Dow futures: Why stocks soar as Fed rate hikes big; What are you doing now

Dow futures rose overnight, along with S&P 500 futures and Nasdaq futures. The stock market fluctuated on Wednesday after the Federal Reserve raised interest rates by the most since 1994, but surged higher as Federal Reserve Chairman Jerome Powell signaled that policymakers might raise rates a little lower at the Fed’s meeting in late July.

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Treasury yields fell sharply on Wednesday after rising to multi-year highs on Tuesday.

Energy Enphase (ENPH), Harmony in the biological sciences (HRMY), automation (AN), Ulta Beauty (Ulta) And the my sim (on meFive stocks to watch. They are all consolidating, holding above or near the 50 day moving averages, with Lines of relative force At or near altitudes.

ON stock is in IBD Leaderboard Watch List. Stock and Harmony Biosciences are available at defect 50. AutoNation is Wednesday IBD stock today.

Tesla (TSLA) recovered strongly on Wednesday even as the National Highway Traffic Safety Administration reported that the electric vehicle giant was dominating accidents involving driver assistance systems.

Dow jones futures contracts today

Dow Jones futures are up 0.5% against fair value. S&P 500 futures rose 0.6% and Nasdaq 100 futures rose 0.7%. Futures came off highs as bond yields slipped from lows.

The 10-year Treasury yield fell 3 basis points to 3.36%, well off its overnight lows. Two-year yields reversed overnight losses, up 2 basis points to 3.3%.

US crude oil prices rose 1%.

Bitcoin traded again above $22,000 on Wednesday night after hitting an 18-month low of $20,087.90 earlier this week.

Remember to work overnight in Dow Jones futures contracts and anywhere else that does not necessarily translate into actual circulation in the next regular session Stock market session.

Fed meeting

policy makers They voted to raise interest rates by 75 basis points for the first time since 1994, at the end of the two-day Federal Reserve meeting, to a range of 1.5%-1.75%.

This came after the May CPI on June 10 showed that inflation unexpectedly rose to a 40-year high of 8.6%.

Fed Chair Powell, speaking at a news conference after the policy meeting, said the central bank is raising interest rates “urgently”, and decided to increase “front loading.” “Inflation is too high” with tight labor markets, he said.

But Powell said the Fed could raise rates by 50 or 75 basis points at the Fed’s late July meeting. He also stressed that the policy would be “sensitive and flexible.” Prior to these comments, markets had all set their price at 75 basis points at next month’s meeting, according to CME FedWatch Tool. Markets still see a 70% chance of a three-quarter move in late July.

All Fed officials see interest rates rising to at least 3% by the end of the year, with an average estimate of 3.4%. They see 3.8% by the end of 2023.

The central bank is now seeing inflation at 5.2% this year, according to its personal consumption expenditures price index. That’s higher than its target of 4.3% in March and 2.6% last December.

Policymakers expect their preferred measure of inflation, the core PCE index, to regress to a still-high 4.3% gain in the fourth quarter, and slow to 2.7% by the end of 2023.

The Fed and Fed Chair Powell tried to strike a delicate balance on Wednesday. On the one hand, they wanted to take a big step against inflation and restore lost credibility. On the other hand, Powell and his colleagues do not want policymakers to crush the economy. The sudden drop in retail sales was among the many weak economic reports on Wednesday.

The central bank beat Wall Street, at least one afternoon. Leading indicators, which fell into mixed after the Fed hike and as Powell started talking, jumped to intraday highs as the “flexible” Fed chief left the possibility of a move half a point open. Stocks closed at their best but were still strongly or sharply higher.

Treasury yields fell sharply on Powell’s suspension of 50 or 75, especially the two-year yield.

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stock market Wednesday

The stock market fluctuated after the rate hike announcement, but rebounded after Powell’s comments.

The Dow Jones Industrial Average rose 1% on Wednesday stock market trading. The S&P 500 rose 1.5%. The Nasdaq Composite Index jumped 2.5%. Small cap Russell 2000 rose 1.5%.

The 10-year Treasury yield fell 9 basis points to 3.39%. The two-year yield, more closely related to Fed rate moves, fell 15 basis points to 3.28%.

US crude oil prices fell 3% to $115.31 a barrel. Natural gas prices rose modestly after dropping 16% on Tuesday.

between the Best ETFsThe Innovator IBD 50 ETF (fifty(closed unchanged, while the Innovator IBD Breakout Opportunities ETF)fit) decreased by 0.2%. iShares Expanded Technology and Software Fund (ETF)IGV) increased by 2.65%. VanEck Vectors Semiconductor Corporation (SMH) advance 1.8%.

SPDR S&P Metals & Mining ETF (XME) rose 2.1% and the US ETF Global X Infrastructure Development Fund (cradle) by 0.8%. US Global Gates Foundation (ETF)Planes) rose 1.55%. SPDR S&P Homebuilders ETF (XHB) rose 0.3%. SPDR Specific Energy Fund (SPDR ETF)XLE) sinking 2.2% and Financial Select SPDR ETF )XLF) gained 1.1%. SPDR Healthcare Sector Selection Fund (XLV) increased by 1%.

Shares reflect more speculative stories, the ARK Innovation ETF (see you) jumped 6.6% and the ARK Genomics ETF index (ARKG) 5.2%. Tesla stock continues to lead across ETFs on Ark Invest.

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stock to watch

ENPH stock jumped 5% to 188.48 on Wednesday, rebounding from its 50-day and 200-day lines. The manufacturer of solar inverters broke out from A double bottom base During a larger consolidation on June 2nd. Enphase stock rose for a few days before falling back. Entry 193 is no longer valid. Arrow shape ENPH handle, with extension buy point at 217.33, just above the intraday high on June 8.

HRMY stock rose 0.3% to 44.61, moving away from the 50-day line but trimming intraday gains. Harmony Biosciences owns a cup base With entry 54.10. But it needs an extra day to form a handle, bringing the buy point down to 47.21.

AutoNation stock reversed lower on Wednesday, dropping 1.45% to 113.40 to close below the 50-day and 200-day lines. AN stock is in a state of long consolidation at 133.58 buying points. But investors can use resistance just above 126 as an early entry. Last Friday, the used car giant hit 126.14 on the day, nearly getting close to an early May high of 126.39, before reversing lower.

Ulta Beauty stock rose 3.3% to 405.61, reclaiming the 50-day line after finding support at the 200-day line earlier this week. ULTA stock traded a 426.93 cup buy point with a handle last week before falling again. New handle entry 429.58 is now running.

Onsemi stock rose 2.45% Wednesday to 58.04, up from the 50-day and 200-day lines. In late May to early June, ON stock rose from the 50-day/200-day lines to 67.19 on June 8, moving towards the 71.25 consolidation buy point. But the chipmaker backed down. This resulted in a somewhat chaotic handle formation with entry 67.29. Entry also coincides with lower peaks trend line.

Tesla Stock

Tesla stock rebounded 5.5% to 699 on Wednesday, still below the 21-day streak. Shares hit an 11-month low of 620.57 on May 24.

On Wednesday, the National Highway Traffic Safety Administration reported accidents involving driver assistance systems. Tesla vehicles using autopilot were involved in 273 accidents from July 20, 2021 to May 21, 2022 out of a total of 392 accidents. The main reason is that there are so many Tesla EVs on the road with autopilot.

Tesla has always claimed that autopilot improves safety, but it doesn’t use apples-to-apples comparisons in terms of road type, weather conditions, and more. NHTSA recently expanded its autopilot probe, while also investigating “phantom braking” in Tesla cars.

Separately, CEO Elon Musk tweeted Wednesday that he is leaning toward supporting Florida Republican Governor Ron DeSantis for president in 2024.

On Thursday, Musk will hold a town hall with Twitter (TWTR) to employees, addressing employees for the first time since a $44 billion, $54.20 per share deal was reached for the social site in late April. Since then, Musk, who has waved the due diligence rights, has complained about fake accounts on Twitter. Musk may want to exit the deal or lower the price significantly.

Twitter’s stock rose 2.1 percent to 37.99 on Wednesday.

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market analysis

The stock market closed higher on Wednesday after the Fed rate hike and Powell’s comments.

The stock market rally is now underway. Wednesday marked the second day of the Nasdaq’s attempt to rally after technology heavy indices rose on Tuesday. But trying to rally is not a green light.

After heavy losses in recent days, the major indicators are well below the 10-day moving averages, not to mention the more fundamental resistance.

However, investors should soon look for a Follow-up day To confirm the new uptrend. However, confirmed market rallies don’t always work out, as 2022 has shown.

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What are you doing now

Wednesday’s movement was positive, but one decent day was not meaningful, especially in a bear market.

If there’s a follow-up day, investors can tip their toes into the market, slowly adding exposure if conditions start to improve.

In the meantime, stay alert and be prepared. Build these watch lists of potential leaders.

Enphase, Onsemi, and other stocks to watch have all struggled, despite their strong relative strength. There is no guarantee that these names will hold up relatively well, or that they will lead in the next real bullish trend.

Read The Big Picture Every day to stay in sync with the trend of the market, stocks and leading sectors.

Please follow Ed Carson on Twitter at Tweet embed For stock market updates and more.

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