Dow Jones futures rose slightly overnight, along with the S&P 500 and Nasdaq futures. Advanced Micro Devices (AMD) and Livent (LTHM) topped another busy night of after-hours earnings. But the focus of investors is on the decision of the meeting of the Federal Reserve on Wednesday.
x
This is the second day of experience in the stock market rally, but investors are not making big bets on Fed interest rate hikes.
Shares of AMD, Livent and shipping company Matson (MATX) were among the notable earnings reports after the close. AMD is slightly above the lowest levels for 2022, but their profits and guidance are important for the semiconductor space. LTHM shares kick off gains for electric vehicle battery companies, with lithium giant Albemarle (ALB) due on Wednesday and rare earths miner MP Materials (MP) on Thursday. MATX shares are among the ship’s stocks trying to make a profit.
LNG leader Cheniere Energy (LNG) and Regeneron Pharmaceuticals (REGN) are available early Wednesday. The reserves for liquefied natural gas are being created in a new base. The shares of REGN recorded a solid gain from a traditional purchase and early entry, although they did not fall apart.
There were some positive changes in profits on Tuesday. Shares of LPX and Atkore (ATKR) showed buy signals with strong results.
LNG stocks are in the IBD rankings. REGN shares are at IBD 50. Louisiana-Pacific (LPX) was IBD shares on Tuesday.
The video embedded in this article discusses Tuesday’s market action and the Fed’s upcoming announcement. It also analyzes the shares of Louisiana-Pacific, ATKR and ZIM Integrated Shipping (ZIM).
Dow Jones futures today
Dow Jones futures rose 0.25% to fair value. S&P 500 futures rose 0.3%. Nasdaq 100 futures rose 0.4%.
Remember that the action at night in Dow futures and elsewhere does not necessarily turn into actual trading in the next regular session of the stock market.
Decision of the Fed meeting
The two-day meeting of the Federal Reserve ended on Wednesday with the announcement of Fed policy at 14:00 ET and the press conference of Fed chief Jerome Powell at 14:30 ET. The Fed will almost certainly raise interest rates by 50 basis points, to a range of 0.75% -1%. Politicians are also expected to approve the reduction in the balance, which will increase in three months to about $ 95 billion a month.
The real question is whether the statement by the Fed and Fed chief Powell will pave the way for 75-point raises in June and July. Markets are already pricing with a high chance of a huge increase in Fed interest rates, as politicians are too late to take aggressive action against inflation.
Inflation may peak in annual profits, but may remain high for a long time as workers become accustomed to higher wage increases and companies may pass on higher costs.
The Fed also needs to worry about the risks of a recession from aggressive monetary policy, while the suspension of work with Covid in China and the Russian war in Ukraine are dampening global economic activity while disrupting supply chains.
Join the IBD experts as they analyze the actions that can be taken in the stock market rally on IBD Live
Stock market rally
The stock market rally did not have much direction before the Fed’s meeting was announced, and ended in small profits.
The Dow Jones Industrial Average rose 0.2% on Tuesday. The S&P 500 rose 0.5%. The Nasdaq index rose 0.15%. Russell 2000 with a small capitalization grew by 0.9%.
US crude oil prices fell 2.6% to $ 102.41 a barrel.
Yields on 10-year government bonds fell 4 basis points to 2.96% after hitting a three-year high of 3% on Monday.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 1.4%, while the Innovator IBD Breakout Opportunities ETF (BOUT) rose 2.3%. The iShares Expanded Tech-Software Sector ETF (IGV) fell 0.8%. The VanEck Vectors Semiconductor ETF (SMH) rose 0.8%, with shares of AMD holding significant.
The SPDR S&P Metals & Mining ETF (XME) jumped 2.3% and the Global X US Infrastructure Development ETF (PAVE) rose 0.8%. The US Global Jets ETF (JETS) rose 0.7%, away from the sale of shares for hotels and online reservations. The SPDR S&P Homebuilders ETF (XHB) rose 1.15%. The Energy Select SPDR ETF (XLE) added 2.8% and the Financial Select SPDR ETF (XLF) 1.3%. SPDR Fund for Selected Healthcare Sector (XLV) increased by 0.3%
Reflecting more speculative stock histories, the ARK Innovation ETF (ARKK) fell 0.9% and the ARK Genomics ETF (ARKG) fell 0.3%.
Five best Chinese stocks to watch now
Key profits
AMD’s earnings exceeded forecasts, with revenue up 71%. The chip giant also targeted sales for the second quarter. Shares of AMD jumped 7% overnight. Shares rose 1.4% to 91.13 on Tuesday, but are well below key moving averages. Shares of AMD recently reached their worst levels since last June.
Livent’s profits easily outperformed, while the lithium miner also gave bullish guidance. Shares of LTHM jumped 17% overnight, signaling a big move back over its 50-day and 200-day lines. Shares rose 2.6% on Tuesday to 21.92. At the end of April, Livent shares fell below their 50-day and 200-day lines, but have not bottomed out since early March. Shares of ALB, which reported on Wednesday night, rose 3% in extended action after rising 3% in Tuesday’s session.
Matson’s profits are slightly better, while revenue simply missed out after container shipping company gave optimistic preliminary figures last month. Shares of MATX rose moderately with prolonged action. Shares jumped 3.4% on Tuesday to 91.36, recovering from its 200-day line.
EV “Freak-out Moment” overhangs lithium, rare earth elements
Market rally analysis
Tuesday’s modest gains were probably perfect for a big decision at the Fed meeting.
The Fed’s market response to rising interest rates and guidance will be key, but don’t be surprised by the big fluctuations on Wednesday afternoons and beyond.
Tuesday marked the second day of a stock market rally. In a few days, investors may start looking for a day to track one or more of the major indexes to confirm the new market rally.
But we are not there yet.
Sectors for viewing
Energy reserves are being re-formed, especially those with exposure to refineries or natural gas, such as Exxon Mobil (XOM) or Cheniere Energy.
Fertilizer’s game recovered from Tuesday’s 50-day line after gaining Mosaic (MOS) and Nutrien (NTR), albeit after some sharp declines to that key level.
Wooden companies and some games for construction products look good. Louisiana-Pacific and Atkore made upward gains on Tuesday as Weyerhaeuser (WY), Boise Cascade (BCC) and Beacon Roofing Supply (BECN) adjusted.
Ocean shipping companies had a strong session. Dry bulk leaders Star Bulk Carriers (SBLK) and Golden Ocean Group (GOGL) did well, while container-focused Matson bounced back from its key support and ZIM shares regained their 50-day line.
These are encouraging signs. And maybe they will work if the stock market rally gains momentum. But other groups have looked promising in recent weeks, such as REITs, medical products and travel, and they have failed or failed.
Meanwhile, growth stocks still look awful. Apple (AAPL) and Tesla (TSLA) are fighting over their 200-day moving average. Other megacaps look worse. Meanwhile, the moderate decline in IGV and ARKK signals that even lucrative hunters are still not jumping to aggressive growth.
Market Time with IBD’s ETF Marketing Strategy
What should we do now
While the market rally attempt is underway, it is not time for much exposure, if any.
If the stock market rises due to the Fed’s rising interest rates, investors may consider eating one or two stocks, or perhaps a broad-sector ETF. But you must be ready to return quickly.
There is nothing wrong with waiting for the next day. Even when the market returns to a confirmed uptrend, you will not want to rush to increase exposure. Gradually expand your holdings as the market intensifies and exit quickly if the rally fails.
For now, make these watch lists – in pencil, not ink. REITs, miners and medical device companies on your watch lists a week or two ago should probably be replaced with new names. But this is not a futile effort. If you have an up-to-date watch list when market trends become favorable, you will be in a great position to jump into the new leaders early.
Read the Big Picture every day to stay in line with market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
YOU MAY ALSO LIKE:
Why this IBD tool simplifies the search for the best stocks
Grab the next big payout with MarketSmith
The best growth stocks to buy and watch
IBD Digital: Unlock first-class IBD stocks, instruments and analysis today
Tesla vs. BYD: China EV Giant Power stopped Covid
Add Comment