Dow Jones Futures: New Market Rally Awaits Fed Decision; AMD, Lithium Play Live Jump Let

The Dow Jones futures rose slightly overnight, along with the S&P 500 futures and Nasdaq futures. Advanced Micro Devices (AMD) and Lithium Play livant (LTHM) headlined another busy night earning hours later. But investors’ attention is focused on the decision of the Federal Reserve meeting on Wednesday.


It’s the second day of an attempted stock market rally, but investors aren’t betting big with Fed rate hikes on tap.

AMD Stock, Live and Shipping Firm matson (MATX) were one of the notable earnings reports after the shutdown. AMD is only a short walk from 2022 lows, but their earnings and guidance are significant for the semiconductor space. LTHM stock starts earnings for EV battery materials firms with lithium giant Albemarle (ALB) Due Wednesday and rare earth miners mp3 content (MP) on Thursday. MATX stock is one of the shipping stocks trying to bounce back in favor.

Early Wednesday, LNG leader Chenier Energy (LNG) and Regeneron Pharmaceuticals (REGN) are on tap. LNG stock being set up in the new base. REGN stock has posted solid gains from the traditional buy point and early entry, although it hasn’t broken out.

There were some positive earners on Tuesday. lpx stock and atkor (ATKR) gave buy signals on its strong results.

LNG stock is on the IBD leaderboard. REGN stock is at IBD 50. Louisiana-Pacific (LPX) was the IBD Stock for the day on Tuesday.

Tuesday’s market action and the announcement for the upcoming Fed meeting are discussed in a video embedded in this article. It also analyzed Louisiana-Pacific, ATKR stock and ZIM Integrated Shipping (ZIM).

dow jones futures today

Dow Jones futures advanced 0.25% versus fair value. S&P 500 futures rose 0.3%. Nasdaq 100 futures rose 0.4%.

Remember that overnight action in Dow futures and elsewhere does not necessarily entail actual trading in the next regular stock market session.

Fed meeting decision

The two-day Federal Reserve meeting ends Wednesday with a Fed policy announcement at 2 p.m. ET and Fed Chief Jerome Powell’s news conference at 2:30 p.m. ET. The Fed will almost certainly raise interest rates by 50 basis points, to a range of 0.75%-1%. Policymakers are also expected to get approval to shrink the balance sheet, which will increase over three months to about $95 billion a month.

The real question is whether the Fed’s statement and Fed chief Powell’s June and July meeting will pave the way for a 75-basis-point increase. Markets are already pricing in a strong opportunity for a Fed rate hike as policymakers take aggressive action of late versus inflation.

Inflation can peak in terms of year-on-year profits, but it can remain high in the long run, as workers get used to large wage increases and companies are able to pass on their higher costs.

The Fed also worries about recession risks from aggressive monetary policy, while China’s Covid shutdowns and Russia’s Ukraine war have cooled global economic activity, shaking up supply chains.

Join IBD experts as they analyze stock market rally actionable stocks on IBD Live

stock market rally

The stock market rally didn’t have much direction prior to the Fed meeting announcement, eventually closing with slim gains.

The Dow Jones Industrial Average rose 0.2% in Tuesday’s stock market trading. The S&P 500 index rose 0.5%. The Nasdaq Composite gained 0.15%. The small-cap Russell 2000 rose 0.9%.

The price of US crude fell 2.6% to $102.41 a barrel.

The 10-year Treasury yield fell 4 basis points to 2.96% after hitting a three-year high of 3% on Monday.

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) gained 1.4%, while the Innovator IBD Breakout Opportunities ETF (BOUT) gained 2.3%. The iShares Extended Tech-Software Sector ETF (IGV) retreated 0.8%. The VanEck Vector Semiconductor ETF (SMH) climbed 0.8%, with AMD stock a notable holding.

The SPDR S&P Metals & Mining ETF (XME) rose 2.3% and the Global X US Infrastructure Development ETF (PAVE) rose 0.8%. The US Global Jets ETF (JETS) advanced 0.7%, closing a sell-off in hotel and online booking stocks. The SPDR S&P Homebuilders ETF (XHB) rose 1.15%. The Energy Select SPDR ETF (XLE) added 2.8% and the Financial Select SPDR ETF (XLF) added 1.3%. Health Care Select Sector SPDR Fund (XLV) up 0.3%

Reflecting more speculative story stocks, the ARK Innovation ETF (ARKK) fell 0.9% and the ARK Genomics ETF (ARKG) 0.3%.

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major earnings

AMD’s earnings topped forecast with revenue up 71%. The chip giant also provided guidance on Q2 sales. AMD stock jumped 7% in the overnight action. Shares rose 1.4% to 91.13 on Tuesday, but are well below key moving averages. AMD stock recently hit its worst level since last June.

Live earnings easily outperformed views, while the lithium miner also gave bullish guidance. LTHM stock rose 17% overnight, indicating a major move above the 50-day and 200-day lines. The stock climbed 2.6% to 21.92 on Tuesday. In late April, Livent stock fell below its 50-day and 200-day lines, but did not rebound from early March lows. ALB stock, which reports Wednesday night, rose 3% in extended action after climbing 3% in Tuesday’s session.

Matson’s earnings declined marginally, while revenues were down after the container shipping firm delivered encouraging preliminary figures last month. MATX stock climbed marginally in extended action. Shares were up 3.4% on Tuesday, rebounding from their 200-day line at 91.36.

EV ‘freak-out moment’ looms over lithium, rare earths

market rally analysis

Tuesday’s modest gains were perhaps the norm in the decision of a huge Fed meeting.

Market reaction to Fed rate hikes and guidance will be important, but don’t be surprised by large volatility on Wednesday afternoon and beyond.

Tuesday marked the second day of a bullish attempt in the stock market. On certain days, investors may start looking for a follow-through day on one or more of the major indexes to confirm a new market rally.

But we are not there yet.

viewing area

Energy reserves are reshaping, especially those with refinery or natural gas risks, such as Exxon Mobil (XOM) or Cheniere Energy.

Fertilizer game resumes from 50-day lines after Tuesday mosaic (MOS) and Nutrients (NTR) earnings, though after some sharp decline at that key level.

Wood products firm and some construction product plays are looking good. Louisiana-Pacific and Atcor posted gains on Tuesday, while weirheuser (WY), Bois Cascade (BCC) and beacon roofing supplies (BECN) are installed.

Oceangoing shipping firms had a strong session. dry bulk leader star bulk carrier (SBLK) and Golden Ocean Group (GOGL) was performing well, while container-focused Matson bounced off its key support and ZIM stock reclaimed its 50-day line.

These are optimistic signs. And maybe they will work if the stock market rally accelerates. But other groups have looked promising in recent weeks, such as REITs, medical products and travel drama, and they have faltered or broken up.

In the meantime, growth stocks still look terrible. Apple (AAPL) and Tesla (TSLA) is fighting around its 200-day moving average. Other megacaps look bad. Meanwhile, marginal declines in IGV and ARKK indicate that even the bargain-hunters are yet to jump on the aggressive growth.

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What do we do now

While a market rally is underway, this is not the time to take on much risk, if any.

If the stock market moves up on Fed rate hikes, investors may consider tacking on one or two stocks or perhaps a broad sector ETF. But you have to be prepared to exit quickly.

There’s nothing wrong with waiting for a follow-through day. Even when the market has returned to a certain uptrend, you don’t want to rush to increase the risk. Gradually expand your holdings as the market strengthens and if the rally picks up then hurry to exit.

For now, build those watchlists—in pencil, not ink. REITs, miners and medical product firms should probably be replaced with new names on your watch list a week or two ago. But it is not a wasted effort. If you have an up-to-date watchlist for when market trends turn favourable, you will be in a good position to jump quickly into the new leaders.

Read The Big Picture every day to learn the direction of the market and keep up with the major stocks and sectors.

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

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