The Dow Jones Industrial Average rallied after the Federal Reserve gave clearer guidance on when tapering will begin. Stocks were also boosted by news about real estate investment group Evergrande. Bitcoin also popped, while Robinhood (HOOD) surged after it emerged the firm is getting set to launch cryptocurrency wallets. Boeing (BA) was the top blue chip, with Chevron (CVX) not far behind.
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Meanwhile a clutch of stocks tried to stage breakouts amid the bullish action. Encore Wire (WIRE), Boot Barn (BOOT), Semtech (SMTC), AutoNation (AN) and Twinkies maker Hostess Brands (TWNK) all passed buy points.
Fed Stands Pat; Powell Makes Pledge
The Federal Reserve signaled Wednesday that it expects to start tapering asset purchases soon and finish by the middle of next year. Policymakers are evenly split over whether the cycle’s first rate hike should come next year, or in 2023.
Fed Chairman Jerome Powell said committee members had discussed the timing of tapering and had generally reached a conclusion. The 10-year Treasury yield dipped very slightly.
Oanda senior market analyst Ed Moya told Investor’s Business Daily that Wall Street can now completely price in a formal November taper announcement with a December start date.
“Risky assets loved the FOMC statement and updated projections as the Fed has well telegraphed they were nearing a taper announcement and (Fed members) continue to show they are in no rush to deliver interest rate hikes,” he said. “The biggest risk to the stock market is accelerated pace of tightening, and the Fed is showing that is something they will avoid unless they were dead wrong about inflation.”
Powell also said Wednesday that changes would be made to the central bank’s current trading rules. He said current guidelines are insufficient and that he will “make changes” after reports said Fed officials made stock and bond trades that could be influenced by policy actions.
It comes after filings showed some regional Fed presidents had traded frequently throughout 2020.
Stocks had already been given a shot in the arm after troubled Chinese property developer China Evergrande Group said it would make an interest payment on an onshore bond, easing some default fears. The company is still expected to miss a separate payment due on its dollar bonds, which are widely held by international investors.
Market Rallies As Fed Walks The Line; 5 Stocks Flash Buys
Nasdaq Rallies, Small Caps Surge
The Nasdaq was just about the biggest gainer among the major indexes. However, its 1% gain meant the indexes closed virtually neck and neck. The Nasdaq managed to move back slightly above its 50-day moving average. Booking Holdings (BKNG) fared best, rising 3.5%.
The S&P 500 rose just under 1% and remains shy of the 50-day line. Devon Energy (DVN) was among the biggest winners here, rising almost 7%.
U.S. Stock Market Today Overview |
||||
|---|---|---|---|---|
| Index | Symbol | Price | Gain/Loss | % Change |
| Dow Jones | (0DJIA) | 34258.51 | +338.67 | +1.00 |
| S&P 500 | (0S&P5) | 4395.65 | +41.46 | +0.95 |
| Nasdaq | (0NDQC ) | 14896.85 | +150.45 | +1.02 |
| Russell 2000 | (IWM) | 220.89 | +3.37 | +1.55 |
| IBD 50 | (FFTY) | 51.03 | +1.08 | +2.16 |
Last Update: 4:06 PM ET 9/22/2021 |
||||
The S&P sectors nearly all made progress, with energy surging. Utilities and communication services were the only areas that closed lower.
Small caps managed to outperform the major indexes, with the Russell 2000 finishing with a gain of 1.6%.
But it was growth stocks that fared best of all, with the Innovator IBD 50 ETF (FFTY) rising just over 2%.
Dow Jones Today: Index Gains As Boeing Stock Climbs
The Dow Jones Industrial Average closed just off highs, but still rose about 1%. It is also stuck under its 50-day moving average.
Boeing stock was the biggest winner on the Dow Jones today. It managed to climb more than 4%. Nevertheless, it remains stuck beneath its 50-day and 200-day moving averages.
Chevron stock also made a good gain amid broad strength in energy. It closed up about 3% but was turned away at the 50-day line.
UnitedHealth (UNH) was the biggest laggard, though its loss of just under 1% was slight.
Bitcoin Rallies; Robinhood Stock Surges On Wallets
Bitcoin was rallying as risky assets become more palatable to investors. The cryptocurrency was up about 3.5% and trading near the $45,000 mark, according to Coindesk.
Brokerage stock Robinhood was also benefiting from interest in digital currency trading. The stock popped on the news it is testing cryptocurrency wallets with select clients next month.
They will allow holders to send and receive cryptocurrencies in and out of the Robinhood app.
It comes after the firm was blasted by some users on social media, who claimed they were getting exposure to cryptocurrency prices by using Robinhood but were not able to own the digital tokens themselves.
Robinhood Chief Product Officer Aparna Chennapragada told CNBC the firm is taking its time “to make sure that we build this in a phased approach.”
More than half of the firm’s transaction-based revenue came from cryptocurrency trading last quarter, up from 3% the previous year.
Robinhood stock closed up more than 8%, popping above its 10-day moving average in the process. The IPO stock remains well shy of its all-time high of 85 however.
These Stocks Pass Buy Points
Electrical wire manufacturer Encore Wire is in a buy zone after passing a flat-base entry of 89.44, according to MarketSmith analysis.
The stock has a perfect IBD Composite Rating of 99, with earnings a particular strength.
Western wear retailer Boot Barn is also actionable after breaking out of a flat base. The ideal entry here is 93.35.
Its stock market performance over the past 12 months has been exemplary, which is reflected in its RS Rating of 97.
Semiconductor play Semtech is in a buy zone after passing a cup-with-handle entry of 79.54.
The relative strength line has been spiking of late, while big money has been getting behind the stock. It holds an Accumulation/Distribution Rating of B.
AutoNation cleared a cup-base buy point of 125.31. This is a second-stage base, which stands more chance of success.
The stock boasts strong institutional sponsorship, and has been a big market winner over the past 12 months. It was featured in Monday’s IBD 50 Stocks To Watch.
Twinkies maker Hostess Brands peaked above a cup base entry of 17.33. While overall performance is not ideal, the RS line has been looking bullish of late.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.
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