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Stocks Set to Open Lower after Fed Minutes Sparks Selling

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Yesterday’s session saw the S&P drift to the 3400 level, but fail to print the figure as the release of the Fed minutes brought in afternoon selling. The minutes showed the Fed fears that COVID-19 will continue to harm growth and ruled out yield curve control.

After the release, stocks sold off into the close and futures continued lower overnight. Buyers stepped in around the 3345 level and the S&P futures are only down slightly now after a rally to 3368. Volume in yesterday’s session was the highest in a week, but still very low to what we were seeing a few months ago. Traders should be cautious not to overtrade in these low-volume situations that we often see in the late summer.  

Investors should watch out for Jobless claims and the Philly Fed, which are both out before the bell.

S&P Futures Trading Levels

The S&P futures currently sit at 3363, which is 19 handles off the overnight low.

Support levels for the day will be 3335 and 3317.

Upside resistance is 3376 and 3388.

The current S&P trading environment is trending upwards, but the current pullback is threatening the trend.  

Three Stocks to Watch

NVDA- Blowout quarter from the company, with a 12% surprise beat on EPS and guide higher. Q2 came in at $2.18 v the $1.95 expected, with revenues coming in at $3.87B v the $3.65B expected.

The stock has seen a big run already this year, so the earnings number is not motivating buyers at these levels quite yet. The stock is trading down 1%, but has seen upgrades from multiple firms. The highest target I’ve seen so far is from Needham, who raised their target to $600 from $400.  

BABA- Big quarter as expected, with the company reporting Q1 EPS at $2.10 v the $1.97 expected. Not much reaction as the stock is trading up slightly. All-time highs of $268 is well within reach off the open.

AMZN– The stock pulled back in yesterday’s session after it teased investors on Tuesday, with a failed move to all-time highs of 3344. The bulls are still in control, but with the futures lower they might not be strong enough to push to that high by weeks end. A move back over 3300 should bring back buyers looking for those highs.

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