Stocks Surge as Fed Delivers Anticipated Rate Cut

Wall Street had a delayed reaction to the Federal Reserve's big rate cut, with the Dow Jones futures and other major stock indexes rallying sharply on Thursday. Two early winners on the stock market were Nvidia (NVDA) and Tesla (TSLA), both of which rallied to key levels in morning trading.

Unlocking the Market's Potential: Navigating the Fed's Rate Cut Impact

Dow Jones Futures and Major Indexes Surge

Ahead of the opening bell, Dow Jones futures jumped 1.2%, or 500 points above fair value, as S&P 500 futures moved up 1.6%. Nasdaq 100 futures advanced 2.2% in early trading, indicating a strong start to the day for the tech-heavy index. This rally came as a delayed reaction to the Federal Reserve's decision to cut interest rates by a half-point on Wednesday, the first such move in more than four years.

Treasury Yields and Oil Prices Rise

Early Thursday, the 10-year Treasury yield climbed to 3.72%, reflecting the market's anticipation of the rate cut. Oil prices also rose 1%, with West Texas Intermediate futures trading around $71.60 per barrel. These movements suggest that investors are positioning themselves for the potential impact of the Fed's decision on the broader economy.

ETFs and Individual Stocks Respond

Among exchange-traded funds, the Invesco QQQ Trust (QQQ) was up 2.2%, while the SPDR S&P 500 ETF (SPY) moved up 1.6% ahead of the open. This indicates that investors are bullish on both the tech-heavy Nasdaq and the broader S&P 500 index.In the individual stock market, Nvidia and Tesla were standout performers, rallying 3.2% and 2.9% respectively in the morning trading session. Nvidia's jump put the stock on track to regain its 50-day moving average, while Tesla raced towards a 235 early entry, the stock's high price on September 5th.

Economic Data and Earnings Movers

The Labor Department's initial unemployment claims fell to 219,000, better than the expected 230,000. The Philadelphia Fed manufacturing index also rebounded to 1.7 for September, exceeding the expected 2.0 reading.In the earnings space, Darden Restaurants (DRI) was a key mover, with its shares surging 7% in premarket trading after the company reported its financial results.

Navigating the Current Market Conditions

During Wednesday's IBD Live show, the IBD Live team discussed the current trading conditions and how investors should handle the stock market. They highlighted the importance of staying vigilant and adapting to the market's fluctuations, as the Fed's rate cut decision has the potential to significantly impact various sectors and individual stocks.

Stocks to Watch: Costco, DoorDash, and Spotify

Among the stocks to watch on the market today are Costco Wholesale (COST), DoorDash (DASH), and Spotify (SPOT). Costco fell below a 896.67 cup-base entry following three days of losses, but rose 1% in early trading. DoorDash ended Wednesday back above a cup-with-handle's 131.21 buy point and surged 3.7% early Thursday. Spotify shares are tracing a consolidation that offers a 359.38 entry and moved up 2.2% in the morning session.

Dow Jones Components and Other Notable Stocks

Notable Dow Jones components to watch include Amazon.com (AMZN), Apple (AAPL), Home Depot (HD), Microsoft (MSFT), and Visa (V). Home Depot and Visa are both in buy zones, with Home Depot above a 378.58 handle buy point and Visa trying to break out above a 290.96 flat-base entry.Outside the Dow, stocks like Ferrari (RACE), Taiwan Semiconductor (TSM), ServiceNow (NOW), and Uber Technologies (UBER) are also in or near buy zones, according to IBD data.

Magnificent Seven Stocks: Alphabet and Meta Platforms

Among the Magnificent Seven stocks, Alphabet (GOOGL) and Meta Platforms (META) were standout performers in the premarket session. Alphabet traded up 2.2%, as it rebounded above its 200-day line, while Meta Platforms climbed 2.5% and is set to surge above a 542.81 buy point.