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Dow Jones Futures: Stock Market Rally Awaits Fed Chief Powell, Key Economic Data

Dow Jones futures fell early Wednesday while S&P 500 futures and Nasdaq futures rose slightly with Fed Chief Jerome Powell and the start of key economic data on tap.


The stock market rally ended mixed on Tuesday with Apple (AAPL) another drag on major indices along with Amazon.nl (AMZN) and Tesla (TSLA). Meanwhile, Apple’s fellow Dow giants Boeing (BA), Chevron (CVX) and Goldman Sachs (GS) are nearby buy points.

Hewlett-Packard Enterprise (HPE) and NetApp (NTAP) headlined earnings reports late Tuesday, with CrowdStrike (CRWD) and Business day (WDAG) launching major software reports this week.

HPE shares then rose modestly in premarket trading HPE revenue top views. HP Enterprise shares, above the 200-day line, are working on a long cup base. NTAP stocks plunged in extended action weak NetApp revenue and guidance. WDAY stock jumped at night on a Q3 beat and a $500 million buyback. CRWD stock fell despite beating Q3 views as subscriptions fell and the cybersecurity firm suggested fourth-quarter revenue declines.

On Wednesday morning, ADP will release its private payroll employment estimate for November. The Labor Department will release job openings in the October JOLTS report. Vacancies are being closely watched by Fed chief Jerome Powell, who will speak Wednesday afternoon.

All of that presages the Fed’s favorite inflation gauge, the PCE price index, on Thursday morning, along with the November jobs report on Friday, as well as several other notable economic releases.

Investors should be cautious about opening new positions until there is more clarity on the economy and the prospects for Fed rate hikes. If anything, they may want to be lightning positions in the very short term.

CVX stock is depleted IBD ranking. BA stock is depleted Swing Trader.

Speech by Fed Chief Powell

Fed Chief Jerome Powell will speak Wednesday at 1:30 p.m. ET at the Brookings Institution. He is expected to reinforce expectations that the central bank will raise interest rates by 50 basis points on December 14. Markets see a 67.5% chance of a half-point step, but still a decent chance of a fifth straight rate hike by the Fed. of 75 basis points. But he is also likely to indicate that rate hikes will continue into 2023.

Whatever Powell says will soon be overtaken by economic data. If inflation begins to cool significantly and labor markets ease, even the most aggressive Fed policymakers will prefer to slow the pace of rate hikes and end earlier than markets expect. Hot price and employment data will bolster the resolve of many Fed doves. Of course, economic data may show mixed results or marginal improvement in the coming days.

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Dow Jones Futures Today

Dow Jones futures lost a fraction of their fair value. S&P 500 futures rose 0.1%. Nasdaq 100 futures rose 0.3%.

The yield on 10-year Treasury bills fell 2 basis points to 3.73%. Crude oil futures rose more than 2%. Copper prices rose by 2%.

China’s official manufacturing index fell 1.2 points to 48 in November, falling further below the neutral level of 50 and views for 49. The services index fell to 46.7 versus forecasts for 48. China’s Covid lockdowns have taken a heavy toll on the economy.

Still, Hong Kong’s Hang Seng index rose 2.2% after rising 5.2% on Tuesday on hopes of Covid restrictions ahead.

Remember that nighttime action Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live

Stock market rally

After Monday’s sharp selling, the stock market rally ended on a mixed note on Tuesday.

The Dow Jones Industrial Average closed just above break-even on Tuesday trading on the stock exchange. The S&P 500 index fell about 0.2%. The Nasdaq composite fell 0.6%. The small-cap Russell 2000 rose 0.3%.

Apple shares fell 2.1%, its third consecutive significant decline, as China Covid cases, lockdowns and protests weigh on the tech giant. On Tuesday, shares fell 2.6%, below their 50-day moving average. Above the 50-day line, a 200-day resistance looms for AAPL stocks. Apple has seen unrest at a massive Foxconn iPhone assembly plant in China.

Amazon shares fell 1.6% and Tesla shares fell 1.1%, both retreating from near their 21-day lines. Both are relatively close to bear market lows.

US crude oil prices rose 2.4% to $79.62 a barrel. During the day, crude oil futures hit their lowest level of the year.

The 10-year Treasury yield increased 5 basis points to 3.75%.

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Below the best ETFsthe Innovator IBD 50 ETF (FFTY) fell 0.2%, while the Innovator IBD Breakout Opportunities ETF (BOLT) increased by 0.5%. The iShares Expanded Tech-Software Sector ETF (IGV) fell 0.8%. The VanEck Vectors Semiconductor ETF (SMH) decreased by 0.3%.

SPDR S&P Metals & Mining ETF (XME) gained 2.3% and the Global X US Infrastructure Development ETF (PAVE) 0.1%. US Global Jets ETF (JETS) increased by 1.8%. The Financial Select SPDR ETF (XLF) climbed 0.6%. The Care Select Sector SPDR Fund (XLV) decreased by 0.25%.

Reflecting more speculative story stocks, ARK Innovation ETF (ARKK) fell 0.5% and ARK Genomics ETF (ARKG) decreased by 0.4%. Tesla stock is a major stock in Ark Invest’s ETFs.

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Dow shares near buying points

Boeing shares rose 2% on Tuesday to 175.32, back above 173.95 cup base point of sale, according to MarketSmith Analysis. Shares traded solidly in light volumes near the buy point after a major run of optimism for the aerospace giant. Analysts expect Boeing to return to profitability in 2023 after four years of losses. The recent pause in BA stocks has caught up with the 21-day line.

Shares of Chevron rose 1.45% to 180.94, slightly below the buy point of 182.50 and just above the 21-day line. CVX shares trade around that official buy point throughout the month. An early participation near 167 on October 19 was probably the safer bet initially. But with Chevron stock right on the 21 day and no longer extended from the 50 day, things are looking more interesting.

GS shares rose 0.35% to 383.71 on Tuesday. The investment bank has a buy point of 389.68 of a 35% deep cup-with-handle base dating back to November 2021. Investors might also view the recent break as a shelf just above the buying range of a bottom base that Goldman shares cleared in early November. The 21-day moving average is close to catching up, while the 50-day line is beginning to gain ground. The relative strength line is at a multi-year high due to the outperformance of GS stocks against the S&P 500.

Analysis of the market rally

The stock market rally is retreating with major technical tests and economic data on tap, along with uncertainty over China’s Covid policies.

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The S&P 500 index extends a pullback from just below the 200-day moving average, but still above the 21-day line. The Russell 2000, which dipped below the 200-day and 21-day lines again on Monday, dipped back above the 21-day lines.

The trailing Nasdaq fell below the 21-day mark and is approaching its 50-day mark.

Apple stocks, Tesla and other mega caps are weighing on the Nasdaq and the S&P 500 index.

The Invesco S&P 500 Equal Weight ETF (RSP) is still above the 200-day moving average.

But don’t exaggerate Apple’s impact. Many leading stocks test or fall below buy points or make decent gains.

The silver lining is that the stock market does not participate in Fed speeches and key economic data. That could mean markets could rebound if there are no negative surprises, with the possibility of bigger gains if the upcoming headlines are positive.

But the market rally is going to do what it is going to do.

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What to do now

With markets pulling back, not many stocks are giving buy signals. Investors should probably wait for Powell’s speech and economic data to come in before making major new purchases. Investors may want to take at least a share of the profits in winners, especially if the winning stocks pull out to buy points.

If the market rally moves higher quickly, a large number of stocks will appear usable. But many interesting stocks will look damaged today if major indices fall significantly from here.

Investors must therefore remain engaged and flexible. Keep your watchlists up to date, but also provide exit strategies for your positions.

Read The big picture every day to stay in sync with market direction and leading stocks and sectors.

Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.


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