Dow Jones futures rose Monday morning, along with S&P 500 and Nasdaq futures, helped by lower dollar and Treasury yields. Warren Buffett’s stock focuses on Occidental Petroleum, Elon Musk’s latest move versus Twitter and three software plays.
The stock market rally looks set to continue the momentum this week, with the S&P 500 and Nasdaq Composite back above the 50-day moving averages and many of the blue-chip stocks flashing buy signals. With that said, the 10-year Treasury yield continues to run toward long-term highs, a potential headwind for a market rally. The CPI for August is due early Tuesday.
Warren Buffett uploaded at most Occidental Petroleum (OXY) with Berkshire Hathaway (BRKB) disclosed 26.8% of shares of OXY late Friday. OXY’s stock rose late Friday after the full stumble of last week’s recent breakout.
Tesla (TSLACEO Elon Musk has made a new argument to exit a $44 billion Twitter acquisition. this week Twitter (TWTRShareholders will vote on Musk’s bid. TWTR stock fell slightly late Friday, but after big gains during a holiday shortening week. Tesla stock jumped, back above key levels and arguably offering a solid entry.
The Biden administration plans in October to expand restrictions on semiconductor shipments to China related to artificial intelligence and chip-making tools, Reuters reported Sunday night, citing several sources. Some bans will be legalized nvidia (NVDA) And the AMD (AMD) Chips. The two companies confirmed late last month that they had received letters from the Ministry of Commerce preventing these shipments.
PANW stock is running IBD Leaderboard, while PCTY stock is on the leaderboard watch list. CDNS inventory running Long-term leaders of IBD. TSLA stock is at defect 50. Percussion design systems and OXY stock are available at IBD Big Cap 20.
Dow jones futures contracts today
Dow futures are up 0.4% against fair value. S&P 500 futures rose 0.6% and Nasdaq 100 futures rose 0.7%.
Even small gains on Monday would lift the Dow above its 50-day and 21-day moving averages. On Friday, the Nasdaq finished just one point below the 21-day line.
European Central Bank officials continued to point to more aggressive rate hikes after the ECB moved last week by 75 basis points. The euro is rising against the dollar, providing a boost to gold, bitcoin and Dow Jones futures.
The 10-year Treasury yield fell 4 basis points to 3.28%.
Crude oil futures rose slightly. US natural gas prices turned slightly lower. European natural gas prices are back down again.
stock market rise
The Dow Jones Industrial Average rose 2.7% last week stock market trading. The S&P 500 jumped 3.65%. The Nasdaq Composite Index jumped 4.1%. Small cap Russell 2000 rose 4%.
The Dow closed just below its 50-day moving average, while the S&P 500, Nasdaq Composite and Russell 2000 shed that key level on Friday.
There is some room to run before the major indicators encounter the 200-day moving average. So the blue-chip stocks could make some decent gains during that period.
However, it won’t take much of a pullback to see all the major indicators back below their 50-day lines or last week’s lows.
One big concern is Treasury yields. The 10-year Treasury yield rose 13 basis points to 3.32% last week. The benchmark index has risen for six consecutive weeks, heading towards an 11-year high of 3.48% set on June 16.
The market rebound picked up even though Treasury yields continued to rise, but there is no doubt that stocks have suffered in 2022 with yields heading higher. Part of that reflects higher yields driving up demand for the dollar, which on Friday eased long-term highs.
On Tuesday, the Labor Department will release its Consumer Price Index for August. Analysts expected consumer prices to decline 0.1% from the previous month after flattening out in July, with lower gasoline prices a major factor. Headline CPI inflation should cool down again, to 8% from 8.5% in July. Core consumer prices are expected to rise 0.3% for the second month. Core inflation may rise to 6.1% from 5.9% in July, supported by a rapid rise in rents.
The moderate inflation report likely won’t prevent the Federal Reserve from raising interest rates by 75 basis points for the third consecutive meeting on September 21. However, it may reinforce expectations of a slower rate of interest rate hikes in the future. On the other hand, a hot inflation reading may lead to higher Treasury yields and higher interest rate expectations.
Elon Musk’s new reason to end Twitter deal
Tesla CEO Elon Musk gave one more reason Friday night to finish canceling a $44 billion Twitter acquisition deal. He argues that the payment of severance pay to whistleblower Zatko “Mudge” of Peiter was outside the normal course of business.
It’s unclear whether that claim will have any traction in Delaware Chancery Court, where Musk-Twitter’s five-day trial is set to begin October 17.
Twitter stock fell 1% early Monday. But that’s after TWTR stock jumped 9.2% to 42.19 last week, although that’s still well below the $54.20 Musk agreed to pay.
On Tuesday, Twitter contributors will vote on Elon Musk’s bid.
Tesla stock rose 10.9% last week to 299.68, rebounding from the 50-day streak and reclaiming the 200-day streak. The EV giant’s shares are arguably flashing a solid entry. Investors can decide to wait for TSLA stock to move above 300 or the short-term high of August 16th at 314.64.
Elon Musk tweeted on Sunday that the latest FSD Beta is rolling out.
Stocks rallied ahead of the opening, above 300.
Warren Buffett buys more Occidental Petroleum shares
Warren Buffett’s Berkshire Hathaway raised its range Occidental Petroleum (OXY) to 26.8% from 20.2%. Berkshire revealed this in a filing with the Securities and Exchange Commission on Friday night.
OXY stock is up about 2% early Monday.
The Federal Energy Regulatory Commission has given Berkshire the right to buy up to 50% of Occidental Petroleum. The Aug 19 news sent Occidental’s stock higher, breaking 66.26 buying points to 77.13. But stocks stumbled on that breakout late last week. OXY stock rose 1.55% to 65.61 on Friday, finding support at the 50-day line.
Stock programs to watch
CDNS stock rose 3.9% last week to 174.68, retracing its 50-day moving average on Friday but still just below the 10-week streak. Shares of the chip design software maker rose strongly from mid-June to mid-August, liquidating early entries above the 200-day line. But Cadence Design stock has fallen since it reached 194.97 on August 16. A move above the 21-day line this week could provide a buying opportunity from the 50-day average.
Palo Alto stock rose 4.7% to 564.77 last week, found support at the 50-day line and reclaimed the 200-day line. PANW stock is running at 578.89 cup base with handle Point purchase, according to MarketSmith Analysis. But the cybersecurity firm broke a downtrend in the handle on Friday, making it now doable.
Paylocity stock jumped 9.6% last week, rebounding from just above the 10-week streak and reclaiming the 21-day streak. It’s probably doable now. Investors can treat the recent merger – after the earnings gap – as a handle at a 10-month deep base. In another week, this knob could turn into a proper stock PCTY base. Either way, the responsible buy point It is 276.98.
For a detailed analysis of the stock market rally and what investors should do now, check this out beforehand stock market column today.
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