Stock today ended mixed yet remain in an uptrend following news that the Federal Reserve has signaled no hike in short-term interest rates would come before the year 2024.
As noted in the Sept. 8 Big Picture column, the current outlook for stocks holds at "uptrend under pressure."
This means that breakouts can still work, but risk is above average following the heavy selling that hit the market in early September. The Nasdaq, which fell more than 1.2% in another seesaw session, remains nearly 8% below an all-time high of 12,074.
The S&P 500 fell 0.5% as the Dow Jones Industrial Average outperformed, rising 0.1%. Innovator IBD 50 (FFTY) fell 1%.
Volume grew on the NYSE yet fell on the Nasdaq, early data showed.
"The Federal Reserve communications today were exceedingly dovish, indicating that rock-bottom interest rates were likely to stay in place for at least the next 2 years," Chris Zaccarelli, CIO of the Independent Advisor Alliance, said in a note sent to IBD. "The only excitement was that two voting members dissented on the new inflation language, which was put in place to formalize the Fed's propensity to let the economy run hot, by keeping rates low until inflation rises somewhat above 2%.
Stocks Today: Breakout Watch
Taiwan Semiconductor (TSM) slid 3.2% to 83.11, closing mildly beneath an 84.10 buy point in a new flat base, a bullish chart pattern built by leading growth stocks.
Horizon Therapeutics (HZNP) backtracked 1.5% in lighter trading and is testing a 79.03 entry point in a tight consolidation of its own.
But Agnico Eagle Mines (AEM) kept its losses small for a second straight day. A 0.3% drop to 85.59 still left shares in the gold explorer up mildly above an 84.76 entry point in its narrow flat base.
All three stocks have gotten airplay on IBD Live in recent days.
Meanwhile, China real estate firm KE Holdings (BEKE) bucked the downdraft with a breakout. The stock, now a quarter-size position on IBD Leaderboard, romped more than 12% higher and surpassed a 54.70 buy point in a very brief nine-day IPO base. Volume accelerated sharply.
The company aims to modernize the world No. 2 economy's real estate market with more reliable information on housing prices and property transactions. (Please read more detail on its mission in today's IBD Stock Of The Day piece.)
The 5% buy zone in KE from the breakout point went up to 57.44.
On Leaderboard, a full position takes up roughly 12.5% of an entire model portfolio dedicated to growth stocks. A quarter-size stake makes up one-fourth of that, or around 3.12%.
Outside Tech Stocks
Meanwhile, more nontech stocks that were former big winners are trying to recoup more of their giant losses suffered as coronavirus swept through the U.S. and many large economies.
Tapestry (TPR), owner of the Coach luxury apparel and handbag brand, and Southwest Airlines (LUV) spurted more than 7% and 3% higher, respectively. Both stocks are trying to overcome upside resistance at or near their long-term 200-day moving averages.
Neither one trades near a correct buy point. Expect these stocks to put in more time fashioning the right side of a new good base.
Aerospace and automotive components maker Honeywell (HON), which reclaimed its 200-day line in August, added 1.3% as a handle on a large cup base gains more shape. It recently rejoined the Dow industrials after a long hiatus.
The Dow Jones transportation average rallied nearly 0.7%.
Morgan Stanley's Buy Side View On Stocks
Cyril Moulle-Berteaux, head of the global multi-asset team at Morgan Stanley Investment Management, noted in a conference call with journalists that his team is looking very closely at stocks that have been pounded unusually hard during the coronavirus market crash. He argues that the market is "learning to live with the coronavirus" and that stocks with current valuations well below historical averages will become ever more attractive as the world gets closer to a working Covid-19 vaccine.
Moulle-Berteaux's colleague, Andrew Slimmon, agrees. The senior portfolio manager for Morgan Stanley's Applied Equity Advisors team notes that the so-called "economy re-opening stocks will not be standing still" until nations adopt a vaccine at widespread scale.
"I often hear from people that 'I won't invest until we have a vaccine'," Slimmon said. "Yet it's likely that returns in the post-vaccine world will be less than in the pre-vaccine one." He adds that as more market participants realize the economy is recovering faster, companies will be less able to post earnings surprises. Plus, the Fed could alter its language on future announcements on interest rates, which could affect future stock prices.
Among the 197 industry groups tracked each day at Investors.com, oil-related shares rebounded furiously as crude oil futures returned back above $40 a barrel for the first time since Sept. 7. Oil drilling, international exploration and production, integrated, U.S. E&P and field services groups rallied 3% or more.
Homebuilder, coal, ship transport and airline stocks also beat the Dow Jones with gains in the 2%-to-3% range.
See the full daily performance of all 197 industry groups at IBD Data Tables.
In Other Financial Markets
The SPDR Gold Shares (GLD) ETF edged up 0.3% and is keeping losses in September relatively tame. Since March 31, GLD has spiked as much as 31% higher.
The yield on the benchmark U.S. Treasury 10-year bond rose 1 basis point to 0.69% and is slightly up for the month.
Two-year notes yield 0.14% while 30-year bonds deliver a 1.45% yield.
Reprinted from yahoofinance, the copyright all reserved by the original author.
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