Dow futures: Stocks dive on demand for biggest Fed rate hike in 40 years; Apple, Tesla Tumble

Overnight, Dow futures rose slightly, along with S&P 500 and Nasdaq futures. The stock market rally was dented on Tuesday by a hotter-than-expected inflation report, with major indexes breaching their 50-day moving averages and erasing all or nearly all of their recent gains.

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The Consumer Price Index for the month of August It was much worse than expected. Consumer prices rose 0.1%, against expectations for a 0.1% decrease, with food prices and rents rising despite lower gasoline prices. Core CPI, which excludes food and energy, rose 0.6%, double what was expected. General inflation slowed somewhat again, to 8.3%, but Wall Street had forecast 8%. Core inflation rose more than expected to 6.3%.

This prompted a Wall Street firm to predict that the Fed will raise interest rates by a full percentage point at the Fed’s September 20-21 meeting. That would be the largest number since the early 1980s, when then-Fed Chairman Paul Volcker launched an all-out war on inflation.

pure storage (PSG), a Tesla competitor New (NIO), Devon Energy (DVN), Wolfspeed (wolf) And the Energy Enphase (ENPH) a relatively healthy business on Tuesday.

Megacaps apple (AAPL) And the Tesla (TSLA), which had been flashing buy signals lately, pulled back hard on Tuesday, back below key levels. nvidia (NVDA) and father Facebook meta pads (dead), which was no one’s idea of ​​the current market leaders, plummeted to its lowest levels in 2022.

DVN Inventory is running IBD Leaderboard. PSTG stock is running SwingTrader And it was Tuesday IBD stock today. Tesla and Devon Energy shares are in defect 50. Devon stock and ENPH are available on file IBD Big Cap 20.

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Dow jones futures contracts today

Dow Jones futures are up 0.3% against fair value. S&P 500 futures rose 0.25% and Nasdaq 100 futures rose 0.25%.

The 10-year Treasury yield rose one basis point to 3.43%.

At 8:30 a.m. ET, the Labor Department will release its Producer Price Index for August.

Remember to work overnight in Dow Jones futures contracts and elsewhere that does not necessarily translate into actual circulation in the next regular session Stock market session.

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stock market rise

The stock market rally suffered its worst loss of 2022, with major indexes closing near session lows on the back of a hot inflation report and Fed rate hike concerns.

Another factor? Reuters reported on Tuesday that the United States is studying options to sweep sanctions against China to avert any invasion of Taiwan. The European Union is under pressure to do the same. That would increase the risk of a massive economic decoupling between China and the West.

The Dow Jones Industrial Average fell 3.9% on Tuesday stock market trading. The S&P 500 fell 4.3%. The Nasdaq Composite Index is down 5.2%. Small capital Russell 2000 lost 3.9%.

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Nvidia and META stock is down more than 9%, both of which have trimmed their 2022 lows.

US crude oil prices fell 0.5% to $87.31 a barrel.

The 10-year Treasury yield rose 6 basis points to 3.42%. The benchmark yield is 3.45% on the day, just below an 11-year high of 3.48% hit on June 14. Short-term returns rose much more.

ETFs

between the Best ETFsThe Innovator IBD 50 ETF (fifty) fell 2.9%, while the IBD Breakout Opportunities ETF innovatorfit) lost 2.35%. iShares Expanded Technology and Software Fund (ETF)IGV) sank 4.7%. VanEck Vectors Semiconductor Corporation (SMH) approximately 6%. One of SMH’s most important assets is the NVDA stock.

SPDR S&P Metals & Mining ETF (XME) give up 3.7%. SPDR S&P Homebuilders ETF (XHB) decreased by 5.9%. SPDR Specific Energy Fund (SPDR ETF)XLE) down 2.5% and the Financial Select SPDR ETF (XLF) is falling 3.75%. SPDR Healthcare Sector Selection Fund (XLV) fell 3.3%.

Shares reflect more speculative stories, the ARK Innovation ETF (see you) is down 6.8% and the ARK Genomics ETF (ARKG) 5.6%. TSLA stock is a major ownership across Ark Invest’s ETFs.

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Stocks show strength

PSTG stock fell 3.8% to 29.64 on Tuesday, but closed above the 21-day line. Pure Storage runs on a file cup base with handle With 31.62 buy points. Investors can use the movement above Monday’s high at 30.88 as a slightly lower entry.

Nio stock rose 0.9% to 21.95, touching the 200-day line on the day after rising 13.5% on Monday. Shares of the China EV startup are up 28% over the past five sessions, four of which are in high volumes. Analysts are increasingly bullish on Nio’s lineup. Nio begins delivery of the ET5 sedan, its third new electric vehicle this year, on September 30th. Nio stock has a base of 24.53 bottom buy pointHowever, investors can use a decisive move above the 200-day line as an early entry.

DVN stock is down 3% to 69.07, retreating after breaking the trend line of the handle on Monday. The purchase point of a mug with a handle is 75.37. Investors can now use Monday’s high of 71.57 as an early entry. A longer pause would allow the 50 day moving average to catch up somewhat.

Wolff shares fell 2.5% to 113.98 on Tuesday, after falling to 111.26 shortly after the opening. Evercore ISI kicked off the chip maker with outperformance, saying it was a great way to power EV space. Investors can treat the latest action as an indication of a massive consolidation, with 123.35 buying points. A move above Monday’s high could provide an early entry, but Wolfspeed’s stock extended, well above some of its moving averages.

ENPH stock fell 1.1% to 305.50 after testing its 21-day streak. Investors can buy Enphase shares now from the 21-day streak, although market conditions increase the risks. The longer ENPH stock pause should allow the fast-rising 50-day streak to build some ground.

Apple stock

Apple stock fell 5.9%, slipping back below the 50-day and 200-day lines in high volume, paring gains from the previous two sessions. AAPL stock had broken a downtrend in the handle on Monday, providing an early entry, but that is off the table for now. Dow Jones tech titan stocks buy 176.25 points off this handle.

Apple iPhone 14 Pre-orders It seems to work as hard or stronger than last year’s iPhone 13. Actual iPhone 14 sales begin Friday.

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Tesla Stock

Tesla stock slipped 4% to 292.13, backing slightly from the 200-day streak but maintaining its 21-day price and comfortably above the 50-day mark. Volume was light, but higher than in the five-day rally.

Arguably the TSLA stock has a short base within a much larger consolidation, with 314.74 buying points. A move above Monday’s high at 305.49 could provide an early entry.

Supply chain constraints and costs are falling for electric vehicles, which will drive prices lower, Tesla’s head of investor relations, Martin Viecha, said at a conference Tuesday. Visha said Tesla will eventually reveal a cheaper EV model, but he didn’t give details on when that might happen. Tesla recently introduced the lower-range Model Y in Europe at a much cheaper price.

Market Rise Analysis

The recently revived stock market rebound was precipitated by the CPI inflation hype witnessed on Tuesday. The major indices and the Russell 2000 all fell below the 50-day moving averages. The Dow Jones cut its lows last week while the S&P 500 came close to doing so. The Nasdaq wiped out most of the gains from the previous four sessions.

Leading stocks, many of which have seen some strong gains in recent days, also suffered on Tuesday. The losers defeated the gainers, after a strong market expansion in recent days.

Apple stock showed malicious action on Tuesday. Tesla also pulled back, after some lower volume gains, but its chart looks a little better.

While Pure Storage and Nio still look OK, the odds are that they will falter if the market comes under more pressure.

The stock market has rebounded over the past several days in part due to expectations of an inflation report. This, in turn, would prompt the Fed to start raising interest rates less aggressively.

But after the hot inflation report, Nomura Securities forecast that Fed policy makers will raise interest rates by 100 basis points on September 21. Late Tuesday, Ed Yardeni of Yardeni Research said a full percentage point Fed rate hike was “likely” over 75 basis points. .

Markets are fully pricing in at least 75 basis points for the third consecutive meeting of the Federal Reserve next week. But there is now a 38% chance at 100 basis points, up from a 0% chance before the CPI data. Markets are also betting on a higher year-end rate.

10-year Treasury yields have continued their aggressive rally over the past several weeks. Not coincidentally, the dollar rebounded after turning lower during the market’s four-day advance.

Having a more aggressive Fed, higher Treasury yields and a stronger dollar isn’t a great recipe for stocks. This is especially true when the markets have been betting on the opposite.

The question now is where the market is headed from here. Will major indices pull back from last week’s lows and head towards June’s low? The market is likely to be range bound as Wall Street awaits actual signs that the Fed will slow rate hikes.

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What are you doing now

Investors may want to take profits as Tuesday’s CPI inflation report approaches, given the low-volume advances are good news. At this point, you may want to conserve remaining gains from recent purchases, or cut losses.

It is a good idea to keep the exposure light. The hot inflation data undermined the short-term bullish case for rate hikes by the Federal Reserve, with the market direction now uncertain.

At some point, whether it’s next week, next month, or next year, the market will be in a clear uptrend. This is when the real money will be made.

So work on your watchlists, focusing on relative strength and signals that large institutions are taking stock.

Read The Big Picture Every day to keep up with the trend of the market, stocks and leading sectors.

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