Dow Jones Futures: Stock Market Rally Awaits Fed Pivot Signals; AMD, Devon Move On Earnings

Dow Jones futures were little changed overnight, along with S&P 500 futures and Nasdaq futures, with the focus on Wednesday’s Federal Reserve meeting and whether to confirm whether policymakers will destroy the Fed’s hopes of a pivot.




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Stocks traded lower than early gains on Tuesday as stronger-than-expected economic data was not what the Fed wanted to see. Megacap technology continues to weigh on indexes, especially the Nasdaq. Amazon.com (AMZN) and parent Google alphabet (GOOGL) has dropped to new bear market lows apple (AAPL) and Microsoft (MSFT).

Advanced Micro Devices (AMD), a lithium producer Livent (LTHM), a drug dealer McKesson (MCK), Paycom Software (PAYC), and a shale oil and gas producer Devon Energy (DVN) was the overnight earnings headliner.

AMD stock rose despite weak results. Livent has declined as revenue growth hasn’t been so hot. Devon Energy Ltd’s dividend payout ratio. PAYC stock rose higher on strong earnings while MCK stock remained flat after mixed results.

DVN stock is in the IBD 50.

At the same time Tesla (TSLA) opponent BYD (BYDDF) will report October sales soon, after subpar deliveries No (NIO), Li Auto (LI) and Xpeng (XPEV). BYD stock rose 2.6% on Tuesday, while Tesla stock closed up 0.1%, both from daily highs.

Meeting of the Fed

The Federal Reserve is expected to increase rates by 75 basis points for the next four meetings. But the market is divided on whether policymakers will raise rates to 50 or 75 in December.

Inflation data and various central bank actions around the world – including some hints from Fed officials – have bolstered expectations of a Fed pivot the smaller rise.

The Fed’s policy announcement is due at 2 p.m. ET Wednesday, with Fed Chair Jerome Powell’s news conference at 2:30 p.m. Investors will be looking for clues from the pivot. Fed. Powell may not want to give clear signals to maintain maximum flexibility.

The head of the Fed may add a warning about the reaction to the basic data. The October jobs report is due on Friday, after a stronger-than-expected September JOLTS survey.

Dow Jones Futures today

Dow Jones futures fell below fair value. S&P 500 futures and Nasdaq 100 futures were unchanged.

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

The stock market rallied on Tuesday. The major indexes opened higher, led by lower Treasury rates and unconfirmed talk that China may move to ease its zero-Covid policy.

But at 10 a.m. ET, September job openings showed a surprise, while the ISM manufacturing index remained above the 50 break-even level in October. Treasury yields rebounded and stocks fell rapidly.

The Dow Jones Industrial Average was down 0.2% in Tuesday’s market trade. The S&P 500 index fell 0.4%. The Nasdaq composite retreated 0.9%. The small-cap Russell 2000 rose 0.25%, its eighth straight advance.

Amazon stock rose 5.5%, hitting its lowest level since the end of April 2020 on Friday. AMZN stock has fallen for five sessions in large amounts.

Google stock fell 4.3% to its worst level since January 2021, after jumping 4.8% last week.

Apple stock fell 1.75%, turning from near the 200-day line to close below the 50-day. AAPL’s share price changed by +5.75% during the week.

Microsoft stock dropped 1.7%, not far from the market’s low. MSFT stock is down 2.6% in the past week.

The 10-year Treasury yield fell 3 basis points to 4.05%, but ended near the high. The 10-year yield fell to 3.955% shortly after the open, but found support again at the 21-day moving average. The US dollar pared early losses.

US crude oil prices rose 2.1% to $88.37 a barrel. Crude futures rose on hopes that China will adjust its Covid policies, as well as reports that the Saudis are wary of an Iranian attack. Natural gas futures fell 10% after rising nearly 12% on Monday.


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ETFs

Among the best performing ETFs, the Innovator IBD 50 ETF (FFTY) rose 0.6%. The iShares Expanded Tech-Software Sector ETF (IGV) has fallen 1.3% in the past year. The VanEck Vectors Semiconductor ETF (SMH) stock price has changed by +0.7% during the week.

Over the past month, the price of the SPDR S&P Metals & Mining ETF (XME) has changed by +1.5% during the week. The Energy Select SPDR ETF (XLE) rose 1%, with DVN stocks holding the top 10. The Health Care Select Sector SPDR Fund ( XLV ) rose 0.1%.

Over the past month, the price of ARK Innovation ETF has changed by +1.3% compared to the previous day.

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The Tesla Stock fund has a large holding in Ark Invest’s ETFs. Mass production of the Tesla Cybertruck will begin in late 2023, Reuters reported on Tuesday morning.

Cathie Wood’s Ark has a small stake in BYD stock. BYD’s EV and plug-in sales have surpassed Tesla’s total, although the American giant still leads in fully electric “BEV” deliveries.


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Basic income

AMD’s earnings and sales missed the outlook, after the chip giant reported preliminary earnings that were well below consensus. AMD also noted that Q4 revenue will fall slightly short of consensus, but could rise by around 14% vs. a year earlier.

AMD stock rose in overnight trading. Shares fell 0.7% to 59.66 on Tuesday. AMD stock bounced back a bit from its October 13 market low of 54.57, but not by much.

Nvidia (NVDA), which competes with AMD in graphics chips, has made some progress.

Living income has doubled, views have increased but revenue is down slightly even though it has doubled from a year earlier. The value of LTHM shares has been declining significantly for a long time. Shares lost 0.8% to 31.33 on Tuesday, turning below the 50-day line. Livet stock has a buy point of 36.48 cups, according to MarketSmith analysis.

ALB stock, along with similar charts, edged lower in limited after-hours trading. Giant lithium Albemarle (ALB) reports on Wednesday evening.

Devon Energy’s earnings are the highest, but the oil producer is cutting its dividend by 13%. DVN stock was slightly lower overnight. Shares fell 5 cents to 77.30 on Tuesday, holding the price of 75.37 a cup with the hand. DVN stock remains slightly extended from its 50-day uptrend line.

Paycom’s earnings looked upbeat, with strong revenue guidance as well. PAYC stock was little changed in extended trading. Shares retreated nearly 1% on Tuesday to 342.72, above the 50-day line and below the trendline. Strong post-earnings moves may suggest early entry. PAYC stock currently has 402.88.

McKesson’s earnings underperformed while revenue grew slightly. MCK stock has never traded in overnight activity. Shares fell 1.85% to 382.16 on Tuesday, but maintained a range from a buy point of 375.33. This flat base is part of a base-based pattern.

Cardinal Health (CAH), which reports Friday, was not trading after hours. CAH stock was extended slightly from a buy position.

Market Rally Analysis

Major indexes opened strongly, but retreated on stronger-than-expected economic data.

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The Dow Jones fell below the 200-day line, while the Russell 2000 moved toward the level. The S&P 500 is still holding the 50-day line, while the Nasdaq is hitting resistance near that area.

Much of Tuesday’s weakness reflected weakness in AMZN stocks, Google and other megacaps.

The Invesco S&P 500 Equal Weight ETF was up +0.2% for the week.

The stock rally led to declines in the NYSE and Nasdaq.

Investors should not think too much about the activity of the stock market on Tuesday, ahead of the announcement of the Fed meeting and the comments of the head of the Fed Powell.

But major indexes and major stocks rose in large part in anticipation of the Fed’s pivot. If Powell gives a hawkish surprise, the stock market rally could see a big sell-off.

Tuesday’s stock market and Treasury moves may pale next to the Fed’s comments.

Post-Fed sentiment may continue, possibly reverse, on Thursday. Friday’s jobs report could also rattle the market.

Major stocks showed mixed action, with heavy income still leading individual names higher or lower.


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What to do now

The stock market rally looks good from a technical standpoint, despite Tuesday’s pullback.

Investors may hold off on raising interest rates until the Fed’s rate hike and Powell’s comments. They may choose to delay the notification until Wednesday afternoon depending on the tolerance.

If the Fed’s meeting is like the earnings report, don’t forget the actual earnings.

Earnings aren’t as volatile as last week’s megacap releases, but they still have a huge impact on individual stocks.

The coming days will be key to the rally. So get your watch list ready. Always focus and ready to add or reduce brightness.

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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