Stock Market Rally Hits Resistance; Facebook Jumps, MoneyGram Skyrockets On Cryptocurrency News

Dow Jones

Dow Jones futures edged higher early Tuesday, along with S&P 500 futures and Nasdaq futures, after Facebook (FB), Netflix (NFLX) and other FANG stocks led a modest stock market rally Monday. Facebook stock extended a strong regular-session gain ahead of Tuesday's cryptocurrency announcement. Meanwhile, MoneyGram International (MGI) skyrocketed after hours on a strategic alliance with Ripple, or XRP. 

Facebook Cryptocurrency Plans

On Tuesday, Facebook will release a white paper on its planned cryptocurrency. A Facebook coin could serve some two billion users and boost e-commerce on Facebook, Instagram and other properties.

In Monday's stock market trading, Facebook stock shot up 4.2% to 189.01, powering above its 50-day moving average. Facebook stock is closing in on a 198.58 cup-with-handle base going back to late July. Shares rose 1% in late trading.

MoneyGram-Ripple Alliance

MoneyGram announced a strategic alliance with Ripple late Monday. Ripple will invest $30 million in MoneyGram, buying an 8%-10% stake at 4.10 a share. That's a 183% premium above MoneyGram stock's Monday close at 1.45. MoneyGram stock erupted for a 154% gain late Monday.

Ripple has long argued that its cryptocurrency could lower transaction fees for cross-border payments. Ripple, or XRP, rose nearly 5% Monday.

The U.S. government blocked China's Ant Financial — run by Alibaba (BABA) Chairman Jack Ma — from buying MoneyGram back in January 2018. MoneyGram stock has plunged since then.

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The Facebook and MoneyGram cryptocurrency plans suggest alt-currencies could be gaining mainstream acceptance for day-to-day use. Bitcoin topped $9,000 on Monday, hitting a 13-month high.

Back in January 2018, Facebook blocked cryptocurrency and blockchain advertising. But it partially lifted the ban last month.

Dow Jones Futures Today

Dow Jones futures were a fraction above fair value. S&P 500 futures climbed slightly. Nasdaq 100 futures were up 0.15%. Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.

Current Stock Market Rally

The current stock market rally had a mildly positive session Monday. The Nasdaq composite rose 0.6%, fueled by the 4% Facebook stock gain, a 3% pop for Netflix stock, and fractional gains for (AMZN) and Google parent Alphabet (GOOGL). But the tech-heavy index pared intraday gains to close below its 50-day line once again. The Dow Jones and S&P 500 index, which are above their 50-day averages, edged up 0.1%.

Ultimately, the stock market rally action Monday didn't break out of the recent sideways range. That's not surprising ahead of the two-day Fed meeting starting Tuesday. Investors are only pricing in a 19% chance of a Fed rate cut Wednesday, so the focus will be on policymakers' hints about future Fed rate hikes.

Of course, the stock market rally also is looking ahead to the G-20 meeting to see if President Donald Trump and Chinese President Xi Jinping meet and restart China trade talks. Positive results could spur a strong market rally, but lack of progress could trigger further escalation in the China trade war.


I hope you enjoyed today's article.