Dow Jones futures rose slightly overnight, along with S&P 500 futures and Nasdaq futures. The stock market rally pulled back from big losses this morning to a mixed close on Thursday as two hawkish Fed officials eased interest rate hike concerns somewhat.
Dow Jones component United Health Group (UNH) reports ahead of the market open on Friday, revealing quarterly earnings for health insurers and healthcare providers in general. Shares of UNH turned up from the 50-day line on Thursday and closed up 0.2% to 502.43, close to the 518.90 buy point.
banking giants Wells Fargo (WFC) and Citygroup (C) also reported before opening. Shares of WFC and Citigroup are in a long downtrend. Indeed, on Thursday, Citi shares fell to their lowest level since the end of 2020 after weaker-than-expected earnings from JPMorgan Chase (JPM) and Morgan Stanley (RS).
Meanwhile, dollar tree (DLTR), blowjob wholesale (BZ) and Lantheus Holdings (LNTH) was giving buy signals while McKesson (MCK) had a bullish shakeout.
Chinese electric vehicle and battery giant BYD (BYDDF) rose on an optimistic earnings forecast but are still sharply lower in the week following rumors that Warren Buffett’s Berkshire Hathaway may sell some of his large stake in BYD. Launch of electric vehicles in China Lee Auto (LI) remains valid while Tesla (TSLA) lies between two key moving averages.
Lantheus shares are on the IBD leaderboard. DLTR and Li Auto shares are on SwingTrader. Dollar Tree, Lantheus, BJ’s Wholesale, McKesson, UnitedHealth and LI are included in IBD 50. MCK and Dollar Tree are also included in IBD Big Cap 20.
The video embedded in the article discussed Thursday’s market behavior and analyzed Apple (AAPL), Costco wholesale (VALUE) and BJ shares.
Hawks Fed Show A Little Dove
Fed Board member Christopher Waller and St. Louis Fed President James Bullard, two of the Fed’s most ardent advocates of accelerated rate hikes, on Thursday lowered expectations for a 100 basis point rate hike later this month. The prospect of a full point rate hike rose sharply on Wednesday following a hot June CPI report and Atlanta Fed President Rafael Bostic’s announcement that “everything is in the game.”
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Waller said Thursday that 75 basis points is still his “base case” for a rate hike at the July 26-27 meeting, saying “the markets may have gotten a little ahead of themselves” by 100 basis points, although he did not rule out such capabilities. “big” move.
Bullard told the Nikkei he favors a 75 basis point hike that he says would bring the federal funds rate to “neutral” levels. He said further tightening would be needed, but “we can evaluate” within a year.
Before the opening, the producer price index unexpectedly accelerated to a record 11.3% in June from a year earlier. But core inflation slowed more than expected. Notably, the core producer price index rose 0.4% month-on-month, having cooled off after rising 0.7% in May. This was in contrast to the core consumer price index, which shows growth accelerating from month to month.
Markets now estimate the likelihood of the Fed raising rates by 75 basis points at 57%. On Wednesday, the odds of being promoted to a full score rose to 80% from about 8% the day before.
Dow Jones futures today
Dow Jones futures were up 0.1% compared to fair value. S&P 500 futures rose 0.15%. Nasdaq 100 futures rose 0.25%.
Crude oil prices rose slightly.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into real trading in the next regular stock market session.
Join IBD experts as they analyze valuable stocks in the stock market rally in IBD Live.
stock market rally
The stock market rally tumbled Thursday morning on fresh inflation worries and weak JPMorgan earnings. Key indices mostly closed lower, but closed near their best levels of the day.
The Dow Jones Industrial Average closed down 0.5% in stock trading on Thursday. The S&P 500 fell 0.3%. The Nasdaq Composite Index posted marginal gains. Small-cap Russell 2000 shares fell 1%.
U.S. crude oil prices fell 0.5% to $95.78 a barrel, far from intraday lows but still the lowest close since April. Gasoline futures fell more than 1%, continuing their rapid decline.
The 10-year Treasury yield rose 6 basis points to 2.96%, although it closed near session lows. The two-year yield wiped out the big gain, dropping 1 basis point to 3.13%. The 1-year Treasury yield fell 3 basis points to 3.18%. The yield curve remains inverted from 1-year to 10-year, but to a lesser degree.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) was up 0.45%, while the Innovator IBD Breakout Opportunities (BOUT) ETF was down 0.5%. iShares Advanced Technology & Software ETF (IGV) fell 0.9%. VanEck Vectors Semiconductor (SMH) ETF is up 2.1% from Taiwan semiconductor (TSM) earnings and forecast for the growth of the chip sector.
The SPDR S&P Metals & Mining ETF (XME) fell almost 3%, while the Global X US Infrastructure Development (PAVE) ETF fell 0.6%. The US Global Jets ETF (JETS) was down 0.7%. The SPDR S&P Homebuilders ETF (XHB) shed 1.1%. Energy Select SPDR ETF (XLE) and Financial Select SPDR ETF (XLF) lost 1.9%. The Health Care Select Sector SPDR Fund (XLV) lost 0.3%. The UNH stock is the main component of the XLV.
Reflecting more speculative stocks, ARK Innovation ETF (ARKK) shares fell 2.1% and ARK Genomics (ARKG) ETF shed 1.8%. Tesla shares remain the main assets of Ark Invest ETF. Ark Cathy Wood also owns some BYD stock.
Top 5 Chinese stocks to watch now
Promotions near the points of purchase
Shares of Dollar Tree rose 1.7% to 168.76. This pushed DLTR shares back above the buy point of 166.45 cups and handles. The dollar store giant is up 7.8% from its 50-day line. According to MarketSmith’s analysis, the relative strength line, the blue line on the charts provided, is making new highs within a few weeks.
Shares of BJ rose 2.95% to 70.16, just below the double bottom buy point at 71.10. Stocks have crossed a descending trendline, suggesting an early entry. Volume was fairly light, while BJ shares are 14% above the 50-day line, which should give investors pause. Ideally, the membership warehouse chain should consolidate around the current levels, possibly creating a handle. The RS line for BJ stock is making new highs.
Shares of LNTH rose 0.7% to 67.91, rebounding from their 50-day line again. While it didn’t break Friday’s intraday high of 69.08, Lantheus shares are noteworthy. LNTH shares should have a proper base after this week with a buy point of 73.88.
Shares of McKesson got off to a bad start on Thursday, dropping below the 50-day line to 315.78 intraday. But shares rebounded, gaining 0.4% to hit 362.55. MCK shares have a fixed buy point of 340.04, but investors can use 335.47, just above Monday’s intraday high, as an early entry.
BYD stock surge
The electric vehicle giant said Thursday it expects first-half net profit to rise 139% to 207% from a year earlier in local currency to 2.8-3.6 billion yuan ($533 million). Excluding one-time gains and losses, earnings should skyrocket to 578%-795%.
Shares of BYD jumped 8.4% to 37.71, returning above the 50-day line after finding support at the 200-day line on Wednesday. But stocks are still sharply lower for the week. BYD shares fell 11.3% on Tuesday on rumors that Buffett may sell some or all of his stake in the electric car maker. This rumor remains unconfirmed. But BYD shares need to adjust again, building a new base after deep consolidation from November to June.
Shares of smaller competitor Li Auto rose 0.4% to 38.18. LI shares are still tradeable after bouncing off their 21-day line on Wednesday. Li Auto shares are working on new consolidation after more than doubling from the beginning of May to the end of June.
Tesla shares rose 0.5% to 714.94. The stock is just above its 21-day line and below its falling 50-day line. Shares of TSLA again slightly exceeded the 10-week milestone. Tesla’s Q2 earnings are due July 20.
Tesla vs. BYD: Which electric car giant is the best buy?
Market Rally Analysis
For the second consecutive session, the major indices fell sharply in the morning, but soon recovered, and the Nasdaq index turned positive in the afternoon. On Thursday, the Nasdaq managed to rise slightly, while the S&P 500, Dow Jones and Russell 2000 fell for the fifth straight session.
All of the key indexes dropped sharply in a week that began with the Nasdaq once again running into resistance on its 10-week moving average. All indices are below their 21-day moving averages.
After declining for several sessions, perhaps the “uptrend under pressure” should rebound. But that shouldn’t happen anytime soon, and it’s possible that Thursday’s rally off the lows was a “bounce.”
It is possible that the major indices are in a range, with early or late June highs marking the top and mid-June lows marking the bottom. There is a lot of volatility in this range.
As the reporting season heats up, adding to the Fed’s inflation-recession-uncertainty whirlwind, it’s highly likely that market and individual stock rally volatility will continue.
Market Time with IBD ETF Market Strategy
What to do now
Healthcare stocks like UnitedHealth and McKesson, which didn’t look good this morning, have indeed rebounded, but investors can’t count on an intraday rally to save the day.
The market is looking for direction on a short-term basis within a long painful downtrend. It’s just not the right environment for a big impact. Hurry up to take profits to take profits in such a volatile market.
Build your watchlists and look out for major earnings in the coming days and weeks.
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