Dow futures fall: Market recovery resilient after Fed surprise; Tesla finishes a record run

Dow Jones futures fell modestly Thursday morning, along with S&P 500 futures and Nasdaq futures. China cut interest rates amid disappointing new economic data.

The stock market rally showed resilience on Wednesday. Indicators initially pulled back from the Fed’s surprisingly hawkish outlook for a rate hike, but closed mixed amid relatively dovish comments from Fed Chair Jerome Powell.

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The central bank paused after the end of its two-day policy meeting on Wednesday afternoon, but policymakers signaled that two more rate hikes were on the verge of taking place. However, Fed Chairman Jerome Powell stressed that officials are not constrained to raise interest rates in July.

nvidia (NVDA) to a record high, the day after it closed above a $1 trillion market cap for the first time. Tesla (TSLA) cut a record winning streak, but reluctantly.

House builder Linar (flexible) reported earnings after closing.

And a slew of medical product and system makers issued buy signals on Wednesday, following insurance giant Dow Jones United Health (United nations) warned that patients spend more on medical procedures.

Shockwave Medical (SWAV). dexcom (DXCM), Edwards Live Science (EW), Smith and Neview (SNN), Striker (SYK), Zimmer Biomet Holdings (ZBH), Boston Scientific (BSX) And InMode (INMDBuy signals flashed on Wednesday morning. He pared most of the gains sharply, with SWAV stock closing off the day’s highs.

Tesla and Nvidia stocks are running IBD Leaderboard. SWAV stock is located in defect 50. TSLA stock is located at IBD Big Cap 20.

Dow jones futures today

Dow futures fell 0.2% against fair value. S&P 500 futures fell 0.4% and Nasdaq 100 futures lost 0.65%. Tesla and Nvidia affected S&P 500 and Nasdaq 100 futures.

A number of chip stocks declined in pre-market activity.

The 10-year Treasury yield rose 3 basis points to 3.83%.

Crude oil rose 1%.

Bitcoin fell sharply overnight.

Overnight, China’s central bank cut its key one-year lending rate by 10 basis points to 2.65%, the first cut in 10 months. Earlier this week, the People’s Bank of China cut its short-term interest rate by the same amount. This comes amid a faltering economic recovery.

Shortly after the People’s Bank of China cut, China announced that retail sales for the month of May rose 12.7% from a year earlier, when most of the country was under lockdown. This was less than the views of 13.6%. Industrial production grew by 3.5%, slightly below expectations of 3.6%. China’s youth unemployment rate rose to a new record high of 20.8%.

Hong Kong’s Hang Seng jumped 2.2% on China’s interest rate cut, possibly hoping for fiscal stimulus.

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

Fed meeting

As expected, federal policymakers took no action on Wednesday, leaving the federal funds rate at 5%-5.25% after raising it by a full five percentage points in just over a year.

But newly released forecasts from Fed policymakers show a median expectation of the federal funds rate at 5.6% by the end of the year, suggesting two more rate hikes. Markets were expecting an additional quarter-point rally, perhaps in July, and even that didn’t come as much of a blow.

Fed Chairman Powell sounded more pessimistic. He stressed that policymakers did not commit to a rate hike in July, saying it would be a “face-to-face meeting”. He said the job market remains “very tight,” but noted that it had begun to ease. Powell noted that core inflation remains stubborn.

Markets now see a 69% chance of a rate hike on July 26th, up slightly from Tuesday. Investors only see an 8% chance of the Fed increasing twice by the end of the year.

Linnar earnings

Lennar’s earnings fell, but it came out much better than expected. The builder also guided by fiscal third quarter and full-year home deliveries.

LEN stock rose 2% in pre-market trading. Shares fell 1.1% to 114.75 in the regular Wednesday session, right at the top of the short consolidation. This can be seen as an indication of a massive handle cup base back in late 2021. Lennar stock was actionable earlier this month with an upward move from the 50-day line in strong volume.

The homeowner will hold a conference call after the opening bell on Thursday.

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Stock market rise

Stock market rally closed mixed after Fed rate pause and Fed Chair Powell’s pause

The Dow Jones Industrial Average fell 0.7% in Wednesday’s stock market trading, dragged down by United Nations stock. The S&P 500 gained 0.1%. The Nasdaq Composite Index rose 0.4%, with Nvidia leading. Small cap Russell 2000 fell 1.2%.

US crude oil prices fell 1.7 percent to $68.27 a barrel.

The 10-year Treasury yield fell 4 basis points to 3.8% after rising briefly to 3.85% shortly after the Fed meeting announcement.

Exchange Traded Funds

Among the growth ETFs is iShares Expanding Technology and Software Sector Fund (IGV) increased by 0.6%. VanEck Vectors Semiconductor Corporation (SMH) appeared by 1.5%. NVDA, SMH’s largest holding company, rose 4.8% to 429.97 on Wednesday, but fell slightly early Thursday.

Reflecting more speculative stories, the ARK Innovation ETF (ARK)ark(down 2% and ARK Genomics ETF)ARKG) declined 0.6%. Tesla stock is the number one stock ETF held by Ark Invest. TSLA stock fell 0.7% on Wednesday to 256.79 after surging 41% on a 13-day winning streak. TSLA stock fell 3% early in the Nadi.

SPDR S&P Metals & Mining ETFs (XME(down 1% and the Global Infrastructure Development Fund (ETF) in the US)cradle) gave up 0.6%. US Global Gates Foundation ETF (Planes) rose 0.7%. SPDR S&P Homebuilders ETF (XHB) declined 1.1%. Energy Defined Fund SPDR ETF (xle) fall off 1%.

SPDR Health Care Sector Selection Fund (XLV) lost 1%. UN stock is XLV’s No. 1 stock, but Dexcom, Boston Scientific, Edwards Lifesciences, Zimmer Biomet, and Stryker are also in the ETF.

SPDR Financial Selection Fund (XLF) decreased by 0.4%. SPDR S&P Regional Banking ETF (KRE) decreased by 2.9%.

Top five Chinese stocks to watch now

Stocks in buy zones

SWAV stock jumped to 315.95 Wednesday morning, reaching 308.09 cups with a buy point handle. But Shockwave Medical fell again, closing up 1.1%, at 295.05. This is below the 300 level which is an early entry.

DXCM rose 0.9% to 127.06, moving back above the 126.44 flat bottom buy point. Dexcom is trying to break in decisively, something it has fought for since November.

EW rose 3.6% to 90.53, which resulted in a short consolidation in high volume after a day of moving above the 50-day line. Edwards Lifesciences stock has not been extended from the 50-day streak. Investors can use the May 15 high of 89.72 as a buying point.

SNN stock gapped above the 50-day line in heavy volume, rising 5.55% to 31.57. This provided an early entry in a flat base, part of the base-on-base formation. Smith & Nephew stock is also approaching a trend line that provides another early entry. The official buy point is 33.19.

SYK stock jumped 4.2% to 293.57 in heavy trading, breaking a downtrend and clearing the 50-day line. This allowed an early entry, though the stock closed near session lows. Stryker stock has 306.56 official buy points from a flat bottom, which is part of a bottom-up pattern.

ZBH stock rose 3.8% to 142.01 on the day after bouncing near the 50-day line. Zimmer Biomet cleared the bulk of the trade in a deep consolidation of 16%, and it’s in the range of the 50-day line. It still has some distance to 149.25 buy points. ZBH closed off session highs.

BSX rose 4.2% to 53.31 moving above the 50-day line. It is the first test of the 50 day / 10 week line since the late March breakout. Boston Scientific shares are consolidating short.

INMD stock rose 1.7% to 36.42, after crossing the trend line on Tuesday. However, stocks came far from their highest levels during the day. InMode stock is approaching short-term highs of 38.38, an area where it has reached resistance several times in 2023. The official buy point is 41.84 from a four-month base, according to MarketSmith analysis.

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Market rally analysis

The stock market rally showed surprising resilience on Wednesday amid hawkish expectations of a rate hike.

The S&P 500 and the Nasdaq Composite, after briefly reversing lower, closed slightly higher after Fed Chair Powell’s comments.

The NASDAQ is likely to use a pause or a pullback. It is now above the 50-day line at 9.2% and trading above the top of the regression line. The NASDAQ 100 is now 10.6% higher than that key level.

The Dow Jones fell, largely on United Nations stocks, but rebounded from lows above the 10-day line.

The market breadth was weak, which interrupted the positive trend. The small caps retracted strongly and the medium caps modestly. Invesco S&P 500 Equal Weight Fund (RSP) fell only 0.2%. First Trust Nasdaq 100 Equal Weighted Mutual Fund (QQEW) rose by nearly 0.2%, although that lagged behind the Nasdaq 100’s advance of 0.7%.

New highs continued to outpace new lows with ease.

Keep in mind that there is often a reaction on the second day of Fed meetings that can differ drastically from the initial market move.

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What are you doing now

Investors could have chomped into one of the many medical product stocks flashing buy signals on Wednesday, though there’s a good chance those purchases will be modestly underwater by Wednesday’s close.

Other than that, there wasn’t much buying opportunity. Many leaders like Nvidia and Tesla have stretched significantly while others have jumped from low in their bases to almost buy points.

With the Nasdaq coming to a halt or pulling back, investors may want to be careful about adding exposure, especially in technology. You might consider taking partial profits for some of your stretch winners.

But you want to attribute that rally to the market. It shows real power, with the range and driving range exponentially wide. So while near-term caution might be in order, the market is sending strong bullish signals overall.

When a market downturn occurs, this can be an opportunity to enter or add big winners. So stay tuned.

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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