Dow Jones Futures: Chinese Stocks Rise On New China Stimulus

Dow Jones futures remained relatively stable on Sunday night, while S&P 500 and Nasdaq futures experienced slight declines. Meanwhile, the Shanghai Composite Index saw gains following new stimulus measures from China. This week marks the acceleration of the earnings season.

The stock market rally posted a strong week, with the S&P 500 and Dow Jones reaching record highs on Friday, and the Nasdaq breaking through significant levels. The small-cap Russell 2000 bounced back after testing key support. Several leading stocks triggered buy signals, while others are positioning for potential gains, with many continuing their upward momentum.

Investor Focus: Earnings Season, Key Buy Points, and Market Shifts

Uber Technologies (UBER) surged higher, while Tesla (TSLA) slumped following a lackluster robotaxi event. Tesla's sharp decline triggered a major sell signal.

Nvidia (NVDA) showed several buy signals, with Taiwan Semiconductor (TSM) and Broadcom (AVGO) also signaling buying opportunities. Taiwan Semiconductor is set to release earnings later this week.

However, market leadership extended well beyond AI chip stocks, reflecting a broader rally.

This is an opportune time for investors to maintain significant exposure to the market, actively seeking new buying opportunities while trimming underperforming stocks. It's crucial to closely monitor earnings season, not only for companies in your portfolio but also for major players that could influence your holdings.

In addition to Taiwan Semiconductor, key earnings reports this week include Netflix (NFLX), UnitedHealth (UNH), Intuitive Surgical (ISRG), and Goldman Sachs (GS). All are near buy points or alternative entry levels.

Nvidia is featured on the IBD Leaderboard, SwingTrader, and the IBD 50, while Uber was named Friday’s IBD Stock of the Day.

Late Friday, Boeing (BA) announced plans to reduce its global workforce by 10%, cutting around 17,000 jobs. The company also delayed the launch of its 777x jet and warned that third-quarter sales would fall well short of analyst expectations. These challenges come amid a crippling strike and stalled labor negotiations. Boeing, already trading at 23-month lows, saw a slight decline in after-hours trading.

China Stimulus Update

China's Finance Ministry announced new stimulus measures on Saturday, largely in line with expectations. These include increased borrowing by Beijing to help local governments address their off-balance-sheet debt. Local governments are allowed to use the funds to purchase unsold properties, converting them into subsidized housing. In addition, major state banks will receive support to strengthen their capital. Although officials indicated there is room for the central government to increase deficit spending, no specific plans were laid out.

Notably, the stimulus package lacked direct measures to boost consumer spending, a critical weakness in the economy.

One key omission was the exact size of the proposed spending, as finance officials did not provide concrete figures.

This announcement followed the disappointment on October 8, when a key planning agency failed to introduce any new stimulus measures. That came on the heels of previous rate cuts and attempts to encourage lending, property purchases, and stock market gains.

Chinese stocks initially surged on earlier stimulus efforts but retreated after the letdown on October 8. On Monday, the Shanghai Composite rebounded strongly after a sharp 2.55% decline on Friday, although it gave back some of its gains later in the day. Meanwhile, Hong Kong's Hang Seng, which had been closed on Friday, experienced a notable decline.

In terms of economic data, China's September consumer prices rose just 0.4% year-over-year, falling short of expectations. Core inflation stood at only 0.1%, the lowest since February 2021, while producer inflation remained negative for the 24th consecutive month.

Dow Jones Futures and Stock Market Rally

Dow Jones futures were little changed vs. fair value. S&P 500 futures declined 0.1% and Nasdaq 100 futures fell 0.2%.

Crude oil prices fell more than 1%. So did copper futures.

Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.

The stock market rally had modest gains on the key indexes but it was an important week. The S&P 500 and Dow Jones hit record highs while the Nasdaq also cleared key levels.

The Dow Jones Industrial Average rose 1.2% in last week's stock market trading. The S&P 500 index and Nasdaq composite climbed 1.1%. The small-cap Russell 2000 popped 1%, thanks to Friday's 2.1% jump.

When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.

Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.