Dow Jones Futures: Fed Minutes Promises Market Rally, Microsoft Makes Key Features; Tesla rivals are in buying zones

Dow Jones futures fell slightly last night, along with S&P 500 futures and Nasdaq futures. The stock market rise rose slightly on Wednesday in an up-and-down session as hawkish Fed protocols contained few surprises. State interest rates returned and still flashed with a warning of recession. Crude oil prices fell again, but came from the lowest level.




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Microsoft stock and Google parent company Alphabet (GOOGL) regained their 50-day moving average. Amazon.com (AMZN) and Apple (AAPL) moved over their 10-week lines. Microsoft (MSFT) and Google stocks are IBD long-term leaders.

Tesla rivals place bid (WILL) and Li Auto (LI) are in purchase zones. BYD stock rose modestly within a buying zone, while Li Auto fell back in range. Tesla stock edged lower.

GME stock split

After Wednesday’s closed, original meme share GameStop (GME) announced plans for a 4-to-1 stock split. GME stock rose 9% overnight after closing 2.4% to 117.30.

Share splits have returned in favor. Amazon stock split 20-to-1 in early June. The Google share will split 10-to-1 on July 15, while Tesla has proposed a 3-to-1 split. However, these technological titans have or have had high stock prices, making it difficult to trade, for example, AMZN stock options. This is not the case with GME shares.

Dow Jones Futures today

Dow Jones futures fell 0.1% to fair value. S&P 500 futures fell 0.15% and Nasdaq 100 futures fell 0.1%.

The price of crude oil fell 1 per cent.

The 10-year government interest rate rose 1 basis point to 2.91 per cent. The 2-year interest rate rose 1 basis point to 2.97%.

At 8:15 a.m. ETP will release its June estimate for private sector employment. At 8:30 a.m. ET, the Department of Labor issues its weekly report on unemployment claims. They come ahead of Friday’s job report in June.

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


Join IBD experts as they analyze powerful stocks in the stock market rally on IBD Live


Bold minutes, financial data

Fed minutes from the political meeting on 14-15. June revealed that politicians said a “restrictive policy” was needed and that it might become “more restrictive”, for fear that inflation could become “anchored”.

Politicians saw an increase in late July of 50 or 75 basis points as likely according to the Fed minutes of the meeting. But Fed chief Jerome Powell already said the same thing after the meeting.

More generally, the Fed protocols offered no real surprises and underlined the major shift in economic conditions over the past three weeks.

The Fed protocols mentioned “inflation” 90 times, but not “recession” once. Since the Fed meeting in mid-June, fears of recession have grown, while commodity prices have fallen sharply.

The Fed minutes slightly boosted market expectations of a 75 basis point rate hike later this month by 50 basis points in September. December still marks the likely end of the Fed’s rate hikes.

Earlier Wednesday, the Ministry of Labor’s JOLTS survey showed that job openings fell to 11.254 million in May from April’s revised up 11.68 million. It was slightly higher than expected, but the biggest drop from month to month since August 2020.

June The ISM non-manufacturing index dipped to a two-year low, but topped the outlook and still pointed to solid growth. The jobs subindex fell to 47.4 from 50.2, below the break-even 50 level.

Stock market rally

The stock market rise moved between small gains or losses in most of Wednesday’s trading. The major indices gained momentum following the release of the minutes of the Fed meeting at

The Dow Jones Industrial Average rose 0.2% in Wednesday’s trading session. The S&P 500 index rose 0.4 per cent. The Nasdaq composite rose 0.35 percent. The small-cap Russell 2000 fell 0.8 percent.

Microsoft and Google shares rose just over 1% to move above their 50-day moving average. Amazon stock rose 0.7% and came all the way up to the 50-day line and above its 10-week line. Apple stock fell below its 50 days, but Wednesday’s rise of 1% pushed the iPhone giant over its 10-week line.

US crude oil prices fell 1% to $ 98.53 per barrel. barrel, far from the lowest morning level, but after a dive of 8.2% on Tuesday. Gasoline futures, which topped $ 4 per barrel. gallon just a few weeks ago, dropped 4% to $ 3.20. Prices at the pump have been falling for the past three weeks and are set to fall sharply over the next few weeks.

The 10-year government bond yield rose by 10 basis points to 2.9% after falling by 30 basis points in the previous three sessions. The two-year government bond yield rose 14 basis points to 2.96%. The yield curve for the Treasury is now slightly more inverted, reflecting increasing recession risks.

ETFs

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) was flat, while the Innovator IBD Breakout Opportunities ETF (BOUT) won 1%. iShares Expanded Tech-Software Sector ETF (IGV) rose 0.1%, with the MSFT stock a top stock. VanEck Vectors Semiconductor ETF (SMH) rose 0.7 pct.

The SPDR S&P Metals & Mining ETF (XME) fell 0.7% and the Global X US Infrastructure Development ETF (PAVE) ticked 0.1% higher. US Global Jets ETF (JETS) fell 1.5 percent. SPDR S&P Homebuilders ETF (XHB) lost 0.6 pct. Energy Select SPDR ETF (XLE) gave up 1.7% and Financial Select SPDR ETF (XLF) fell 0.25%. Health Care Select Sector SPDR Fund (XLV) rose 0.7 per cent.

As a result of more speculative history stocks, the ARK Innovation ETF (ARKK) fell 2.25% and the ARK Genomics ETF (ARKG) fell 0.2% after both rose above their 50-day lines on Tuesday. The Tesla stock is a large holding across Ark Invest’s ETFs. Cathie Wood’s Ark Invest also owns some BYD shares.


Five best Chinese stocks to see now


China EV shares in buy zones

The BYD stock rose 1.1% to 40.55 after briefly testing its buy point of 39.81 from a deep cup-with-handle base for a fifth consecutive session during the day. On Sunday, BYD reported sales of 134,036 electric cars and plug-in hybrids in June, an increase of 224% over a year earlier. In the second quarter, BYD sales topped Tesla deliveries with more than 100,000 vehicles. Tesla continues to be a leader in all-electric “BEV” sales, though this difference has narrowed significantly over the past year.

Li Auto shares fell 3.5% to 38.60. Intraday, the stock fell to 37.10, but closed above the buy point of 37.55 from a long, deep base. The LI stock is still 39% above its 50-day line. Ideally, the hybrid SUV maker would form a short base here and let the Li Auto share digest its huge gains from early May to late June. Li Auto will begin delivery of its second premium SUV, the L9, in late August.

Tesla shares fell 0.6% to 695.20 on Wednesday, just below the 21-day mark.

The Chinese Ministry of Commerce and 16 other departments jointly issued a statement on July 7 supporting the purchase of new energy vehicles (NEVs) and will consider extending the exemption from NEV purchase tax by the end of the year. It follows similar signals from a high-level meeting on June 22 when it expires.

It could benefit BYD, Li Auto, Tesla and other electric car manufacturers in China.


Tesla vs. BID: Which EV giant is the best buy?


Analysis of market rally

The stock market rise contributed to Tuesday’s recovery from low days within the day, but the major indices still seemed to be seeking direction.

The Nasdaq lineup moved above its 21-day moving average on Wednesday, but the S&P 500 and Dow Jones hit resistance at the short-term average. All three major indices are now back above the lowest levels in their follow-up days on June 24th. The fall during their FTDs last week pushed the market rally to “under pressure” where it remains.

The end of June and the 50-day line protrude above the 21-day lines, with the early June peaks above it.

While the major indices rose on Wednesday, the breadth was weak, with losers slightly exceeding the winners on the Nasdaq and NYSE.

Good news about inflation and Fed rate hikes, including falling commodity prices and easing labor markets, is bad news for a possible recession. So the markets do not quite know how to handle economic data.

It is possible that the market will trend sideways for some time. It would provide an opportunity to form a lot of bases and create clarity about the economy and Fed policy. But even if that happens, there may be major fakes and shakeouts along the way for individual stocks and the overall market.

Medical stocks remain the clear leaders right now, including IBD 50 members Evolent health (EVH), McKesson (MCK), UnitedHealth (UNH), Harmony Biosciences (HRMY) and AstraZeneca (AZN).


Time The Market with IBD’s ETF Market Strategy


What should I do now

The stock market rise is under pressure, with the major indices still facing a lot of important resistance levels. While a number of doctors and a handful of other stocks are behaving well, even they may be prone to notable shakeouts.

So if you want to take a stand, make them small and look for early entries. Consider taking at least partial profits quickly to lock in some winnings. Do not hesitate to shorten losses.

Read The Big Picture every day to stay in line with market trends and leading stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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