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The buy-the-dip trade worked yesterday for the most part among the stocks that were hardest hit in Monday's DeepSeek selloff. NVIDIA (NVDA), up 8.9%, was a standard bearer in the recovery effort.
Notably, though, it was a pretty isolated trade in that the broader market did not follow course with the rebound effort. The equal-weighted S&P 500, for instance, was down 0.5% yesterday even though the Nasdaq Composite was up 2.0%.
To be fair, the equal-weighted S&P 500 showed some impressive relative strength Monday as the stocks of the AI leaders were imploding, so we'll give it a pass on yesterday's underperformance.
There isn't much buy-the-dip conviction this morning, however. Currently, the S&P 500 futures are down 11 points and are trading 0.2% below fair value, the Nasdaq 100 futures are up 17 points and are trading 0.1% above fair value, and the Dow Jones Industrial Average futures are down 68 points and are trading 0.2% below fair value.
There have been some mixed reactions to earnings reports released since yesterday's close that have kept things in check.
Stocks trading higher after their reports include Starbucks (SBUX), T-Mobile US (TMUS), ASML (ASML), Norfolk Southern (NSC), Corning (GLW), and F5 Networks (FFIV).
Stocks trading lower after their reports include Qorvo (QRVO), Danaher (DHR), Packaging Corp. (PKG), Manhattan Associates (MANH), and Otis Worldwide (OTIS).
The real hang up, though, is what comes after today's close. That would be earnings reports from Microsoft (MSFT), Meta Platforms (META), and Tesla (TSLA) along with IBM (IBM), Lam Research (LRCX), ServiceNow (NOW), Las Vegas Sands (LVS), and Whirlpool (WHR).
We can ascribe a wait-and-see mindset to the futures trade, which also relates to today's FOMC decision and press conference. The real wait-and-see item is the press conference.
The market widely expects the Fed to keep the fed funds rate unchanged at 4.25-4.50%. The intrigue revolves around the press conference and how Fed Chair Powell will describe the Fed's deliberations over the inflation data and what Fed Chair Powell thinks about President Trump's view that he knows more about interest rates than the Fed Chair does and that he believes the Fed will listen to him.
Spoiler alert: It is highly unlikely that Fed Chair Powell will take the bait in the Q&A period. Look for him to say something like "no comment" or "we are committed to doing the job Congress has legally charged us to do."
If Fed Chair Powell sticks to that script and the party line that the Fed will continue to watch the data and will make decisions on a meeting-by-meeting basis, then today's FOMC affair could be a so-called non-event for the market in terms of being a trading catalyst.
To that end, look for the earnings news to be doing the driving.
