Dow Jones futures fall: Markets rally strongly as Powell hints at slow Fed rate hike, but watch out for ‘Day 2’

Dow Jones futures fell early Thursday, with S&P 500 futures and Nasdaq futures on the meta platform and Qualcomm reporting earnings.




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Stock market rally on Wednesday saw big gains after the Federal Reserve raised rates by 75 basis points for a second straight meeting. Fed chief Jerome Powell indicated that policymakers are looking to slow the pace of tightening down the road, even as the economy remains stressed and inflation-focused.

Major indices were already at moderate to vigorous highs, driven by positive reactions to earnings from Microsoft ,msft), google parent Alphabet ,Google) And Enphase Energy ,ENPH,

Sen. Joe Manchin, DWV announced a deal late Wednesday with Senate Majority Leader Chuck Schumer on a settlement bill with tax, climate and energy provisions. The deal, which may face several hurdles, includes a 15% minimum corporate tax rate, drug price controls, increased Obamacare subsidies, and solar and green energy provisions. Among the winners were solar and fuel-cell stocks.

fed meeting

Federal Reserve raised rates By 75 basis points on Wednesday afternoon, raising the rate to a target of 2.25%-2.5%.

The central bank slightly lowered its outlook on the economy, noting that “spending and production have softened.” But “job gains have remained strong” while “inflation remains high.”

Fed chief Powell, speaking after the Fed meeting, stressed that policymakers are “strongly committed to bringing inflation down.” He said the economy is “resilient” with labor markets “extremely tight.”

Powell said it would be “appropriate” for the Fed to slow rate hikes as they become “more restrictive”. He expects Fed rates to be “moderately restrictive” by the end of the year, which he said will be in the 3%-3.5% range.

Following the Fed rate hike and Powell’s comments, the likelihood of a 50-basis-point move on Sept. 21 rose to 56% from about 50-50 before the Fed’s announcement. In addition, markets expect a modest move in the last two Fed meetings of the year, to end the year around 3.25%-3.5%.

major earnings

meta platform ,meta) And Qualcomm ,qcom) major earnings headline with chip-equipment maker Lam Research ,lrcx, service now ,Now he, O’Reilly Auto ,Took more, ford motor ,F) And Teladoc Health ,TDOC) also reporting late Wednesday night.

Meta retraced solidly after stock Facebook parents missed out on earningsreported its first revenue decline and was less directed.

Qualcomm stock fell marginally overnight weak revenue guidance,

Shares of LRCX declined slightly after better-than-expected quarterly results.

The stock now fell as the business software giant cut subscription revenue guidance after trailing Q2 views slightly.

Ford stock easily popped up after seeing, a . with 423% EPS profit,

ORLY stock fell after lower earnings and a drop in guidance from the auto parts retailer.

TDOC stock fell after a telemedicine expert guided it to a full-year target low. Teladoc reported a bigger Q2 loss due to a larger impairment charge, though revenue was slightly green.

During this, best Buy ,BBY) cut its full-year forecast, citing weak consumer spending amid high inflation. BBY shares declined marginally.

early Thursday, Merck ,MRK) beating Q2 ideas pfizer ,PFE) is on tap before open. Pfizer stock is nearing a trendline entry. Merck stock, changed little early Thursday, has been trading near its 50-day line as it consolidates for the past two months.

late Thursday evening, Apple ,AAPL) And Amazon.Com ,AMZN) are on tap. Apple stock is marginally below its 200-day line after moving above its 50-day high earlier this month. AMZN stock is also trading slightly above its 50-day line.

Spirit Airlines-JetBlue Deal

Spirit Airlines ,save) agreed to a takeover by jetblue ,Blue) after terminating its merger agreement with Frontier Group ,ULCC) Last night. It comes after months of debate as JetBlue offered significantly more but Spirit worried about the high risk of antitrust rejection.

JetBlue will pay $33.50 in cash per share, with the deal having a $7.6 billion enterprise value. Save holders will receive $2.50 per share once the merger is approved, plus 10 cents per share starting in January, as the agreement goes through regulatory review.

Save stock rose 3.7% to 25.30. The stock of JBLU was not trading at present. The stock of ULCC gained 6.5 per cent.

dow jones futures today

Dow Jones futures fell 0.1% versus fair value. S&P 500 futures dropped 0.3%. Nasdaq 100 futures were down 0.6%.

Crude oil prices up 2%

The Commerce Department will release second-quarter GDP at 8:30 a.m. ET. Economists expect 0.5% annualized gains after a 1.6% decline in Q1. A subsequent GDP decline would not officially signify a US recession. National Bureau of Economic Research economists rule on changes in the business cycle, usually long after the fact.

Remember that overnight action dow futures and nowhere else necessarily translates into actual business in the next routine Share Market session.


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stock market rally

The stock market rally rose on Wednesday, led by big-tech earnings, then gains on Fed rate hike decisions and Fed chief Powell’s comments.

The Dow Jones Industrial Average rose 1.4% on Wednesday stock market trading, The S&P 500 index rose 2.6%. The Nasdaq Composite gained 4.1%. The small-cap Russell 2000 rose 2.3%.

US crude oil prices rose 2.4% to $97.26 a barrel. Natural gas futures fell 3.4%.

ETFs

in the middle Best ETFsThe Innovator IBD 50 ETF (ffty) rose 2.3%, while the Innovator IBD Breakout Opportunities ETF (boxing) climbed 1.1%. iShares Extended Tech-Software Sector ETF (tub) jumped 4.3% with Microsoft stock a major component. VanEck Vector Semiconductor ETF (smh) jumped 4.7% with QCOM stock and Lam Research leading the way.

SPDR S&P Metals & Mining ETF (XME) 3.4% and the Global X US Infrastructure Development ETF (expansive) advanced 2.1%. US Global Jets ETF (jet) rose 3.1%. SPDR S&P Homebuilders ETF (XHB) climbed 2.1%. Energy Select SPDR ETF (XLE) 2.3% and the Financial Select SPDR ETF (45) 1.5%. Health Care Select Sector SPDR Fund (xlv) with Pfizer and MRK stock the major holdings up 0.6%.

Reflecting the more speculative story stocks, the ARK Innovation ETF (arkk) 6.7% and the ARK Genomics ETF (ARKG) rose 3.9%.


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meta earning

Facebook-parent meta platform earnings and revenue fell, with the social media giant also guiding lower on Q3 revenue.

Meta stock fell 5.5% in overnight action. Shares rose 6.55% to 169.58 on Wednesday, driven by Google’s earnings and a general market rally. Meta stock was sold 13% in last three sessions after weakening crack ,crack) Reports and Guidance.

Qualcomm’s earnings

Qualcomm’s earnings and revenue outpaced fiscal Q3 EPS and revenue considerations slightly, though gross margin was slightly lighter. The wireless chip giant also lowered guidance on Q4 revenue.

QCOM stock sank 3.5% in extended trading. The stock rose 2.3% to 153.42 in Wednesday’s trade, falling short of the 200-day line.

market rally analysis

The stock market’s rally on Wednesday took a major hit after some notable losses in the past few sessions. The Nasdaq and S&P 500 bounced back from near their 50-day lines.

But watch for a day two response. Major indices also rose after the last two Fed meetings, but then sold out the next day.

While investors gave little hints of Powell on Wednesday, they can focus on why Fed rate hikes may start off slow, namely a weakening economy. This makes that Q2 GDP report particularly important.

Meanwhile, a rise above last week’s high will be the next test for the major indices, followed by a peak in early June.

Still not a lot of stocks to buy. Growth stocks can break out of three-day consolidations, but often within ugly charts.

It was encouraging to see Microsoft and Google turn strong despite missing out on the earnings scene. combat-sleepy ,TPX) bounced despite weak results and low guidance.


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What should we do now

With the Fed meeting and many big earnings out of the way, investors facing some extreme uncertainty are fading away. The market rally so far this week full of news is definitely positive.

Still “two days” the Fed meeting could be reversed. In addition, Apple and many others are still reporting this week along with GDP data and other major economic reports.

In the event of a limited number of good-looking stocks, investors may wish to increase exposure through broad market or sector ETFs.

But if the market continues to correct, buying opportunities will present themselves and new positions will yield solid gains. So work on your watchlist.

Reading big picture Every day to keep pace with market direction and major stocks and sectors.

Please follow Ed Carson on Twitter @ibd_ecarson For stock market updates and much more.

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