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