Dow Jones futures rose moderately overnight, along with S&P 500 futures and Nasdaq futures. The stock market shook on Wednesday after the Federal Reserve raised interest rates by the most since 1994, but rose after Fed chief Jerome Powell signaled that politicians could raise interest rates by a little less at the meeting. Fed at the end of July.
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Government bond yields fell sharply on Wednesday after hitting multi-year highs on Tuesday.
Enphase Energy (ENPH), Harmony Biosciences (HRMY), AutoNation (AN), Ulta Beauty (ULTA) and Onsemi (ON) are five monitoring actions. They are all in consolidation, staying above or near their 50-day moving averages, with their relative lines of force at or near peaks.
Availability ON is on the IBD Leaderboard watch list. Shares of AN and Harmony Biosciences are on IBD 50. AutoNation is the stock of IBD for Wednesday.
Tesla (TSLA) recovered solidly on Wednesday, even when the National Highway Traffic Safety Administration said the EV giant was dominating accidents involving driver assistance systems.
Dow Jones futures today
Dow Jones futures rose 0.4% to fair value. S&P 500 futures rose 0.4% and Nasdaq 100 futures rose 0.5%.
Crude oil prices in the United States rose slightly.
Bitcoin traded more than $ 22,000 on Wednesday after hitting a new 18-month low of $ 20,087.90 earlier this week.
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.
Fed meeting
Politicians voted to raise interest rates by 75 basis points for the first time since 1994, at the end of the two-day Fed meeting, to a range of 1.5% -1.75%.
This came after the May 10 consumer price index showed that inflation had unexpectedly risen to a 40-year high of 8.6%.
Speaking at a press conference after the policy meeting, Fed Powell’s chief said the central bank was raising interest rates “expeditiously”, deciding to increase the “preload”. He said “inflation is too high” and labor markets are very tight.
But Powell said the Fed could raise interest rates by 50 or 75 basis points at the Fed’s meeting in late July. He also stressed that the policy would be “sensitive and flexible”. Prior to these comments, markets had fully valued 75 basis points at next month’s meeting, according to CME FedWatch. Markets still see a 70% chance of moving from three-quarters of the points at the end of July.
All Fed employees see interest rates rise to at least 3% by the end of the year, with an average of 3.4%. They see 3.8% by the end of 2023.
The central bank is already reporting 5.2% inflation this year, measured by the consumer price index. That’s up from its 4.3% target in March and 2.6% last December.
Politicians expect their preferred indicator of inflation, the core PCE index, to fall to still-high growth of 4.3% in the fourth quarter, slowing to 2.7% by the end of 2023.
The Federal Reserve and the head of the Fed 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 confidence. On the other hand, Powell and his fellow politicians do not want to crush the economy. A surprising drop in retail sales was among several weak economic reports on Wednesday.
The central bank won over Wall Street for at least one afternoon. The main indexes, which fell to mixed after the Fed raised interest rates and when Powell began to speak, rose to peaks during the day as the Fed’s “flexible” boss left open the possibility of moving halfway. Shares closed at their best, but were still solidly or sharply higher.
Government bond yields fell sharply after Powell’s comment of 50 or 75, especially for the two-year yield.
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Stock market Wednesday
The stock market shook after the announcement of interest rate hikes, but recovered after Powell’s comments.
The Dow Jones Industrial Average rose 1% in stock trading on Wednesday. The S&P 500 rose 1.5%. The Nasdaq index jumped 2.5%. Russell 2000 with small capitalization grew by 1.5%
Yields on 10-year government bonds fell 17 basis points to 3.31%. The two-year yield, more closely linked to changes in Fed interest rates, fell 20 basis points by 3.23%.
US crude oil prices fell 3% to $ 115.31 a barrel. Natural gas prices rose moderately after falling 16% on Tuesday.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) closed unchanged, while the Innovator IBD Breakout Opportunities ETF (BOUT) fell 0.2%. The iShares Expanded Tech-Software Sector ETF (IGV) jumped 2.65%. VanEck Vectors Semiconductor ETF (SMH) advanced 1.8%.
The SPDR S&P Metals & Mining ETF (XME) was up 2.1% and the Global X US Infrastructure Development ETF (PAVE) was up 0.8%. The US Global Jets ETF (JETS) rose 1.55%. SPDR S&P Homebuilders ETF (XHB) rose 0.3%. Energy Select SPDR ETF (XLE) fell by 2.2% and Financial Select SPDR ETF (XLF) rose by 1.1%. The SPDR in the health sector (XLV) increased by 1%.
Reflecting more speculative stock histories, the ARK Innovation ETF (ARKK) jumped 6.6% and the ARK Genomics ETF (ARKG) 5.2%. Tesla shares remain the leading ETFs in Ark Invest.
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Watching actions
Shares of ENPH jumped 5% to 188.48 on Wednesday, recovering from its 50-day and 200-day lines. The manufacturer of solar inverters came out of the double-bottomed base as part of a larger consolidation on June 2nd. Record 193 is no longer valid. Shares of ENPH formed a handle with a buying point of 217.33, just above the highest level since June 8 during the day.
Shares of HRMY rose 0.3% to 44.61, leaving its 50-day line, but reduced earnings during the day. Harmony Biosciences has a base for a cup with entrance 54.10. But it takes another day to form a handle, lowering the buying point to 47.21.
Shares of AutoNation turned lower on Wednesday, falling 1.45% to 113.40 to close just below its 50-day and 200-day lines. The shares of AN are in long consolidation with a buying point of 133.58. But investors could use the resistance just over 126 as an early entry. Last Friday, the giant used car dealer reached 126.14 during the day, almost peaking at 126.39 in early May before turning lower.
Shares of Ulta Beauty rose 3.3% to 405.61, regaining the 50-day line after gaining support for the 200-day line earlier this week. ULTA shares flirted with a point for buying a glass with a handle of 426.93 last week before falling back. A new record on the handle of 429.58 is in play.
Shares of Onsemi rose 2.45% on Wednesday to 58.04, rising from its 50-day and 200-day lines. At the end of May to the beginning of June, the shares of ON rose from 50-day / 200-day lines to 67.19 on June 8, moving to 71.25 consolidation point for purchase. But the chipmaker fell back. This created a bit of a messy manipulator with record 67.29. The entry also coincides with a trend line of declining peaks.
Tesla shares
Shares of Tesla jumped 5.5% to 699 on Wednesday, still below its 21-day line. Shares hit an 11-month low of 620.57 on May 24.
On Wednesday, the National Road Safety Administration announced accidents involving driver assistance systems. Tesla’s autopilot cars were involved in 273 crashes from July 20, 2021 to May 21, 2022, out of a total of 392. The main reason is that there are so many Tesla electric cars on the road using autopilot.
Tesla has long argued that autopilot improves safety, but does not use comparisons between apples and apples in terms of road type, weather conditions and more. NHTSA recently expanded its autopilot probe while investigating a “phantom stop” in Tesla vehicles.
Separately, CEO Elon Musk tweeted Wednesday that he was leaning in support of Florida GOP Gov. Ron DeSantis for president in 2024.
On Thursday, Musk will hold a City Hall with Twitter staff (TWTR), addressing staff for the first time since a $ 44 billion deal and a $ 54.20 share a share on social media in late April. Musk, who denied due diligence rights, has since complained about fake Twitter accounts. Musk may want to withdraw from the deal or significantly reduce the price.
Shares of Twitter rose 2.1% to 37.99 on Wednesday.
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Market Analysis
The stock market closed higher on Wednesday after the Fed raised interest rates and Powell’s comments.
An attempt to rally on the stock exchange is currently underway. Wednesday marked the second day of Nasdaq’s rally after technology indexes rose on Tuesday. But the rally attempt is not a green light.
After fierce losses in recent days, the main indices are far below their 10-day moving averages, not to mention more significant resistance.
However, investors will soon have to look for the next day to confirm the new upward trend. However, confirmed market increases do not always work, as 2022 showed.
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What should we do now
Wednesday’s action was positive, but a decent day didn’t make much sense, especially at the bear market.
If there is a next day, investors can enter the market on their toes, slowly adding exposure if conditions start to improve.
In the meantime, be alert and be prepared. Build these watch lists with potential leaders.
Enphase, Onsemi and the other stocks you need to watch are fighting on an absolute basis, despite their strong relative strength. There is no guarantee that these names will hold up relatively well or that they will lead to the next real uptrend.
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.
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