Dow Jones futures were little changed overnight, along with S&P 500 futures and Nasdaq futures. The stock market rally slumped Thursday morning on the back of the Fed’s hawkish data, extending Wednesday’s losses. However, the major indices rebounded from some key levels to close slightly lower.
Treasury yields rebounded while crude oil prices fell.
apple (AAPL), Microsoft (MSFT) and the parent of Google the alphabet (GOOGL), the only three trillion dollar stocks on US stock exchanges, rose after testing support at the 50-day moving averages. while, Tesla (TSLA) retreated towards bear market lows.
Investors should be careful in the current market, adding exposure slowly and willing to quickly take profits and cut losses.
Applied materials (AMAT), Palo Alto Networks (Bannu), The field is empty (CLFD) and Ross Stores (ROST) topped all EPS and sales viewpoints late Thursday, with strong guidance also overall.
AMAT stock rose modestly overnight, poised to return above its 200-day line. PANW stock has popped up, indicating a move above 50 days. CLFD stock rallied in the extended trade, looking to bounce above the 50-day line as it attempts to build the right side of the base of a double bottom. ROST stock rose towards its 2022 highs after closing in the range from a bottom base.
JD.com (JD) f I reckon (ATKR) early Friday.
JD shares jumped 7.5% on Thursday, reaching the 200-day line, after that. Ali Baba (Papa) Earnings early Thursday. ATKR stock fell 3.5% on Thursday, but was comfortably above its 200-day line as it works on the right side of a deep cup base.
Dow jones futures today
Dow futures fell 0.1% against fair value. S&P 500 futures were flat. Nasdaq 100 futures rose 0.1%, with AMAT Technologies and PANW stocks lifted.
Crude oil futures rose 1%.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
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Stock market rise
The stock market rally fell sharply at the open as St. Louis Fed President James Bullard and Kansas City Fed President Esther George made hawkish remarks. Major indices rebounded to close flat to slightly lower.
The Dow Jones Industrial Average was just below breakeven in stock market trading on Thursday. The S&P 500 fell 0.3%. The Nasdaq Composite fell 0.35%. Shares of the small-cap Russell 2000 company fell 0.9%.
Apple shares rose 1.3%. Microsoft shares returned two cents, and Google shares fell 0.5%. They all tested their 50-day streaks during the day. They are all below the 200-day lines with no obvious buy points. Tesla stock fell 2%, nearing the bottom of the November 9 bear market.
US crude oil prices fell 4.6% to $81.64 a barrel. In addition to the Fed’s hawkish rhetoric, he blamed Beijing’s renewed emphasis on “non-coronavirus” policies. China’s State Council has reportedly warned cities to avoid “irresponsible easing” of Covid-19 measures, just a week after that high-profile body backed easing rules. On Wednesday, Peking University closed on one case. Covid infections have increased over the past two weeks in China.
The hawkish Fed raises Treasury yields
The 10-year Treasury yield rose 8 basis points, to 3.77%.
St. Louis Fed Bullard said the federal funds rate, currently at 3.75%-4%, should probably rise to 7%, well above the consensus of around 5%. George of the Kansas City Fed said a recession may be necessary to bring down inflation.
One of the reasons policy makers look to hawks is to raise market prices and curb the stock market rally. If financial conditions cool down significantly to the hopes of the pivotal Fed, inflation could remain higher for longer, forcing the Fed to tighten policy rates further.
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Exchange Traded Funds
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) was down 0.1%. The iShares Expanded Tech-Software Sector (IGV) ETF (IGV) fell 2.65%, even with MSFT shares a major component. PANW stock is also the property of IGV. The VanEck Vectors Semiconductor ETF (SMH) fell 0.5%, with AMAT stock owning SMH of note.
The SPDR S&P Metals & Mining ETF (XME) was down 2.1%. The SPDR S&P Homebuilders ETF (XHB) fell 2%. The Energy Select SPDR ETF (XLE) was down 0.5% and the SPDR Healthcare Sector Fund (XLV) was down 0.2%.
Reflecting more speculative story stocks, ARK Innovation ETF (ARKK) fell 2.8% and ARK Genomics ETF (ARKG) 3.2%. TSLA stock is a major holding via Ark Invest’s ETF.
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Stock market rally analysis
The stock market rally tested some key levels at the open on Thursday. The Nasdaq found support just above the 50-day moving average. The S&P 500 fell to short-term highs in October for a brief period. Russell 2000 rebounded from near the 21-day streak. S&P 400 MidCap held the 200-day streak.
It can be said that the market was about to decline after a strong wave, and the S&P 500 index approached the 200-day line. Meanwhile, the market rally found support on Thursday in important areas. So the past two days have been somewhat normal and constructive for the major indices – assuming they can hold Thursday’s lows and eventually move higher.
However, the market pulled back from Tuesday’s high to Thursday’s low, which led to a number of stocks breaking out or making early entries in the past two days. Many of those entries tested or failed completely. Some bounce back while others may. In some cases, previous purchase points are still valid, while others may need to set new handles or other entries. Still others may struggle for a long time.
A variety of stocks and sectors show interesting actions.
In all of these cases, a healthy market recovery will be key.
Apple, Microsoft and Google stocks are not market leaders and may not be for some time. But if they can avoid being late, that would be a huge help.
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What are you doing now
The stock market rally showed encouraging action on Thursday. The overall trend has been higher over the past several weeks. But it was a winding road for investors.
Anyone who bought the shares after the follow-up day on Oct. 21 would likely be underwater by early November. While the indices rose on November 10 on the back of the CPI report, the Nasdaq, S&P 500, and Russell 2000 have been steadily lower since then.
The stock market rally remains volatile, with sector turnover and large intraday swings complicating matters. Buying opportunities have often been the moment the market pulls the rug out from investors.
So keep exposure. Add exposure gradually – and be prepared to reduce exposure due to market conditions or individual stock selling rules.
Keep your watchlist updated so you can spot emerging leaders.
Read the big picture every day to stay in sync with market trend, leading stocks and sectors.
Please follow Ed Carson on Twitter at @employee For stock market updates and more.
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