Dow Jones Futures: Powell's Rate Cut Hints? Tesla, Micron, AppLovin Target New Buys

Market Movements and Key Stock Highlights

On Monday morning, Dow Jones futures edged lower, along with S&P 500 futures and Nasdaq futures. This slight dip came as investors remained focused on the upcoming speech by Federal Reserve Chair Jerome Powell, which is expected to influence market sentiment.

Tesla (TSLA), Micron Technology (MU), and AppLovin (APP) are currently near key buy points, drawing attention from traders who are watching for potential entry opportunities. These stocks have shown strength in recent weeks, with Tesla and AppLovin appearing on leading stock lists, while Micron is on a watchlist for further developments.

Despite some weakness later in the week, the stock market rally continued to hit new highs, driven by solid weekly gains. Growth stocks, particularly those related to artificial intelligence, faced some selling pressure. However, small-cap stocks and other sectors emerged as strong performers during this period.

Economic and Political Developments

President Donald Trump's summit with Russian President Vladimir Putin in Alaska concluded without an agreement, though he described the talks as "very productive." Trump is set to meet with Ukrainian President Volodymyr Zelenskyy and several European leaders in Washington on Monday, signaling ongoing diplomatic efforts.

Walmart (WMT) and Home Depot (HD) will be among the major retailers releasing earnings reports this week, offering insights into the strength of the U.S. economy. Investors will be closely watching these reports for signs of consumer spending trends and overall economic health.

Fed Speech and Market Expectations

The big event on the horizon is Federal Reserve Chair Jerome Powell's annual Jackson Hole speech. Historically, this speech has been used to signal important policy changes. Markets are keenly anticipating whether Powell will confirm expectations of rate cuts. While the odds of a September 17 rate cut remain around 85%, this has decreased slightly due to recent inflation and economic data. Investors are still betting on another cut by year-end, with a decent chance of a third.

Dow Jones futures were just below fair value, with S&P 500 futures dipping 0.1% and Nasdaq 100 futures falling 0.2%. The 10-year Treasury yield dropped slightly to 4.29%, reflecting ongoing concerns about economic conditions.

Market Rally and Sector Performance

The stock market rally largely shrugged off hot inflation reports, with investors continuing to bet on a Fed rate cut next month. The S&P 500 and Nasdaq continued to hit fresh highs, while the Dow Jones topped its late November all-time high on Friday.

The Dow Jones Industrial Average rose 1.7% in last week’s trading, the S&P 500 climbed 0.9%, and the Nasdaq composite increased 0.8%, although it drifted lower late in the week. The small-cap Russell 2000 soared 3.1%, hitting a six-month best on Wednesday.

Several ETFs showed mixed performance. The Invesco S&P 500 Equal Weight ETF (RSP) jumped 1.5%, just below all-time highs, while the First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) lagged with a 0.6% increase.

AI-Related Stocks and Sector Shifts

Many AI hardware and related names saw selling pressure amid negative earnings reactions to CoreWeave (CRWV), Applied Materials (AMAT), Coherent (COHR), and Cisco Systems (CSCO). However, many of these stocks held key levels after significant price runs.

Meanwhile, financials, homebuilders, airlines, and biotechs stepped up, showing resilience in the face of broader market volatility.

ETF Performance and Key Holdings

Among growth ETFs, the Innovator IBD 50 ETF (FFT) advanced 1.3% last week. The iShares Expanded Tech-Software Sector ETF (IGV) declined 0.5%, with AppLovin stock in IGV. The VanEck Vectors Semiconductor ETF (SMH) gained 0.7%, with Micron stock as a notable component.

The ARK Innovation ETF (ARKK) popped 3% last week, while the ARK Genomics ETF (ARKG) surged 8%. Tesla stock is the top holding across ARK Invest's ETFs.

Other ETFs such as the SPDR S&P Metals & Mining ETF (XME), U.S. Global Jets ETF (JETS), and SPDR S&P Homebuilders ETF (XHB) also showed strong performance.

Key Stocks to Watch

Tesla stock popped above a 338 short-term high on Monday, reaching 348.98 intraday before fading to close up 0.3% at 330.56. The official consolidation buy point is 367.71, and the relative strength line is off consolidation highs, reflecting some underperformance versus the S&P 500.

Micron stock rose 1.7% to 120.87 for the week but faded like Tesla. The memory-chip maker popped after raising guidance amid strong AI demand, nearing a 129.85 cup-base buy point, but then faded amid broader AI worries and weak guidance from Applied Materials.

AppLovin stock fell 3.8% to 438.68 for the week but rebounded slightly after testing a 428.99 buy point. Shares had cleared the cup base on August 7 following earnings, and investors could still use that or the August 11 peak of 473.70 as a high handle entry.

What to Do Now

The stock market continues to march higher, with investors considering taking profits and trimming exposure to the AI sector based on their specific strategies and risk tolerance. It remains a good time to be heavily invested, possibly diversifying into emerging leadership.

A number of stocks from various sectors have recently forged or cleared handles, reflecting broader market trends. Investors should ensure their watchlists are up to date and have exit strategies in place.

In addition to Walmart and Home Depot, notable earnings this week include Lowe’s (LOW), TJX Cos. (TJX), Amer Sports (AS), and Palo Alto Networks (PANW). However, Powell’s speech may end up being the biggest story of the week.

For more insights, readers can follow daily updates and analysis on market direction and leading stocks. Investors can also stay connected through social media platforms for real-time stock market updates.