Dow Jones futures were little changed overnight, along with S&P 500 futures and Nasdaq futures, with attention to Wednesday’s Federal Reserve meeting and whether lawmakers will approve or scrap the prospect of the Fed.
The stock market report eased back down from early earnings on Tuesday as stronger-than-expected economic data is not what the Fed wants to see. Megacap technology continues to weigh on the index, especially the Nasdaq. Amazon.com (AMZN) and parent Google Alphabet (GOOGL) fell to new market lows while Apple (AAPL) and Microsoft (MSFT).
Special Dismissals (AMD), lithium manufacturer Alive (LTHM), drug distribution McKesson (MCK), Paycom Program (PAYC), and shale oil and gas production Devon Power (DVN) headlined overnight gains.
AMD stock rose despite weak results. Livet fell because revenue growth wasn’t hot enough. Devon Energy stock retreated on a dividend but. PAYC stock edged higher on earnings before MCK stock edged lower after mixed results.
DVN stock is on the IBD 50.
Right now Tesla (TSLA) competitors BYD (BYDDF) will report sales next October, after poor-to-best deliveries from Nio (NIO), Li Auto (Five Xpeng (XPEV). BYD’s stock rose 2.6% on Tuesday, while Tesla’s was up 0.1%, both at daily highs.
The Federal Reserve is expected to raise rates by 75 basis points for the same period. But the market is divided on whether lawmakers will raise the rate to 50 or 75 basis points in December.
Some of the technical information of the monetary value and many central banks around the world – including a few statements from Fed officials – have strengthened the expectation of the Fed pivot to small increases.
The Fed’s policy statement is due at 2 p.m. ET Wednesday, along with Fed Chair Jerome Powell’s announcement at 2:30 p.m. Investors will be looking for any Fed keynote. Powell may not want to give clear signals to establish the level of flexibility.
The Fed may include information about responding to key information. The October jobs report is due on Friday, following a stronger-than-expected September JOLTS survey.
Dow Jones Futures Today
Dow Jones futures are down and fair value. S&P 500 futures and Nasdaq 100 futures were steady.
Note that overnight movements in the Dow futures and elsewhere do not translate into actual trades in the next regular market session.
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Market trends retreated on Tuesday. Major indexes opened higher, boosted by lower Treasury yields and uncertain talk that China could move toward easing its policy. no-Covid.
But at 10 a.m. ET, jobs opened unexpectedly in September, while the ISM manufacturing index remained above the mid-even 50 level in October. The Ministry’s budget was restored and sales quickly fell.
The Dow Jones Industrial Average fell 0.2% in market trading on Tuesday. The S&P 500 index fell 0.4%. The Nasdaq composite retreated 0.9%. The small-cap Russell 2000 climbed 0.25%, its eighth straight advance.
Amazon’s stock fell 5.5%, reducing Friday’s low to the worst since April 2020. It ended after falling 13 % last week in earnings. AMZN stock has fallen for the fifth straight session in heavy pressure.
Google stock fell 4.3% to the worst since January 2021, after 4.8% in the previous week.
Apple’s stock fell 1.75%, returning close to the 200-day range to close below the 50-day. AAPL stock fell 5.75% last week.
Microsoft shares gave up 1.7%, not far from market lows. MSFT stock fell 2.6% last week.
The 10-year Treasury yield fell 3 basis points to 4.05%, but finished near session highs. The 10-year yield fell to 3.955% immediately after the release, but found support at its 21-day moving average. The American dollar fell quickly.
US crude oil prices rose 2.1% to $88.37 a barrel. The negative outlook came on the hope that China will adjust its Covid policies, as well as a report that the Saudis are on high alert for an Iranian attack. Natural gas futures fell 10% after rising nearly 12% Monday.
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Among the best performing ETFs, the Innovator IBD 50 ETF (FFTY) climbed 0.6%. The iShares Expanded Tech-Software Sector ETF (IGV) fell 1.3%, with MSFT stock the main holding. The VanEck Vectors Semiconductor ETF (SMH) rose 0.7%, with AMD buying a large share.
SPDR S&P Metals & Mining ETF (XME) gained 1.5% and the Global X US Infrastructure Development ETF (PAVE) gained 0.6%. The Energy Select SPDR ETF (XLE) gained 1%, with DVN stock holding the top 10. The Health Care Select Sector SPDR Fund (XLV) rose 0.1%.
Reflecting weak market news, ARK Innovation ETF (ARKK) rose 1 cent while ARK Genomics ETF (ARKG) climbed 1.3%
Tesla stock is a major holding on Ark Invest’s ETF. Tesla Cybertruck mass production will begin at the end of 2023, Reuters reported early Tuesday.
Cathie Wood’s Ark has a small stake in BYD stock. BYD’s EV and plug-in hybrid sales have surpassed Tesla’s total, although the US giant still leads in all-electric “BEV” deliveries.
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AMD’s earnings and sales missed expectations, after the carrier reported preliminary earnings that were below consensus. AMD also indicated that Q4 revenue will fall slightly below consensus, but will grow about 14% vs. the year before.
AMD stock jumped in overnight trading. The stock fell 0.7% to 59.66 on Tuesday. AMD stock has fallen slightly since Oct.
Nvidia (NVDA), which competes with AMD in graphics chips, is slightly slower.
Organic revenue rose, higher views but revenue still fell despite more than doubling vs. the year before. LTHM stocks fell sharply in extended action. The stock lost 0.8% to 31.33 on Tuesday, reversing below its 50-day line. Livet has a stock price of 36.48 cups based on sales, according to MarketSmith research.
ALB shares, with a similar chart, were down in limited after-hours trading. Lots of lithium Albemarle (ALB) report late Wednesday.
Devon Energy’s earnings beat estimates, but the oil producer is cutting its dividend by 13%. DVN stock fell to an overnight low. Shares were down 5 cents on Tuesday at 77.30, hovering between the 75.37 cup-and-hold price. DVN shares are still rising from above the 50-day line.
Paycom’s earnings beat estimates, with strong earnings guidance as well. PAYC sales are little changed in extended trading. Shares retreated nearly 1% on Tuesday to 342.72, above the 50-day range and below the trend line. A strong change after earnings can offer an early entry. PAYC stock has 402.88 sales volume.
McKesson’s earnings missed while earnings rose. MCK’s stock did not take off overnight. Shares fell 1.85% to 382.16 on Tuesday, but are within range of the 375.33 trading base. That flat base is part of a base-to-base sequence.
Cardinal Health (CAH), which reported on Friday, was also not traded after hours. CAH sales are a little extra from sales.
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Core data opened strong, but retreated on stronger-than-expected economic data.
The Dow Jones fell below its 200-day line, while the Russell 2000 moved up. The S&P 500 is still holding the 50-day line, while the Nasdaq is hitting resistance near that area.
Much of Tuesday’s weakness reflected weakness in AMZN stock, Google and other megacaps.
The Invesco S&P 500 Equal Weight ETF (RSP) rose 0.2%, trading between the 200-day and 50-day ranges.
The expansion in sales led the buyers to the NYSE and Nasdaq.
Investors should not think about the action of the market on Tuesday, which comes before the meeting of the Fed and the statement of Fed Powell.
But the main data and popular stocks have gathered in large part in anticipation of the Fed pivot. If Powell delivers a hawkish surprise, the stock market could see a big sell-off.
Tuesday’s stock market and earnings could be white next to the Fed’s response.
The post-Fed response may continue, perhaps reversing, on Thursday. Friday’s jobs report is likely to disrupt markets as well.
Popular stocks showed mixed action, with earnings pressures still putting individual names up or down.
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What To Do Now
It seems that the stock market is in good shape on technical levels, although on Tuesday under the change.
Investors should hold off adding information until after the Fed hike and Powell’s statement. They may choose to reduce exposure to the Wednesday afternoon show based on their risk tolerance.
While the Fed meeting is like an earnings report for the stock market, don’t forget the real earnings.
Earnings aren’t as market-moving as last week’s megacap announcements, but they still have a big impact on individual stocks.
The coming days will be key for the market trend. So get your watch lists ready. Stay tuned and be prepared to add or subtract exposure.
Read the Big Picture every day to stay in tune with the direction of marketing and sales products and categories.
Please follow Ed Carson on Twitter at @IBD_ECarson for sales updates and more.
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