U.S. stock futures rebounded Tuesday after a market rout on Monday that saw the Cboe Volatility Index (VIX), also known as the “fear index,” surge to its highest level since March 2020. High-profile tech stocks like Apple (AAPL), Nvidia (NVDA), and Tesla (TSLA) plunged, while Palantir Technologies (PLTR) soared on strong earnings.
Artificial intelligence leader Palantir saw its stock jump 13% in extended trading after reporting robust Q2 earnings and raising its full-year revenue outlook.
Key Earnings Movers
Diamondback Energy (FANG): Shares gained 0.8%.
Hims & Hers Health (HIMS): Recovered from losses to inch higher in after-hours trading.
Lucid Motors (LCID): Stock climbed 6%.
Market Reactions
Financial markets are now pricing in a strong likelihood of 1.25 percentage points in Federal Reserve rate cuts by year-end, a sharp contrast to the mere 0.2% chance seen just a week ago. This drastic shift has resulted in a massive liquidity squeeze, which is expected to be temporary.
On Monday, the VIX spiked from around 23 to above 65, indicating extreme market fear, before settling back below 39. This index serves as a hedge against sudden market downturns, making the recent volatility particularly jarring for investors expecting continued low volatility. The last time the VIX was this high was in March 2020, shortly after the Fed’s emergency measures during the Covid-19 pandemic.
Stock Performance
On Monday:
Dow Jones Industrial Average: Fell 2.6%.
S&P 500: Lost 3%.
Nasdaq Composite: Declined 3.4%.
Stocks to Watch
Among the top companies to monitor today are:
Ferrari (RACE)
MercadoLibre (MELI)
ServiceNow (NOW)
Shake Shack (SHAK)
Additionally, Dow Jones components like Amazon (AMZN), Amgen (AMGN), Apple (AAPL), IBM (IBM), and Microsoft (MSFT) are also noteworthy.
Amgen and Ferrari are highlighted in the Stocks Near A Buy Zone column.
Market Indicators
Dow Jones Futures: Up 0.9% vs. fair value.
S&P 500 Futures: Gained 1.4%.
Nasdaq 100 Futures: Rebounded 1.9% vs. fair value.
On Monday, the 10-year U.S. Treasury yield dropped to 3.78%, while oil prices saw a modest rise, with West Texas Intermediate futures settling around $73.90 a barrel.
What to Do Now
Investors should consult IBD’s The Big Picture column for insights on the ongoing market action. Following Monday’s session, it’s essential to review today’s The Big Picture and updated exposure levels.
In Monday’s “IBD Live” show, the team analyzed current trading conditions amid the market sell-off. Resources like IBD MarketSurge’s “Breaking Out Today” list and the “Near Pivot” list are valuable for identifying stocks nearing buy points. For more stock ideas, check IBD Stock Lists like IBD 50, Big Cap 20, and Stocks Near A Buy Zone, which highlight bullish patterns and buy points.
