Dow Jones Futures: Stock Market Rally Awaits Fed Chief Powell, Key Economic Data

By | November 30, 2022

Dow Jones futures edged higher on Wednesday, while S&P 500 and Nasdaq futures edged higher on Fed Chief Jerome Powell and major economic data available.




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The stock market rally ended Tuesday mixed with Litter (AAPL) once again a weight in the main indices, along with amazon.com (AMZN) and tesla (TSLA). Meanwhile, Apple’s other Dow giants boeing (BA), chevron (CVX) and Goldman Sachs (GS) are close to points of purchase.

Hewlett Packard Enterprise (HPE) and NetApp (NTAP) topped earnings reports on Tuesday, with CrowdStrike (CRWD) and Work day (WDAY) starting big software reports this week.

HPE shares rose modestly in premarket trading after HPE earnings topped previews. HP Enterprise stock, above its 200-day line, is working on a long cup basis. NTAP stock plummeted in prolonged action due to weak NetApp revenue and guidance. WDAY’s stock jumped overnight on a third-quarter crash and a $500 million buyback. CRWD shares plummeted despite beating third-quarter views as subscriptions declined and the cybersecurity firm hinted at a loss of fourth-quarter revenue.

Separately, Horizon Therapeutics (HZNP) surged 30% overnight after confirming three possible takeover bids.

On Wednesday morning, ADP will release its November employment estimate on private payrolls. The Department of Labor will release job openings in the October JOLTS report. The job openings are closely watched by Fed Chief Jerome Powell, who will speak on Wednesday afternoon.

All of this foreshadows the Fed’s favorite inflation gauge, the PCE price index, on Thursday morning, along with Friday’s November jobs report, as well as several other notable economic releases.

Investors should be cautious about opening new positions until there is more clarity on the economy and the Fed’s rate hike prospects. At the very least, they may want to lighten positions in the very short term.

CVX shares are on the IBD Leaderboard. BA shares are on SwingTrader.

Speech by Fed Chief Powell

Fed Chief Jerome Powell will speak at the Brookings Institution at 1:30 pm ET on Wednesday. It should bolster expectations that the central bank will move to a 50bp hike on Dec. 14. Markets see a 67.5% chance of a half-point move, but still a decent chance of a fifth consecutive Fed hike. of 75 basis points. But he will likely also indicate that rate hikes will continue into 2023.

Whatever Powell says will be quickly overtaken by economic data. If inflation starts to show significant cooling and labor markets relax, even the most hardline Fed policymakers will be in favor of slowing the pace of rate hikes and ending them sooner than markets might expect. Hot price and employment data will strengthen the resolve of many Fed doves. Of course, economic data for the next few days could show mixed results or marginal improvement.

Dow Jones Futures Today

Dow Jones futures were up slightly from fair value. S&P 500 futures advanced 0.2%. Nasdaq 100 futures were up 0.4%.

The 10-year Treasury yield fell 3 basis points to 3.72%.

Crude oil futures were up 2%, while natural gas futures were down. Copper prices rose nearly 3%.

China’s official manufacturing index fell 1.2 points to 48 in November, falling further below the neutral level of 50 and views to 49. The services index fell to 46.7 against forecasts of 48. Covid in China seriously affected the economy.

Still, Hong Kong’s Hang Seng Index rose 2.2% after jumping 5.2% on Tuesday in hopes of easing Covid restrictions in the future.

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


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stock market rally

After Monday’s strong selloff, the stock market rally closed Tuesday mixed.

The Dow Jones Industrial Average closed just above breakeven in Tuesday’s stock market trade. The S&P 500 index fell about 0.2%. The Nasdaq composite was down 0.6%. The small-cap Russell 2000 was up 0.3%.

Apple shares fell 2.1%, their third straight significant decline, as China’s Covid cases, lockdowns and protests weighed on the tech giant. On Tuesday, the stock was down 2.6%, below its 50-day moving average. Above the 50-day line comes 200-day resistance for AAPL stocks. Apple has seen unrest at a massive Foxconn iPhone assembly plant in Zhengzhou amid an ongoing Covid lockdown. China lifted its blockade of Zhengzhou overnight.

Amazon shares were down 1.6% and Tesla shares were down 1.1%, both pulling back from nearly their 21-day lines. Both are relatively close to the bear market lows.

US crude oil prices rose 2.4% to $79.62 a barrel. On Monday, crude oil futures hit their lowest levels of the year.

The 10-year Treasury yield rose 5 basis points to 3.75%.

ETFs

Among the top ETFs, the Innovator IBD 50 ETF (FFTY) was down 0.2%, while the Innovator IBD Breakout Opportunities (BOUT) ETF was up 0.5%. The iShares Expanded Tech-Software Sector ETF (IGV) was down 0.8%. The VanEck Vectors Semiconductor ETF (SMH) was down 0.3%.

The SPDR S&P Metals & Mining ETF (XME) gained 2.3% and the Global X US Infrastructure Development ETF (PAVE) 0.1%. The US Global Jets ETF (JETS) was up 1.8%. The Financial Select SPDR ETF (XLF) was up 0.6%. Health Care Select Sector SPDR Fund (XLV) shed 0.25%.

Reflecting stocks from more speculative stories, the ARK Innovation ETF (ARKK) was down 0.5% and the ARK Genomics ETF (ARKG) was down 0.4%. Tesla shares are a major holding in Ark Invest’s ETFs.


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Dow Stocks Near Buy Points

Boeing shares rose 2% to 175.32 on Tuesday, back to the 173.95 buy point, according to MarketSmith analysis. The stock has been trading lightly on volume near the buy point after a huge surge in optimism for the aerospace giant. Analysts expect Boeing to return to profitability in 2023 after four years of losses. The recent lull in BA stocks has caused the 21-day line to bounce back.

Chevron shares rose 1.45% to 180.94, slightly below the 182.50 buy point and just above the 21-day line. CVX shares traded around that official buy point throughout the month. An early entry near 167 on Oct. 19 was probably the safest bet initially. But with Chevron stock on the 21st and no longer extended from the 50th, it looks more interesting.

Shares in GS rose 0.35% on Tuesday to 383.71. The investment bank has a buy point of 389.68 of a 35% deep handle coaster as of November 2021. Investors may also see the recent break as a shelf just above the buy range of a base fund that Goldman shares paid off in early November. The 21-day moving average is close to rebounding, while the 50-day line is starting to gain ground. The relative strength line is at a multi-year high, reflecting the outperformance of GS stocks against the S&P 500.

Market Rally Analysis

The stock market rally is pulling back on major technical tests and economic data available, along with uncertainty over Covid policies in China.

The S&P 500 Index is extending a pullback just below its 200-day moving average, but still above its 21-day cross. The Russell 2000, which dipped below the 200 and 21-day lines on Monday, has pulled back above the 21-days.

The laggard Nasdaq dipped below its 21-day line and is approaching its 50-day line.

Shares of Apple, Tesla and other megacaps are weighing on the Nasdaq and the S&P 500 index.

The Invesco S&P 500 Equal Weight ETF (RSP) is still above its 200-day moving average.

But don’t overstate Apple’s impact. Many leading stocks are testing or falling below buy points or decent round-trip gains.

On the bright side, the stock market is not recovering from Fed speeches and important economic data. This could mean that markets can recover if there are no negative surprises, with the possibility of bigger gains if the next few headlines are positive.

But the market recovery will do what it will.


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What to do now

With markets pulling back, not many stocks are showing buy signals. Investors should probably wait for Powell’s speech and economic data before making significant further purchases. Investors may want to take at least some partial profits on winners, especially if winning stocks are pulling back to buy points.

If the market rally picks up soon, a large number of stocks will look actionable. But many interesting stocks today will start to look damaged if major indexes drop significantly from here.

Therefore, investors need to remain engaged and flexible. Keep your watchlists up to date, but also have exit strategies for your holdings.

Read The Big Picture every day to stay in sync with market direction and key stocks and sectors.

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

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