Federal Reserve's Upcoming Meeting Stirs Anticipation: Impacts on Dow Jones, S&P 500, and Nasdaq Futures

As the evening of the following Sunday draws near, all eyes from the world of finance will be fixed on the opening of the Dow Jones, S&P 500, and Nasdaq futures. The anticipation is high, as investors await developments from an array of stocks including, but not limited to, the electric automotive giant Tesla, the illustrious Nvidia, athletic shoemaker On Holding, renowned biopharmaceutical company Biogen, the ubiquitous Oracle, the aviation pioneer Boeing, and construction and mining equipment manufacturer Caterpillar. Yet, what the investors are perhaps most eager to see are the outcomes of the Federal Reserve meeting, set against the backdrop of a couple of significant inflation reports.

Last week saw a gradual expansion of the stock market rally, albeit with a slight fade after Wednesday. The leading indexes demonstrated a marginal weekly increase, with both Nasdaq and S&P 500 touching the zeniths of 2023. Meanwhile, small and midcap stocks, continuing their solid performance, contributed to an upward trend in market breadth, even though Friday was dominated by losers.

Investors are right to be wary in the current climate. The Federal Reserve meeting looms large on the horizon, while the Nasdaq's proximity to becoming overextended only exacerbates concerns. The apprehension seems to be more pronounced for investments in thriving tech sectors. Nonetheless, several stocks continue to give reasons for optimism.

For instance, On Holding recently exhibited a bullish maneuver. Nvidia, the renowned chip giant and an undisputed leader in artificial intelligence, has carved a fresh buying point. Will Tesla, in this climate, manage to prolong its winning streak? It's normal for Tesla stocks to experience a breather or slight retraction, which could potentially help Nasdaq to take a breather.

In other developments, Oracle's stock is extended. However, their earnings report scheduled for late Monday could provide insights into the state of business software and AI. Adobe, which has been performing exceptionally well, is due to report later in the week. Simultaneously, Bitcoin seems to have weathered the storm and recovered slightly on Sunday following a precipitous tumble the previous day, even though smaller digital currencies experienced significant drops.

But it is always prudent to remember that the overnight actions in Dow futures and others do not necessarily dictate the actual trading trends in the following regular stock market session.

A significant piece of news came on Friday when an FDA advisory panel wholeheartedly recommended approval for Biogen's Alzheimer's drug, Leqembi. Post this announcement, Biogen's stock increased by 6.2% to 328, following a halt during Friday's regular session. This represents a breakout from a newly formed flat base, an element of a base-on-base structure, with a buying point at 319.74.

Through Thursday of the past week, shares have witnessed an increase of 2.9% to 308.88, buoyed by the 50-day line and breaking a downturn in anticipation of a positive decision from the advisory panel. This provided an early entry. Eli Lilly's stock remained largely unaffected by the FDA advisory panel vote, inching up by just 0.1% on Friday. Still, the approval of Biogen's Leqembi should be a promising sign for Lilly's experimental Alzheimer's treatment, donanemab. In recent weeks, LLY stock has been consolidating near highs.

In the meantime, industrial stocks should be on every investor's radar. Several of them are either setting up or already in buying areas, and this includes Dow giants Boeing and Caterpillar.

The market players like Tesla and Nvidia are enlisted on the IBD Leaderboard, with ONON being added to the Leaderboard watchlist last Friday. BA stock made its way to SwingTrader. Tesla and ORCL stocks are featured on the IBD 50 list.

As the week progresses, all eyes will be on the CPI and PPI inflation reports and the Federal Reserve meeting. Although it's not a certainty, it's expected that the policymakers will leave the interest rates unchanged at the end of the meeting. However, maintaining the current interest rate may suggest a "hawkish" pause. This implies that while the rates won't increase at this meeting, there could be the possibility of an increase at a later date.

In conclusion, the financial markets currently showcase a blend of cautious optimism, interspersed with moderate wariness. Despite some sectors and stocks demonstrating significant strength, and thus potential opportunities, others hint at caution due to overextension and impending external factors. Hence, the financial market continues to be an intricate ballet of risk, reward, and careful strategizing.