadly in just four weeks. But amid a variety of headlines, good and bad, often regarding Autopilot or Full Self-Driving, Tesla stock has had relatively tight daily and weekly closes.

CrowdStrike (CRWD), Palo Alto Networks (PANW) and other security software makers continued their strong run, after Microsoft (MSFT), Google (GOOGL) and others pledged big spending on cybersecurity after a White House summit on the subject.

CRWD stock, which joined the Nasdaq 100 before the open, rose 3.25% on Thursday and 278.77 this week to record highs. PANW stock added 2.4%, bolstering a 457.69 spike to all-time levels on Monday’s blowout earnings. But other cybersecurity stocks, including Zscaler (ZS), SentinelOne (S) and Okta (OKTA) also have sprinted this week. CrowdStrike and Okta report next week.

The multiple bomb attacks near the Kabul airport, killing at least 13 U.S. service members and dozens of Afghans, may have been a catalyst for Thursday’s market losses. Investors also may have taken profits ahead of Fed chief Powell, especially with multiple Fed officials calling for tapering bond buys. But after several days of solid price gains on declining volume, the market rally arguably was “due” for a down session.

MRVL stock, Peloton, Bill.com, Workday (WDAY) and Dell Technologies (DELL) were notable earnings movers overnight. Marvell, Dell and PTON stock retreated while Workday and Bill.com stock rallied.

Tesla stock is on IBD Leaderboard. CRWD stock and Bill.com are on the IBD 50.

Fed Chief Powell

Fed chief Powell speaks at 10 a.m. ET at the Jackson Hole monetary conference, which once again is virtual. He could discuss the Fed scaling back asset purchases, but many analysts expect him to leave most or all of that “taper talk” for the September Fed meeting

However, Dallas Fed President Robert Kaplan and St. Louis Fed President James Bullard on Thursday both explicitly backed a September Fed meeting decision in favor of a bond taper. Neither is a voting FOMC member in 2021, though Bullard will be in 2022.

Fed Gov. Esther George, who is a voting member, said the economy has made “substantial further progress,” a standard that policymakers have for starting to reduce monetary stimulus. George says she’s ready to discuss tapering bond buys sooner rather than later, though she didn’t explicitly call for a September announcement.

The 10-year Treasury yield was flat Thursday at 1.34%, giving up intraday gains to nearly 1.37%. The benchmark Treasury yield is up 8 basis points so far this week.

Rising Treasury yields have fueled financial stocks over the past week, and they rebounded after testing recent buy points.

Dow Jones Futures Today

Dow Jones futures were steady vs. fair value. So were S&P 500 futures and Nasdaq 100 futures.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live

Stock Market Rally

The stock market rally closed near session lows Thursday, but didn’t cede too much ground.

The Dow Jones Industrial Average fell 0.5% in Thursday’s stock market trading. The S&P 500 index and Nasdaq composite sank 0.6%. The small-cap Russell 2000 retreated 1.1%

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) sank 0.8%, while the Innovator IBD Breakout Opportunities ETF (BOUT) dipped 0.4%. The iShares Expanded Tech-Software Sector ETF (IGV) edged down 0.4%. The VanEck Vectors Semiconductor ETF (SMH) gained 0.15%.

SPDR S&P Metals & Mining ETF (XME) retreated 1.8% and Global X U.S. Infrastructure Development ETF (PAVE) declined 0.8%. U.S. Global Jets ETF (JETS) gave up 1%. SPDR S&P Homebuilders ETF (XHB) ceded 0.7%. The Energy Select SPDR ETF (XLE) retreated 1.5% and the Financial Select SPDR ETF (XLF) 0.5%.

Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) fell 1.55% and ARK Genomics ETF (ARKG) 1.35%. ARKK hit resistance at its 50-day and 200-day lines, while ARKG is below both levels. Tesla stock is the No. 1 holding across ARK Invest’s ETFs.

Five Best Chinese Stocks To Watch

Key Earnings

Marvell stock dropped 4% overnight after the data-center-chip maker narrowly beat views and nudged guidance overnight. MRVL stock has rallied for six straight sessions as it rebounded from its 50-day line.

PTON stock fell 6% on a wider-than-expected Peloton loss, weak guidance and a price cut for its connected bike. But Peloton stock pared initial losses as it tries to stay in a short base within a much-longer consolidation. PTON stock reversed lower after hitting resistance around its 50-day and 200-day lines.

Bill.com stock leapt 13% from record highs on strong quarterly results and bullish guidance.

Workday earnings beat while subscription revenue guidance was strong. WDAY stock popped 4%, moving up the right side of a base, but doesn’t appear to offer an early entry.

Dell earnings beat views. Dell stock fell 2% after closing just above a buy point.

Tesla Stock

Tesla stock fell 1.4% on Thursday to 701.16. That’s still above its 21-day moving average and follows gains in the prior four sessions and five of the last six. Tesla has been trading in relatively tight range in the past few weeks and arguably the past two months — especially compared to the volatile trading for much of 2021. Tighter daily and weekly closes is a positive signal.

Tesla stock has stayed in its lane amid various self-driving headlines.

Late Wednesday, Elon Musk said FSD Beta V10 would be released in a week, pledging big improvements. In fact, he said he expects to release FSD Beta to all Tesla owners with Full Self-Driving within four weeks. Keep in mind that Musk has been promising a wide FSD Beta release for months, so it would surprise no one if it’s delayed yet again. In any case, Musk has been saying Level 5 full autonomy is just months away for several years. Despite its name, Tesla has told regulators that Full Self-Driving will remain a Level 2 driver-assist system. Drivers must remain alert and ready to take control at any moment.

Just days earlier, Musk said that the current FSD Beta version is “not great.” Last week, the NHTSA began an investigation into Tesla Autopilot crashes into emergency vehicles parked on the side of roads with flashing lights on. Two U.S. senators called on the FTC to look into Tesla’s marketing claims for Autopilot.

Separately, Tesla is now using LFP batteries from China’s CATL for U.S.-made Model 3 SR+ vehicles.

Investors could use 730 as an early entry for Tesla stock, treating it like a handle buy point. Especially aggressive traders could use a downward-sloping trend line from the January peak of 900.40, with Wednesday’s high of 716.98.

Market Rally Analysis

After five straight days of gains on declining volume, the Nasdaq was due for a pause. The market rally held on to the bulk of its recent gains in the face of negative headlines and ahead of potentially big news from Fed chief Powell.

Still, the Russell 2000 is back below the 50-day line. That could be just a blip after a four-day rally from beneath its 200-day. But small caps, and market breadth generally, have lagged the rally for several months.

Some leading stocks started off Thursday with positive action, but reversed lower with the broader market. Some merely gave back a fraction of recent gains. Others, such as Airbnb (ABNB), Square (SQ) and Snap (SNAP), have lost most or all of their recent advances.

A few had sharp losses, but mostly due to negative earnings reactions or after running up sharply in recent days. The former include Autodesk (ADSK) and Burlington Stores (BURL) while the latter includes Doximity (DOCS).

Time The Market With IBD’s ETF Market Strategy

What To Do Now

Buying stocks at the edge of buy zones or outright extended has been very difficult in 2021’s choppy market rally and sector rotation. That’s especially true if the overall market or specific sectors have had a recent run.

If you buy correctly, and a stock advances 5%, 10% or 20% over a few weeks, you have to decide whether to take a quick win, take partial profits or try to hold on through a pullback and risk most or all of your gains. The current market rally may spur some shorter-term trading, but investors have to sell based on what works for them broadly and on a stock-by-stock basis.

Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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Business

Dow Jones Futures: Market Rally Keeps Rising Before Fed Chief Powell; Salesforce Leads 4 Earnings Movers In Buy Zones

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Dow Jones futures fell slightly Wednesday night, along with S&P 500 futures and Nasdaq futures. The stock market rally held near recent highs while small caps reclaimed a key level. Salesforce stock and Snowflake (SNOW) were among the notable earnings reports overnight.




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The major indexes rose slightly but the S&P 500 and Nasdaq hit fresh all-time highs while the Dow Jones nudged closer to record levels. The small-cap Russell 2000 reclaimed its 50-day moving average for the first time on July 12. Infrastructure plays, financials, housing, chips and cybersecurity were solid performers.

The stock market rally is acting well with Fed chief Jerome Powell due to give a big speech. Powell speaks at the (this year) virtual Jackson Hole monetary conference at 10 a.m. ET on Friday. He could drop hints about the Fed scaling back asset purchases, but many analysts expect him to leave most or all of that “taper talk” for the September Fed meeting.

Salesforce.com (CRM), Snowflake, Autodesk (ADSK), Box (BOX), NetApp (NTAP), Zuora (ZUO) and Williams-Sonoma (WSM) reported earnings late Wednesday.

CRM stock rose modestly late after closing in a buy zone. SNOW stock jumped. ADSK stock and Box retreated after closing around buy points. NTAP stock is signaling a breakout. WSM stock and Zuora surged higher, also flirting with buy points.

Early Thursday, Chinese EV maker Xpeng Motors (XPEV) reports, along with Burlington Stores (BURL), Dollar Tree (DLTR), Dollar General (DG) and Abercrombie & Fitch (ANF). XPEV stock and Abercrombie & Fitch are close to possible early entries. BURL stock and Dollar General are in buy zones. Dollar Tree is starting to bounce back.

Late Wednesday, Microsoft (MSFT) and Google parent Alphabet (GOOGL) pledged to spend several billion dollars on cybersecurity, as many other corporate giants committed to major initiatives. That followed a White House cybersecurity summit with President Joe Biden in the wake of several high-profile ransomware attacks this year. Cybersecurity software stocks, already up solidly this week on Palo Alto (PANW) earnings and more, rose slightly overnight.

The video embedded in this article analyzes Quanta Services (PWR), Wells Fargo (WFC) and the Global X U.S. Infrastructure Development ETF (PAVE).

Dow Jones Futures Today

Dow Jones futures were 0.1% below fair value. CRM stock is a Dow Jones component. S&P 500 futures dipped 0.2% and Nasdaq 100 futures fell 0.3%.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

Join David Ryan as he analyzes actionable stocks in the stock market rally on IBD Live Thursday’s morning

Stock Market Rally

The stock market rally had slim gains on the major indexes, extending a winning streak to five days on the S&P 500 and Nasdaq.

The Dow Jones Industrial Average edged up 0.1% in Wednesday’s stock market trading. The S&P 500 index rose 0.2%. The Nasdaq composite climbed 0.15%. The small-cap Russell 2000 rose 0.4%.

The 10-year Treasury yield popped 5 basis points to 1.34%, reclaiming its 200-day and 50-day lines. The 10-year Treasury yield, like the stock market rally, has been making gains in recent days heading into Friday’s Powell speech.

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 0.7%, while the Innovator IBD Breakout Opportunities ETF (BOUT) climbed 0.6%. The iShares Expanded Tech-Software Sector ETF (IGV) edged up 0.2%, with CRM stock and Autodesk top holdings. The VanEck Vectors Semiconductor ETF (SMH) climbed 1.1%.

SPDR S&P Metals & Mining ETF (XME) retreated 0.8% but the PAVE ETF gained 0.6%. U.S. Global Jets ETF (JETS) advanced 0.85%. SPDR S&P Homebuilders ETF (XHB) rose 1.2%. The Energy Select SPDR ETF (XLE) climbed 0.8% and the Financial Select SPDR ETF (XLF) 1.2%.

Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) closed just below break-even. ARK Genomics ETF (ARKG) edged up 0.1%.

Five Best Chinese Stocks To Watch

Salesforce Earnings

Salesforce earnings were better than expected. The business software giant also hiked guidance after closing its Slack acquisition.

CRM stock rose 2% to about 266 in extended trade. Salesforce stock edged up 0.5% to 260.85 on Wednesday. Shares are in buy range from a 253.60 saucer-with-handle entry. The buy zone runs to 266.28. Investors also could use 271.02 as an alternate buy point for CRM stock

Snowflake Earnings

Snowflake lost slightly less than expected as revenue more than doubled once again. Management was upbeat on guidance.

SNOW stock popped 4% overnight after initially moving between modest gains and losses. Shares advanced 0.85% to 283.76 on Wednesday. Snowflake stock has rallied from a record low of 184.71 on May 13, but doesn’t currently have a reasonable entry.

Autodesk Earnings

Autodesk earnings topped views while sales were in line. Guidance was roughly in line.

ADSK stock slumped 7% in extended action. Shares nudged up 0.35% to 342.27 on Wednesday. Autodesk stock closed slightly extended from a 321.23 buy point, according to MarketSmith analysis. But it’s in danger of falling below the buy point.

Why This IBD Tool Simplifies The Search For Top Stocks

Box Earnings

Box earnings narrowly topped views. Guidance was in line to slightly above views.

Box stock fell 3% in overnight trade. Shares dipped 0.9% on Wednesday to 25.64. Box stock has a cup-with-handle base with a 26.58 buy point.

NetApp Earnings

NetApp earnings comfortably beat. The data storage giant guided slightly higher on current-quarter EPS.

NetApp stock climbed 3% to 85 in late trade. Shares rose 1.8% on Wednesday to 82.27. NTAP stock has a handle buy point of 83.60 on a double-bottom base.

Williams-Sonoma Earnings

Williams-Sonoma earnings easily beat views and the company guided higher. The upscale housewares and furniture retailer also hiked its dividend 20% and announced a $1.25 billion buyback.

WSM stock vaulted 13% to 193 overnight, briefly topping a 194.79 buy point. Shares rose 0.7% to 170.74 on Wednesday, closing near session lows. But that followed Tuesday’s 4.6% gain for Williams-Sonoma stock.

Zuora Earnings

Zuora reported a slim loss that was in line with views, while revenue topped forecasts.

ZUO stock leapt 14% in extended trade to 18.61. Shares dipped 0.1% on Wednesday to 16.35. ZUO stock has a double-bottom buy point of 18.12, but could have a slightly lower trend-line entry.

Market Rally Analysis

The stock market rally had another positive session, with the S&P 500 and Nasdaq at record highs and the Russell 2000 back above its 50-day line.

While Apple (AAPL) and some tech titans retreated or held steady Wednesday, many growth names continued to advance. With leading stocks from several other sectors making gains while small caps mount a comeback, the depth and breadth of the market rally has improved significantly from Thursday’s lows.

It wouldn’t be surprising for the major indexes to have a down session ahead of or in the wake of Fed chief Powell’s speech Friday morning, even if he ends saying nothing unexpected.

The latest bulls vs. bears reading of newsletter writers showed bulls fell to 50%, while 18.5% are bearish. That’s the lowest bull reading since late May. That certainly indicates the market rally could rise quite a bit on growing enthusiasm before bullish sentiment gets excessive.

Time The Market With IBD’s ETF Market Strategy

What To Do Now

The market rally continues to offer new buys while rewarding investors holding a wide variety of stocks and sectors.

Use your watchlists to spot early entries and make buys as close as possible to buy points.

If you own a highflying IPO or other leading stock that’s surged in the past week or two, congratulations. Now what? In this choppy market rally, there’s a heightened chance of some sort of pullback. Do you hold for really big gains, take partial profits or cash out? That can depend on your investing style, the size of your position, the character of the stock and your conviction in that holding. There’s not a “right” or “wrong” answer. It’s why selling winning stocks is as much an art as a science.

Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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Business

Fed summit, tapering fears, economic data, Covid-19

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LONDON — European markets were muted on Wednesday, tracking global sentiment as investors await a key meeting of central bankers.

The pan-European Stoxx 600 inched 0.15% higher in early trade, with travel and leisure stocks adding 1.4% to lead gains while utilities slid 0.5%.

Shares in Asia-Pacific were similarly subdued in Wednesday’s trading session, while U.S. stock futures pointed to a flat open on Wall Street after the S&P 500 and Nasdaq 100 notched record highs on Tuesday.

Focus for global investors this week remains on the Fed’s Jackson Hole symposium, which takes place virtually on Thursday, as policymakers could detail their plans for tapering the central bank’s $120 billion a month bond-buying program. Fed Chairman Jerome Powell will deliver a speech on Friday.

Stock picks and investing trends from CNBC Pro:

Global equities have been propped up so far this week by easing fears that the Fed would taper imminently and the U.S. Food and Drug Administration’s full approval of Pfizer and BioNTech’s Covid-19 vaccine.

Back in Europe, German business morale fell in August. The Ifo Institute’s business climate index came in at 99.4, below a Reuters consensus forecast of 100.4 and down from a revised 100.7 in July.

In the U.K., retailers reported the sharpest increase in spending for almost seven years in August but inventories fell to the lowest levels on record, exerting pressure on prices, data from the Confederation of British Industry (CBI) showed on Tuesday.

WHO Director-General Tedros Adhanom Ghebreyesus will give a news conference Wednesday to document the latest developments in the Covid-19 pandemic.

In terms of individual share price movement, Swedish radiation therapy equipment manufacturer Elekta slid more than 6% to the bottom of the Stoxx 600 after missing first-quarter operating profit expectations.

At the top of the index, Stadler Rail climbed 4.9% after increasing first-half net profit and confirming its full-year outlook.

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Business

Dow Jones Futures Rise After Pfizer Covid-19 Vaccine FDA Approval Boosts Market, But Fed Summit Looms

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Dow Jones futures, along with S&P 500 futures and Nasdaq 100 futures, were higher after the market close Monday. The stock market rally received a strong boost following full FDA approval of the Pfizer Covid-19 vaccine. But an annual Fed summit focusing on rising inflation looms later this week.




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On Monday, the Dow Jones Industrial Average advanced 0.6%. The S&P 500 climbed 0.85% and the Nasdaq rallied 1.55%; both indexes hit all-time highs.

Among the Dow Jones leaders, Apple (AAPL) rallied 1% Monday, while Microsoft (MSFT) movsded up 0.1% in today’s stock market. Home Depot (HD) remains below a new buy point after a recent breakout attempt.

Tesla (TSLA) raced nearly 4% higher, bullishly retaking a recent buy point. The EV leader is back in buy range.

After the close Monday, cybersecurity leader Palo Alto Networks (PANW) reported strong fiscal-Q4 results. Shares jumped over 7% in extended trade. Best Buy (BBY) will report ahead of the market open Tuesday.

Among the top stocks to buy and watch, Mercado Libre (MELI), Nvidia (NVDA) and Snap (SNAP) are in or near new buy zones.

Microsoft, Nvidia and Tesla are IBD Leaderboard stocks. Nvidia is also an IBD SwingTrader stock. Nvidia and Snap featured in this week’s Stocks Near A Buy Zone column. Snap was also Monday’s IBD Stock Of The Day.

Dow Jones Futures Today: Fed Summit Looms

After the stock market close Monday, Dow Jones futures rallied 0.2% vs. fair value, while S&P 500 futures also moved up 0.2%. Nasdaq 100 futures traded 0.2% higher. Remember that trading in Dow Jones futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

On Thursday, the Federal Reserve will meet virtually for an annual summit usually held in Jackson Hole, Wyo. On Friday, Fed Chairman Jerome Powell will speak and is expected to reveal details of how long the currently higher inflation is expected to last, and what the Fed should do about it.

U.S. Stock Market Today Overview
Index Symbol Price Gain/Loss % Change
Dow Jones (0DJIA) 35335.71 +215.63 +0.61
S&P 500 (0S&P5) 4479.51 +37.84 +0.85
Nasdaq (0NDQC ) 14942.65 +227.99 +1.55
Russell 2000 (IWM) 219.61 +4.09 +1.90
IBD 50 (FFTY) 46.42 +1.12 +2.47
Last Update: 4:16 PM ET 8/23/2021

Among exchange traded funds, the Innovator IBD 50 (FFTY) rose 2.45% Monday. Nasdaq 100 tracker Invesco QQQ Trust ETF (QQQ) gained 1.5% Monday. Meanwhile, the SPDR S&P 500 ETF (SPY) rose 0.9%.

Stock Market Rally Continues

The three major stock indexes — the Dow Jones industrials, Nasdaq and S&P 500 — continued to rebound from their 50-day support levels Monday. The Nasdaq and S&P 500 extended their win streaks to three sessions.

Friday’s Big Picture noted a reason to be bullish amid last week’s volatility. “Stock market bears might be worried about waning breadth on the Nasdaq, what the Fed plans, and skittish action among many leading growth stocks. But the bulls certainly have reasons to feel good about the uptrend. Bullish sentiment dropped off a cliff earlier in the week when the Investors Intelligence weekly survey of stock market newsletter writers fell to 51.1% from 56.4%. It’s a contrarian indicator, meaning when there aren’t too many bulls around, it might actually be the time to be bullish.”

For more stock market commentary, check out IBD’s The Big Picture.

Stock Market ETF Strategy And How To Invest

Pfizer Covid-19 Vaccine Gets FDA Approval

Early Monday, the Covid-19 vaccine from Pfizer (PFE) and BioNTech (BNTX) received full FDA approval. The Food and Drug Administration’s clearance of the shot on Monday, for people 16 years and older, is the agency’s first full approval of a Covid-19 vaccine. The decision was expected this week, The Wall Street Journal and other news outlets reported.

Pfizer jumped 2.4%, while BNTX stock rallied 9.6%.

Bitcoin Price Tops $50,000

The price of Bitcoin briefly climbed above $50,000 Monday before losing some gains. Bitcoin traded around $49,200 in Monday evening trade, according to Coindesk.

Grayscale Bitcoin Trust (GBTC) rallied nearly 1% Monday. The ETF is back above its 50-day moving average, but still about 30% off its 52-week high.

Dow Jones Stocks To Buy And Watch: Home Depot

Dow Jones leader Home Depot is trying to break out past a cup-with-handle’s 333.55 buy point, but is below the buy point, according to IBD MarketSmith chart analysis. The 5% buy area goes up to 350.23.

Shares dropped 0.55% Monday.

Stocks To Buy And Watch: Mercado Libre, Nvidia, Snap

Mercado Libre moved up 1.3% Monday. The largest e-commerce company in Latin America continues to trace a cup with handle with a 1,899.43 buy point. MELI stock is holding just above a 1,755.05 buy point created by the Aug. 5 gap-up on earnings.

Graphics-chip maker Nvidia is breaking out past a 208.85 buy point in a flat base, according to IBD MarketSmith chart analysis. Shares advanced 5.5% Monday and are just out of the 5% buy area that runs up to 219.29. On Friday, the stock climbed above an early entry at 207.43.

Nvidia is an IBD Leaderboard stock. Exposure to Nvidia has been raised by another quarter as it continues to make progress following its earnings beat last week.

The chip giant reported quarterly earnings last week that topped analyst estimates. The company earned an adjusted $1.04 a share on sales of $6.51 billion in the quarter ended Aug. 1. On a year-over-year basis, Nvidia earnings jumped 89% while sales surged 68%.

IBD SwingTrader stock Snap is back in buy range above a 73.69 buy point in a consolidation. Shares are also rebounding from their critical 50-day moving average line. The stock rallied 3.8% Monday. Snap was Monday’s IBD Stock Of The Day

The IBD Stock Checkup shows SNAP stock holds a solid 93 out of a perfect 99 IBD Composite Rating. The IBD Composite Rating identifies stocks with a blend of strong fundamental and technical characteristics.

IBD Live: A New Tool For Daily Stock Market Analysis

Tesla Stock

Tesla stock rallied 3.8% Monday. Shares bullishly regained their 700.10 aggressive buy point deep inside a correction after last week’s weakness and are back in buy range. Meanwhile, a deep, large base continues to take shape.

On Jan. 25, Tesla stock hit a record high at 900.40, after climbing as much as 93% from a 466 buy point in a cup with handle.

Dow Jones Leaders: Apple, Microsoft

Among the top Dow Jones stocks, Apple moved up 1% Monday, extending a win streak to three sessions. Apple stock is back above a 148 trend line buy point and in buy range. The stock hit an all-time high on Aug. 18 at 151.68 before reversing lower.

Software giant Microsoft rose 0.1% early Monday, closing just off Friday’s new highs. Microsoft is about 15% above a cup base’s 263.29 buy point.

Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.

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For bank regulators, tech giants are now too big to fail

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  • Britain, France, United States and EU scrutinising sector
  • Bank cloud tech spending to surge to $85bn by 2025 – IDC
  • Bank regulators want more oversight of cloud risks

LONDON, Aug 20 (Reuters) – More than a decade on from the financial crisis, regulators are spooked once again that some companies at the heart of the financial system are too big to fail. But they’re not banks.

This time it’s the tech giants including Google (GOOGL.O), Amazon (AMZN.O) and Microsoft (MSFT.O) that host a growing mass of bank, insurance and market operations on their vast cloud internet platforms that are keeping watchdogs awake at night.

Central bank sources told Reuters the speed and scale at which financial institutions are moving critical operations such as payment systems and online banking to the cloud constituted a step change in potential risks.

“We are only at the beginning of the paradigm shift, therefore we need to make sure we have a fit-for-purpose solution,” said a financial regulator from a Group of Seven country, who declined to be named.

It is the latest sign of how financial regulators are joining their data and competition counterparts in scrutinising the global clout of Big Tech more closely.

Banks and technology companies say greater use of cloud computing is a win-win as it results in faster and cheaper services that are more resilient to hackers and outages.

But regulatory sources say they fear a glitch at one cloud company could bring down key services across multiple banks and countries, leaving customers unable to make payments or access services, and undermine confidence in the financial system.

The U.S. Treasury, European Union, Bank of England and Bank of France are among those stepping up their scrutiny of cloud technology to mitigate the risks of banks relying on a small group of tech firms and companies being “locked in”, or excessively dependent, on one cloud provider.

“We’re very alert to the fact that things will fail,” said Simon McNamara, chief administrative officer at British bank NatWest (NWG.L). “If 10 organisations aren’t prepared and are connected into one provider that disappears, then we’ll all have a problem.”

RAPID PACE

The EU proposed in September that “critical” external services for the financial industry such as the cloud should be regulated to strengthen existing recommendations on outsourcing from the bloc’s banking authority that date back to 2017.

The Bank of England’s Financial Policy Committee (FPC) meanwhile wants greater insight into agreements between banks and cloud operators and the Bank of France told lenders last month they must have a written contract that clearly defines controls over outsourced activities.

“The FPC is of the view that additional policy measures to mitigate financial stability risks in this area are needed,” it said in July. read more

The European Central Bank, which regulates the biggest lenders in the euro zone, said on Wednesday that bank spending on cloud computing rose by more than 50% in 2019 from 2018.

And that’s just the start. Spending on cloud services by banks globally is forecast to more than double to $85 billion in 2025 from $32.1 billion in 2020, according to data from technology research firm IDC shared with Reuters.

An IDC survey of 50 major banks globally identified just six primary providers of cloud services: IBM (IBM.N), Microsoft, Google, Amazon, Alibaba (9988.HK) and Oracle (ORCL.N).

Amazon Web Services (AWS) – the largest cloud provider according to Synergy Group – posted sales of $28.3 billion in the six months to June, up 35% on the prior year and higher than its annual revenue of $25.7 billion as recently as 2018.

While all industries have ramped up cloud spending, analysts told Reuters that financial services firms had moved faster since the pandemic after an explosion in demand for online banking and emergency lending schemes.

“Banks are still very diligent but they have gained a higher level of comfort with the model and are moving at a fairly rapid pace,” said Jason Malo, director analyst at consultants Gartner.

Reuters Graphics Reuters Graphics

NO MORE SECRECY

Regulators worry that cloud failures would cause banking systems to fall over and stop people accessing their money, but say they have little visibility over cloud providers.

Last month, the Bank of England said big tech companies could dictate terms and conditions to financial firms and were not always providing enough information for their clients to monitor risks – and that “secrecy” had to end.

There is also concern that banks may not be spreading their risk enough among cloud providers.

Google told Reuters that less than a fifth of financial firms were using multiple clouds in case one failed, according to a recent survey, although 88% of those that did not spread their risk yet planned to do so within a year. read more

Central bank sources said part of the solution may be some form of mechanism that offers reassurance on resilience from cloud providers to banks to mitigate the sector’s aggregate exposure to one cloud service – with the banking regulator having the overall vantage point.

“Regardless of the division of control responsibilities between the cloud service provider and the bank, the bank is ultimately responsible for the effectiveness of the control environment,” the U.S. Federal Reserve said in draft guidance issued to lenders last month.

FINRA, which regulates Wall Street brokers, published a report on Monday ahead of potential rule changes to ensure that using the cloud does not harm the market or investors.

Being able to switch cloud providers easily when needed is, however, a task that is more easily said than done and could introduce disruptions to business, the FINRA report said.

‘THE BUCK STOPS WITH US’

Banks and tech firms contest the suggestion that greater adoption of the cloud is making the financial system’s infrastructure inherently riskier.

Adrian Poole, director for financial services in the United Kingdom and Ireland for Google Cloud, said the cloud can be more effective in bolstering a bank’s security capabilities than by building it in-house.

British digital lender Zopa said it had moved 80% of its transactions to the cloud and was working to mitigate risks. Zopa Chief Executive Jaidev Janardana said the company was also deliberately leaning on tech firms’ expertise.

“Cloud providers invest a lot of resources in security at a scale that few individual companies could manage,” he said.

Google’s Poole said the company was open to working more closely with financial regulators.

“We may one day see regulators pulling data on demand from regulated banks with cloud-enabled application programming interfaces (APIs), instead of waiting for banks to periodically push data at them,” he said.

NatWest’s McNamara said the bank was collaborating closely with tech firms and regulators to mitigate risks, and had put alternative services in place in case things went wrong.

“The buck stops with us,” McNamara said. “We don’t put all our eggs in one basket.”

One problem, though, is that not all banks have a full understanding of the risks to resiliency that could come with a wholesale shift to the cloud, said Jost Hoppermann, principal analyst at Forrester, particularly the smaller lenders.

“Some banks do not have the necessary know-how,” he said. “They think doing this will vanish all their problems, and certainly that isn’t true.”

Reporting by Iain Withers and Huw Jones; Additional reporting by Michelle Price in Washington and Francesco Canepa in Frankfurt; Editing by Rachel Armstrong and David Clarke

Our Standards: The Thomson Reuters Trust Principles.

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Business

Dow futures drop over 300 points as selling gathers pace after Fed minutes

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U.S. stock futures slumped on Thursday, a day after minutes from the Federal Reserve’s rate-setting committee indicated its bond buying program was on its last legs.

What’s happening

* Futures on the Dow Jones Industrial Average
YM00,
-0.68%
fell 327 points;

* Futures on the S&P 500
ES00,
-0.61%
lost 0.9%;

* Futures on the Nasdaq 100
NQ00,
-0.47%
retreated by 0.8%.

On Wednesday, U.S. stocks suffered their worst single session in a month. The Dow
DJIA,
-1.08%
fell 382 points, the S&P 500
SPX,
-1.07%
lost 1.1% and the Nasdaq Composite
COMP,
-0.89%
fell 0.9%.

What’s driving markets

Investors continued to be rattled by the release of the Fed minutes, even though its message — that tapering will start this year — was well choreographed in speeches and articles citing insiders ahead of the release.

“While the formula provided could in principle be consistent with a taper decision in September (particularly given the strong July employment report that came after the FOMC meeting), the overall tone of the debate – including multiple references to the delta variant – seem more consistent with a more methodical approach in which the Fed provides a clear signal in September that a taper decision is coming in November. That was and remains our call,” said economists at Evercore ISI.

Also noteworthy was a U.K. study, from the University of Oxford based on real-world data, that showed diminished effectiveness from coronavirus vaccines to the delta variant. After four to five months, the study found that two doses of the vaccine from Pfizer
PFE,
-2.20%
and BioNTech
BNTX,
-0.62%
was as effective as two Oxford-AstraZeneca
AZN,
+0.15%
jabs.

Robinhood Markets
HOOD,
+6.71%
was set to retreat after the online broker’s cautious outlook on the third quarter.

Other markets

The selling was particularly intense in Europe, where miners dived nearly 5% to send the Stoxx Europe 600
SXXP,
-1.90%
down by 2%.

The yield on the 10-year Treasury
TMUBMUSD10Y,
1.232%
fell to 1.22%.

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Business

Asian shares fall, dollar gains after Fed minutes

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HONG KONG, Aug 19 (Reuters) – Asian shares fell on Thursday while the dollar reached multi-month highs against peers, after minutes from the U.S. central bank’s last meeting showed the increasing prospect of reduced monetary stimulus this year.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) dropped 0.63%, heading back towards 2021 lows set last month, with Chinese blue chips (.CSI300) down 0.21%, Australia (.AXJO) falling 0.54% and Hong Kong off 0.45%.

Japan’s Nikkei (.N225) dropped 0.37%.

Carlos Casanova, senior Asia economist at UBP, said the main drivers for markets this week were weaker economic activity data in China, which had prompted many economists to downgrade forecasts, the situation in Afghanistan and the Fed minutes.

The minutes from the July policy meeting published Wednesday fleshed out the Fed’s thinking on when to taper its monthly bond purchases, and showed officials expected they could ease stimulus this year if the economy continues to improve.

However, officials noted the spread of the COVID-19 Delta variant could temporarily delay the full reopening of the economy and restrain a jobs market that looms large in the Fed’s thinking. read more

“The minutes show a Fed that is pretty split on most things, but recognises that we are getting much closer to the point of tapering,” wrote ING analysts in a note.

Focus now shifts to the Fed’s annual research conference in Jackson Hole, Wyoming, next week for any read about the central bank’s next steps.

“We will have more visibility about the outlook for the U.S. 10-year yields from September onwards, there are some upside risks that they could go to 1.6% to 1.8% from the current levels, and for Asia Pacific that means outflows,” said Casanova.

U.S. Treasury yields were little changed in Asian trading. Benchmark 10-year notes were last at 1.2617% having risen to as high as 1.300% before the minutes were disclosed.

However, the greenback reacted more strongly with the dollar index , which measures the currency against the euro, yen and four other rivals, climbing to 93.347, its highest since April 1.

Gains were particularly strong versus risk-friendly currencies, and the dollar rose to nine-month highs versus the euro and Australian and New Zealand dollars.

Wall Street closed lower after the minutes with the Dow Jones Industrial Average (.DJI) ending the day down 1.07%, while the S&P 500 (.SPX) lost 1.07% and the Nasdaq Composite (.IXIC) fell 0.89%.

The stronger dollar dragged on gold. The spot price dropped 0.15%.

Oil extended losses into a sixth day on Thursday, hovering near three-month lows. ANZ analysts said rising U.S. inventories had fuelled fears of weaker demand amid a spike in COVID-19 cases worldwide. 0/R

Brent crude was down 85 cents or 1.3% at $67.38 a barrel, U.S. West Intermediate crude lost 1.4% to $64.53 a barrel.

Reporting by Alun John in Hong Kong. Additional reporting by Pete Schroeder in Washington; Editing by Sam Holmes

Our Standards: The Thomson Reuters Trust Principles.

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Business

Dow Jones Falls As Fed Minutes Reveal This Fear; Tesla Up As Growth Stocks Lead; Apple Dips

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The Dow Jones Industrial Average fell after the latest Fed Minutes showed some officials fear inflation could be more durable than expected. Apple (AAPL) was among the worst blue chip performers, while electric-vehicle stock Tesla (TSLA) charged higher as growth stocks fought back from recent losses. Lowe’s (LOW) surged higher on earnings, while Nvidia (NVDA) was slipping as it gets set to post results.




X



Fed Minutes Show This Fear

The Fed minutes from the July policy meeting showed central bank officials deliberated on when to scale back the current extraordinary support for the economy. Most think they will likely scale back the pace of asset purchases this year, as long as the economy progresses as they anticipate.

Some believe there is a risk that inflation could run above their 2% target longer than previously expected, and that the Fed’s bond buying program is worsening inflationary pressures.

However there are other bankers who believe current price pressures will subside, and that global forces could keep inflation under the 2% target despite the fact interest rates are at historically low levels.

“Looking ahead, most participants noted that, provided that the economy were to evolve broadly as they anticipated, they judged that it could be appropriate to start reducing the pace of asset purchases this year because they saw the Committee’s ‘substantial further progress’ criterion as satisfied with respect to the price-stability goal and as close to being satisfied with respect to the maximum employment goal,” the minutes said.

Nasdaq Reverses As Growth Stocks Lead

The Nasdaq reversed lower after the minutes were released. The tech-heavy index fell 0.3%. Trip.com (TCOM) was a top performer, posting a gain of more than 6%.

The S&P 500 also dipped, giving up 0.5%. A rally attempt for the index failed, and it was back near session lows. Cboe Global Markets (CBOE) was among the standouts, rising more than 8%. Jack Henry & Associates (JKHY) lagged, falling almost 4% despite an earnings beat.

U.S. Stock Market Today Overview
Index Symbol Price Gain/Loss % Change
Dow Jones (0DJIA) 35172.59 -170.69 -0.48
S&P 500 (0S&P5) 4428.14 -19.94 -0.45
Nasdaq (0NDQC ) 14617.12 -39.06 -0.27
Russell 2000 (IWM) 216.68 +0.28 +0.13
IBD 50 (FFTY) 45.57 +0.80 +1.79
Last Update: 2:20 PM ET 8/18/2021

A majority of the S&P sectors were red, with only consumer discretionary and communication services in positive territory. Real estate and consumer staples were the worst laggards.

Small caps gave up some gains, though the Russell 2000 was still up 0.1%.

Growth stocks made the most impressive gains. The Innovator IBD 50 ETF (FFTY) was up 1.8%. This allowed it to move back above the key 50-day moving average.

Dow Jones Today: Index Dips As Apple Stock Falls

The Dow Jones Industrial Average was fighting it out with the S&P for the title of the day’s worst major index. It was also down about 0.5%.

Apple stock one of the worst performers, dropping more than 1%. The stock remains just above a trend line entry near 180. The firm is gearing up for the launch of the iPhone 13 next month.

While Apple was a laggard, Salesforce.com (CRM) was having a strong session. It was by far the best component, posting a gain of more than 3%.

It got a boost after JMP Securities analyst Patrick Walravens reiterated his outperform rating on Salesforce stock and hiked his target from 282 to 320. Salesforce reports earnings next week.

Coca-Cola (KO) was the worst laggard, dropping about 1.3%.

Tesla Stock Charges Higher

Tesla stock was trying to bounce back following recent struggles. It was up about almost 4%, which allowed it to pull away from its converged 50-day and 200-day moving averages.

Despite this, the stock is still down about 4% for the week. An aggressive buy point of 700.10 is looking increasingly irrelevant. However, Tesla bulls will be quick to point out a large base is continuing to take shape.

Tesla stock was punished earlier in the week on news the National Highway Safety Administration opened a formal investigation into Tesla’s Autopilot system. This could be a topic of discussion when the firm holds its AI Day on Thursday. The agency claims it has identified 11 crashes since early 2018 where a Tesla vehicle using Autopilot or the Traffic Aware Cruise Control unit hit vehicles, as well as heading toward road hazard indicators such as flashing lights, flares, an illuminated arrow board and cones warning of hazards.

Senate Democrats Richard Blumenthal and Edward Markey have upped the pressure on Tesla, saying in a letter to the FTC that the firm has “persistently misrepresented the capabilities of its cars and the company’s progress toward safe Autopilot and FSD technology.”

It has been a mixed year so far for Tesla stock. It has plunged from the record high of 900.40 it reached in late January.

Lowe’s Stock Surges On This

Lowe’s was near highs, remaining up almost 11% in heavy volume. The move saw it erase all of Tuesday’s 6% drop, while also driving higher. The stock bullishly moved back above its 50-day moving average

It comes after the home improvement retail stock posted better-than-expected Q2 results. Analysts cheered the firm’s strategy to gain more professional customers as do-it-yourself demand subsides.

CFRA’s Global Director of Equity Research Kenneth Leon reiterated his buy rating on the stock. His price target is 220. He said the firm is “well positioned to gain market share.”

“LOW is improving its processes to enhance store product offerings, operational improvement, and widen margins,” Leon said in a note to clients.

The stock had dropped hard following Home Depot‘s (HD) disappointing report. Home Depot stock was forced lower after U.S. same-store sales came in a little light amid fewer DIY customers. It bounced back with a gain of about 1.4% today.

Nvidia Earnings Due, Stock Lags

Nvidia stock was down around 0.6% as it gears up for its latest earnings report after the close.

The stock is forming a flat base after previously finding support at the 10-week moving average.

Bearish action saw Nvidia exposure cut Tuesday on the prestigious Leaderboard list of leading growth stocks.

Nvidia has been a star stock so far in 2021, despite recent struggles. It is up around 48% so far this year.

In Q1, Nvidia beat Wall Street’s targets on strong sales of gaming and data-center processors. Investors will be looking to see if the momentum continues.

Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.

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Business

Treasury yields rise ahead of Fed meeting minutes

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U.S. Treasury yields rose on Wednesday morning, ahead of the release of minutes from the Federal Reserve’s latest policy meeting.

The yield on the benchmark 10-year Treasury note rose nearly 2 basis points to 1.275% at 4 a.m. ET. The yield on the 30-year Treasury bond added 1 basis point, rising to 1.933%. Yields move inversely to prices and one basis point is 0.01%.

Minutes from the Federal Open Market Committee’s July meeting are due to be published at 2 p.m. ET on Wednesday. Investors will be poring over the minutes for any indicators as to when the Fed will start to taper its bond buying program.

In addition, data for the number of building permits issued, as well as the number of housing projects started in July will be released at 8:30 a.m. ET.

Auctions will be held on Wednesday for $30 billion of 119-day bills and $27 billion of 20-year bonds.

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