Dow Jones futures rose late Monday, along with S&P 500 futures and Nasdaq futures, as congressional negotiators reached a tentative deal to avoid a government shutdown. But President Donald Trump hasn’t signed on yet. In Monday’s session, top stocks strained to move the market higher. But the major averages kept growth stocks from running wild with the current stock market rally in a tiny consolidation. Microsoft stock and Apple stock weighed modestly on the Dow Jones, S&P 500 index and Nasdaq. While the Innovator IBD 50 ETF (FFTY) rose a solid 0.7%, Shopify stock reversed lower from a breakout attempt. Meanwhile, highly rated RingCentral stock, Mimecast stock and Chegg stock rose late on earnings.
Government Shutdown Deal?
House and Senate negotiators from both parties said they have an “agreement in principle” to avert another government shutdown. A last-minute dispute over the number of immigration detention beds was reached. The government shutdown deal also reportedly includes $1.375 billion for 55 miles of border fencing in the Rio Grande Valley. President Trump, who hasn’t said if he backs the tentative border security and government funding deal, had sought $5.7 billion in wall funding. Trump was in El Paso, Texas, Monday night at a rally calling for a border wall.
Dow Jones Futures Today
Dow Jones futures rose 0.5% vs. fair value. S&P 500 futures advanced 0.5%. Nasdaq 100 futures climbed 0.65%. Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular session.
Top Stocks Rising Late On Earnings
RingCentral (RNG), Mimecast (MIME) and Chegg (CHGG) all climbed overnight on earnings reports. RingCentral stock has a best-possible 99 IBD Composite Rating. Security software firm Mimecast has a 97 Composite Rating; Chegg stock boasts a 96. Business communications software maker RingCentral and education stock Chegg are extended from recent buy points, while Mimecast stock is running up the right side of its base toward a breakout.
RingCentral stock rose 2.8% late and Chegg stock 10%. Mimecast stock popped 6.5%, just below a buy point and new high.
Current Stock Market Rally
IBD says investors should follow the current stock market by watching the action of the major averages and leading stocks. From the standpoint of the key indexes, early gains faded to essentially nothing. The Dow Jones fell 0.2%, its fourth straight loss, finding support at its 200-day line for a third day in a row. Meanwhile, the Nasdaq and S&P 500 index, hitting 200-day resistance last week, edged up 0.2% and 0.1%, respectively. It’s not particularly surprising for the stock market rally to hit resistance at this level, especially after such a strong run since Christmas Eve.
As for the government shutdown deal, even if Trump signs on, it may be only a modest positive for Wall Street. The current stock market rally started a few days into the previous government shutdown and kept rallying as the impasse continued.
Apple Stock, Top Techs Generally Edge Lower
Megacap tech stocks were no help. Microsoft (MSFT) fell 0.4% and Apple (AAPL) 0.6%, with Apple stock down for a third straight session. Amazon.com (AMZN) rose 0.2%, but that was offset by fractional losses by Facebook (FB), Netflix (NFLX) and Google parent Alphabet (GOOGL). With Apple stock and most tech titans drifting lower, it’s impressive that the Nasdaq eked out any gain.
Top Stocks Lead Market Rally
Meanwhile, top stocks were a different story. The Innovator IBD 50 ETF, commonly known by its FFTY ticker, climbed to a three-month high after a 0.7% gain Monday and a 1.35% pop on Friday. Chipotle Mexican Grill (CMG) rose 3.5% on Monday, extending last week’s post-earnings breakout.
But there were limits. Shopify (SHOP) ran up to 180 intraday, clearing a 176.70 buy point in a consolidation going back to late July. But Shopify stock reversed lower, closing down 1.6% to 173.17.
In fairness, Shopify stock has run up sharply over the last several weeks, so reversing from intraday highs on one day is no big deal.
Shopify Earnings Early Tuesday
With Shopify earnings due before Tuesday’s open, investors may have grown skittish. It’s highly risk to buy a stock before earnings, even when the current stock market rally is acting bullishly, unless adopting an earnings options strategy. IBD Leaderboard added Shopify stock Monday via an option.
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