Stocks Defy Volatility as Fed Signals More Rate Cuts Ahead

Stocks managed to end up on the positive side Monday, switching gears from what had been a down session for all the major indexes. The gains came as Federal Reserve Chair Jerome Powell said more interest rate cuts are on the way. Meanwhile, Magnificent Seven names Meta Platforms (META) and Amazon.com (AMZN) gained on bullish analyst calls while a trio of Warren Buffett stocks, including Apple (AAPL), were near buy points on the stock market today.

Navigating the Shifting Tides of the Stock Market

Indexes Defy Volatility, Reach New Highs

Major indexes ended a seesaw month in positive territory, with the Dow Jones Industrial Average finishing the session up marginally and posting a record high. The Nasdaq composite added 0.4%, remaining more than 3% above its 50-day moving average. The benchmark S&P 500 gained 0.4%, also posting a new record high. Small caps also posted gains, with the Russell 2000 rising 0.3%. Growth stocks fared better, with the Innovator IBD 50 (FFTY) exchange traded fund closing the day up 0.5%.

Sector Performances: A Mixed Bag

The S&P 500 sectors had a mixed day, with energy and health care stocks being the best performers while materials and consumer discretionary were the weakest. Decliners outnumbered advancers on both the New York Stock Exchange and the Nasdaq, but volume was higher on both exchanges.

Standout Performers and Laggards

Apple and Walmart (WMT) were top performers on the Dow, while Intel (INTC) and Boeing (BA) lagged with drops of nearly 2% each. Intuitive Surgical (ISRG) was strong in the tech-heavy Nasdaq, rising more than 2%, but Micron Technology (MU) was one of the worst Nasdaq performers, falling nearly 4%. CVS Health (CVS) and FedEx (FDX) were strong in the S&P 500, with gains of more than 2% apiece, while Carnival (CCL) pared losses to a fraction following an earnings beat and Ulta Beauty (ULTA) and General Motors (GM) lagged, with both skidding nearly 4%.

Promising Stocks on the Radar

A few stocks made progress toward buy points despite the broader challenging action. Medical products maker Globus Medical (GMED) inched closer to a flat base buy point, with an EPS Rating of 93 out of 99 and strong analyst expectations. NB Bancorp (NBBK) ended the session up more than 1% as it tries to reach a cup-with-handle entry, and homebuilder Tri Pointe Homes (TPH) also is trying to complete a cup-with-handle, showing signs of being an excellent all-around performer.

Powell's Remarks Sway Market Expectations

Fed Chair Powell gave a speech at the National Association for Business Economics Annual Meeting, touting the robustness of the economy and progress made on inflation. He indicated that further rate cuts are on the horizon, though he insisted central bankers are "not on any preset course." This caused traders to see the path of cuts as being slower than before, with the odds of another 0.5% rate cut at the next FOMC meeting in November falling to 35.2% compared with yesterday's likelihood of 53.2%.

Magnificent Seven Stocks: Mixed Performance

The so-called Magnificent Seven group of stocks, including Meta Platforms and Amazon.com, were having mixed luck in the final session of September. Meta Platforms fared best with a gain of nearly 1% after Citi reiterated it as a top pick, while Amazon lagged the most despite Citi making the same call, falling nearly 2% and testing support at the 21-day line.

Buffett Stocks Near Buy Points

A few stocks held by Berkshire Hathaway, led by Warren Buffett, were in or near entries on Monday. Mastercard (MA) is in a buy zone after clearing a cup-base buy point, while Louisiana-Pacific (LPX) moved just past a buy zone on the stock market. Apple is also closing in on a consolidation entry, getting a boost from positive analyst commentary.

Diverging Fortunes in the Auto Sector

China electric vehicle maker Nio (NIO) soared in early trading after the firm announced a fresh investment, while Stellantis (STLA) plunged around 13% after the firm reduced its full-year outlook, citing "global industry dynamics" and warning of lower sales across most regions in the second half of 2024.

Geopolitical Tensions Simmer, but Market Impact Muted

The crisis in the Middle East continued to escalate, with Israel's defense minister describing the country as prepared to use forces "from the air, sea, and land" to extinguish the threat from terror group Hezbollah. However, the impact on the stock market today appeared muted.