Dow Jones futures fell slightly after hours, along with S&P 500 futures and Nasdaq futures, with the focus on Wednesday’s Federal Reserve meeting announcement. Advanced Micro Devices (AMD) and SNAP stock headlined the night’s gains.
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The stock market rebounded on Tuesday, retracing Monday’s decline.
Before the Fed’s announcement on Wednesday afternoon, there will be several important economic reports and OPEC+ meeting in the morning.
AMD and parent Snapchat of (SNAP) reported after the conclusion.
AMD’s revenue and earnings slightly beat the outlook. The chipmaker sees Q1 revenue down 10%, worse than consensus but better than expected. AMD stock rose slightly after hours. Shares rose 3.7% to 75.15 on Tuesday. AMD stock is working on a low basis at a price of 79.33. It’s below the 200-day line, but the actual breakout involves a breakout of that key level.
AMD competitors Nvidia (NVDA) has moved lower in recent trading. NVDA stock rose nearly 2% to 195.37 on Tuesday, trading in a short cup.
Snap’s revenue looked high, but revenue was lacking. The social network sees Q1 revenue tracking at a 2%-10% decline. SNAP stock fell overnight. Shares rose 4.2% to 11.56 on Tuesday.
Snap income and directions Meta Platforms (META) and Pinterest (PINS). Facebook parents Meta Platforms (META) reports Wednesday night, with Pinterest (PINS) will end next Monday. META stock has fallen somewhat of late, after closing below its 200-day line. PINS stock is down slightly. Pinterest has a narrow three-week entry above and below its moving average.
The video embedded in this article discussed Tuesday’s rally and the Fed’s upcoming rate hike decision, and analyzed Nvidia stock, Arista Networks (ANET) and here and there (ETSY).
China EV Sales
On Wednesday, Tesla China competed No (NIO), Li Auto (LI) and Xpeng (XPEV) will report a January launch. The New Year holidays, as well as the Covid pandemic, took a toll on sales last month. So it is difficult to draw conclusions about February and beyond, especially at the end of February Tesla (TSLA) discounts that are still considered by its competitors.
Nio and Xpeng stocks are in the lowest base, but below the 200-day line. Li Auto is fighting for 200 days. EVs and giant batteries BYD (BYDDF) is posting a strong entry from the 200-day line, with January trading this week. Tesla stock is up nearly 41% in January, above the 50-day line, but has no clear buy point.
Fed rate hike
The Federal Reserve is set to slow rate hikes for the second straight meeting, increasing the federal funds rate by a quarter of a point at 2 pm ET Wednesday, to 4.5% – 4.75%. That follows a half-hour increase in December after four straight 75-basis increases in November.
The market is highly expecting a Fed rate hike at the end of March, to 4.75%-5%. But investors tend not to be bullish anymore.
Therefore, the central bank advises on inflation, inflation and the economy will be important. Will the Fed’s policy statement keep the language waiting for “continued hikes?”
Fed chief Jerome Powell, speaking at 2:30 pm ET, is sure to emphasize the Fed’s commitment to keeping interest rates high to keep inflation down. But with rate hikes slow and nearing a break, Fed chief Powell may be more cautious, keeping the central bank’s options open.
Before the announcement of the Fed meeting, investors will receive other economic data. The ADP jobs report for January will be released at 8:15 a.m. ET, along with December job openings and January’s ISM manufacturing index at 10 a.m. ET.
On Friday, the January employment report is due. Before the March meeting, the Fed will receive the February jobs report, as well as the January and February inflation reports.
On Tuesday, the labor price index was slightly lower than expected. The ECI, a broad measure of employee compensation, rose 1% in Q4, the third straight quarter of growth.
Dow Jones Futures today
Dow Jones futures fell 0.2% vs. S&P 500 futures were down 0.2%. Nasdaq 100 futures were down 0.4%.
Remember that overnight movements in Dow futures and elsewhere do not necessarily translate into actual trading in the next trading session.
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Stock Market Rally
Stock market stocks had a strong session, rebounding from Monday’s lows.
The Dow Jones Industrial Average rose 1.1% in Tuesday’s market trade. The S&P 500 index rose 1.5%. The Nasdaq composite jumped 1.7%. The small-cap Russell 2000 jumped 2.4%.
US crude oil prices rose 1.25% to $78.87 a barrel. OPEC+, which includes the oil cartel and major allies such as Russia, meets on Wednesday morning. The market expects no change in OPEC+ production quotas.
The 10-year Treasury yield fell 2 basis points to 3.53%, the ECI report added.
ETFs
Over the past month, the price of the Innovator IBD 50 ETF has changed by +2%. Shares of iShares Expanded Tech-Software Sector ETF changed by +1.44%. The VanEck Vectors Semiconductor ETF (SMH) rose 1.5%, with major stocks AMD and NVDA.
Shares of SPDR S&P Metals & Mining ETF (XME) changed by +1.15% during the week. Share price US Global Jets ETF (JETS) Over the past month, the price of the SPDR S&P Homebuilders ETF has changed by +4.8%. The Energy Select SPDR ETF (XLE) rose 0.9% and the Financial Select SPDR ETF (XLF) rose 1.4%. The Health Care Select Sector SPDR Fund ( XLV ) rose 1.3%
Over the past month, the price of the ARK Innovation ETF (ARKK) has changed by +3.7% and the ARK Genomics ETF has changed by -3.1%. Tesla stock is a major holding in the Ark Invest ETFs. Cathie Wood’s Ark also has a small stake in Tesla rival BYD’s stock.
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Market Rally Analysis
Stock market rallies picked up again on Tuesday, making Monday’s decline look like a typical break around key levels amid a strong advance.
The Nasdaq composite hit the 200-day line, around the December peak. The S&P 500 and Dow Jones edged higher, with the blue chip finding support near the 50-day line.
The Russell 2000 index retook all of Monday’s losses and then some, clearly above the 2022 highs.
A major index that decides to take off the highs by the end of 2022 will be a strong signal.
But the Fed meeting is looming on Wednesday. The rally is looking forward to an end to inflation in March or possibly May. Wednesday’s economic data and Friday’s jobs report will help the market interpret Fed chief Powell’s statement.
Don’t forget about salary. AMD reported last Tuesday. Meta Platforms is on Wednesday night and apple (AAPL), Amazon.com (AMZN) and parent Google alphabet (GOOGL) is on tap Thursday night, along with hundreds of others.
These earnings reports can damage major indexes and sectors and, of course, individual names.
Just as AMD takes the money from Nvidia stock and Snap moves Meta, Meta’s spending plan will affect the likes of Arista Networks and Pure Storage (PSTG). Amazon earnings could be a catalyst for Etsy stock. Apple’s revenue will drive the iPhone world while Google’s revenue will be driven by various businesses.
ANET and Pure Storage stocks are near the first entry, while Etsy, SwingTrader holding, is below the buy point.
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What to do now
The stock market is doing well, with strong ups and only minor downs. A large deposit triggers a buy signal that generally works. This is a good time to add to the exhibition.
Fed meeting announcements and Fed chief Powell could be catalysts for major market moves. But so are income and economic data. Investors should not be too aggressive in taking new positions over the next two days, although the technical picture of the market and specific stocks looks promising.
Remember that if you’re going to be aggressive getting into a stock, you have to be ready to get out quickly.
Work on your watch list together. Dozens of stocks are posting or flashing buy signals. Your eyes want to scan them, analyzing the potential target before pulling the trigger.
Read The Big Picture every day to stay in tune with the direction of the market and stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market reforms and more.
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