Dow Jones futures rallied Wednesday morning along with S&P 500 futures and Nasdaq futures, as crude oil prices rebounded solidly a day after President Donald Trump pulled the U.S. out of the Iran nuclear deal. Meanwhile, the 10-year U.S. Treasury yield moved back above 3%.
XDespite concerns about the stock market and geopolitical impact, the Dow Jones, S&P 500 index and Nasdaq composite closed virtually unchanged Tuesday after Trump's Iran decision. Most top stocks in buy range continued to act well, with Apple (AAPL), Nvidia (NVDA), Visa (V) and Mastercard (MA) nudging higher.
Crude oil prices fell, but pared losses and held near multiyear highs Tuesday.
Dow Jones Futures Today
Dow Jones futures rose 0.5% vs. fair value. S&P 500 futures climbed 0.45%. Nasdaq 100 futures were 0.35% higher.
U.S. crude futures rose 2.7% to $70.95 a barrel, hitting their best levels since late 2014.
The 10-year Treasury yield just topped 3%, hitting 3.006%, after peaking at 3.02% in late April. Meanwhile, the 2-year yield climbed to 2.52%, putting the spread at a still-narrow 48 basis points. That 3% yield, and the narrowing Treasury yield spread with the 2-year rate, pressured stock markets.
Stock Market Lessons
Tuesday's stock market action held three key investing lessons. 1. Don't be swayed by outside noise and punditry; focus on the action of the major stock market averages and leading stocks. 2. The 50-day moving average looms large for the Dow Jones, S&P 500 and Nasdaq composite. 3. Pay close attention to the relative strength line, which tracks a stock's performance vs. the S&P 500 index. The RS line is an easy way to separate true stock market winners from laggards.
Focus On The Major Stock Market Averages, Top Stocks
Investors should stay in tune with important business, political, economic and technology news and trends. That can inform your investing decisions. But your primary focus and investing guide should be the action of the major indexes — the S&P 500, Nasdaq composite and Dow Jones industrial average — and the action of leading stocks.
President Trump's decision on the Iran nuclear deal drew a lot of attention, and deservedly so. But ultimately, the collective wisdom of investors decided for now that Trump's decision to exit that accord was not a market-moving event. The Dow Jones and Nasdaq composite just inched higher in stock market trading Tuesday, while the S&P 500 index edged lower.
Meanwhile, most recent breakouts fared well. Tech giants Apple and Nvidia rose fractionally, outperforming the broader market. Top oil stocks like Marathon Oil (MRO) acted bullishly, paring intraday losses or even gaining despite a modest loss for crude futures.
The 50-Day Moving Average Matters
The 50-day is often a key area of support for leading stocks as well as the major indexes. But it can also act as resistance. Since late January, the S&P 500 index and Dow Jones have struggled to move above the 50-day line, with the few attempts short-lived. Both indexes are just below the 50-day currently, though futures Wednesday suggest they may make another run at that level.
The Nasdaq composite reclaimed that level on Friday and is holding just above that line.
Stock Winners Flex Relative Strength
Investors should always focus on the true stock market leaders. If you're going to take on stock-specific risk, you want to get outperformance. But in conditions like now, when the stock market uptrend is under pressure, besting the S&P 500 simply is a must.
Apple, Nvidia, Mastercard and Visa all rose fractionally, moving higher but still within their 5% buy zones. While the price gains were modest, the RS lines all hit long-term or all-time highs. Marathon Oil fell intraday to 19.15 before roaring back for a 3.4% gain at 20.44, extended from an 18.76 buy point. The RS line set a 15-month best.
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