Dow Jones futures rose slightly overnight, along with S&P 500 futures and Nasdaq futures. All eyes are on the announcement of the Federal Reserve meeting and Fed Chairman Jerome Powell. Fed rate hike forecasts will be key.
The stock rally closed modestly higher, but first a CPI inflation report. Prospective movements of leading stocks have generally declined or reversed.
Tesla (TSLA) fell to fresh bear market lows on Tuesday as sentiment turned decidedly bearish on the EV giant. TSLA stock is trading heavily. CEO Elon Musk himself acknowledged concerns about Tesla’s demand on Wednesday.
Among the Dow Jones megacap technologies, apple (AAPL) erased strong early gains amid news of a radical change to the App Store model. Microsoft (MSFT) higher but closed after hitting key resistance.
Airline stocks were a tough sell JetBlue (JBLU) warning, adding to recent concerns about travel demand through 2023. United Airlines (GOOD), which has been flirting with buy points for the past few weeks, collapsed on Wednesday.
In the meantime, General Electric (Go), Goldman Sachs (GS) and Peabody Energy (BTU) all found support at key levels and are as close as possible get points. Peabody was Tuesday IBD Stock of the Day.
The video embedded in this article discussed Tuesday’s market action and analyzed Tesla stock, GE and Peabody Energy.
Fed Rate hike, forecast
After four consecutive Fed hikes of 75 basis points, the Federal Reserve will almost certainly raise rates by 50 basis points at 2:00 PM ET. What investors want are signals about the Fed’s interest rate policy in early 2023.
After Tuesday’s CPI inflation report, markets are now leaning slightly towards a quarterly rate hike on February 1. 1.
The consumer price index was lighter than expected in November, gaining 0.1% month-on-month, or 0.2% excluding food and energy. The CPI inflation rate fell to 7.1%, the lowest this year, down from 7.7% in October. The core CPI inflation rate cooled to 6% from 6.3%.
The Fed will release quarterly economic forecasts along with policymakers’ interest rate hike forecasts. This can give policymakers an idea of where they see the “terminal” or peak fed funds rate.
Fed Chair Jerome Powell will speak at 2:30 PM ET. His comments on inflation and recession risks and peak Fed rates will be critical for stocks and Treasury yields.
Dow Jones Futures today
Dow Jones futures advanced 0.2%. fair value. S&P 500 futures rose 0.2%, and Nasdaq 100 futures rose 0.3%.
Don’t forget that it’s a one night stand Dow futures and elsewhere does not necessarily become the actual trade on a regular basis Stock market session.
Join IBD’s experts as they analyze the stocks that made the most of the stock rally on IBD Live
Stock market rally
The stock market rally got off to a strong start on Tuesday, with all major indexes clearing short-term highs on the CPI inflation report. However, earnings have declined significantly.
The Dow Jones Industrial Average rose 0.3% on Tuesday stock trading. The S&P 500 index rose 0.7%. The Nasdaq composite rose 1%. The small-cap Russell 2000 advanced 0.3%.
Apple shares rose as high as 149.97 on the day, but ended up just 0.7% at 145.47. It just retook the 50-day line. Bloomberg reports that Apple will open up its iPhone and iPad devices to multiple app stores in Europe to satisfy European regulators. Apple has turned the App Store into a huge money maker over the past few years.
Microsoft shares rose 1.75% to 256.92. 1 high. But the stock reached 263.92 in the morning. MSFT shares topped the 200-day line, a key resistance area.
The price of crude oil in the United States increased by 3% to 75.39 dollars/barrel.
The yield on the 10-year Treasury fell 11 basis points to 3.5%, but was at an intraday low of 3.43%. The two-year Treasury yield, which is more closely tied to Fed policy, fell 18 basis points to 4.22%.
between the best ETFsInnovator IBD 50 ETF (FFTY) rose 0.8%, while the Innovator IBD Breakout Opportunities ETF (ABOUT) rose 0.9%. iShares Expanded Tech Software Sector ETF (IGV) rose 1.6%, a major component of MSFT shares. VanEck Vectors Semiconductor ETF (SMH) added 1.7%. Reflecting more speculative story stocks, the ARK Innovation ETF (ARKK) 0.1% and ARK Genomics ETF (ARKG) increased by 1.1%. Tesla stock is a major holding in Ark Invest’s ETFs, specifically ARKK.
SPDR S&P Metals & Mining ETF (XME) 0.8% and Global X US Infrastructure Development ETF (PEACE) 0.9%. US Global Jets ETF (JETS) UAL stock and JetBlue fell 2.85% with both components down. SPDR S&P Homebuilders ETF (XHB) gained 1.8%, while several builders and housing-related retailers showed strength. Energy Select SPDR ETF (XLE) increased by 1.9%. Financial Select SPDR ETF (XLF) and the Healthcare Select Sector SPDR Fund (XLV) both increased by 0.3%.
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Stocks to Watch
Shares of GE fell 0.4% to 82.88 after breaking above its 21-day moving average. On Monday, General Electric made a solid advance off the bottom with an 81.40 buy point. On the weekly chart, the GE stock found support at its 10-week moving average for the first time since early November. A strong bounce from these levels would offer a buying opportunity, perhaps reaching Tuesday’s high of 84.90.
GE’s earnings have been mixed, but they’re up again in 2022, with even stronger growth next year.
GS shares also recently bounced back from a breakout of a cup base and found support at the 10-week line, finishing below the 358.72 buy point. Investment banking resumes this week. On the weekly chart, Goldman stock has a 13-month run base with cup handle according to, with a buy point of 389.68 MarketSmith analysis.
The stock rose 1.5% to 368.89 on Tuesday, slightly above its 21-day moving average but hitting an intraday high of 378.56. A move above Tuesday’s high could suggest early access to GS shares.
Peabody Energy Stock
Shares of BTU rose 2.2% to 28.47 on Tuesday, retreating from the 50-day and 10-week lines but holding resistance at the 21-day line. Peabody shares have a buy point of 32.99 holdings in a consolidation that lasts about eight months. But BTU stock, like the overall market, tends to make rapid advances followed by more gradual pullbacks that give away much of the previous gains. A move above Tuesday’s high of 29.08 could suggest an early entry from both the 50-day and 21-day lines, as well as break the downtrend of the handle.
Tesla shares opened higher but quickly gave back gains before falling sharply for the second straight session. Stocks exploded during November. The 21-month bear market decreased by 4.1% to 160.95. Volume was the heaviest in more than a year with several other high trading pullbacks over the past few weeks.
It is possible that some large TSLA stock investors or mutual funds are selling the stock as it declines and the year ends.
More broadly, Tesla shares have lost nearly half their value since late September. Sharp sales were followed by cool, short bounces.
Data on Tuesday showed that Tesla’s Chinese car registrations were lower than last week’s forecasts. This raises demand concerns for China and comes amid widespread reports that Tesla will slow production at its Shanghai factory and stop production at the end of the year.
Elon Musk acknowledged Tuesday that Tesla’s demand is a problem. “Tesla will be great long-term, but it doesn’t control macroeconomic fluctuations,” Musk said.
While the weak global economy is a likely factor, Tesla faces increasing competition, particularly in China.
Meanwhile, Elon Musk’s Twitter reign is weighing on Tesla stock. His focus is on Twitter. The EV giant. Meanwhile, Musk’s increasingly partisan, trolling tweets have damaged his brand image, particularly with Democrats. The concern of TSLA stock investors is that Elon Musk’s negatives will turn off potential Tesla EV buyers.
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Market rally analysis
Stocks rallied on Tuesday’s open CPI inflation report, but quickly gave up most of those gains.
All major indices have outperformed in December. 1 intraday high for a short time before pulling back. The S&P 500 closed above its 200-day moving average. The Nasdaq continued to climb above its 50- and 21-day lines.
The Russell 2000 opened above the 200-day, but fell well below that level and ended below the 21-day line.
If the major indexes, especially the S&P 500, were able to move higher in December. 1 high, that would be a bullish sign, but not necessarily definitive. The current market rally saw a series of big one-day gains, soon followed by pullbacks that wiped out the move. This made it difficult to purchase with power.
Not surprisingly, many stocks posted big gains at the open on Tuesday, but fell back for small advances or outright losses. Megacaps are neutral at best, like Microsoft stock, laggards like Apple stock, or outright losers like Tesla.
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What to do now
Tuesday’s market action shows why investors shouldn’t buy straight into the open, especially when the major indexes are down on the news. It also shows why investors should keep their emotions in check.
If the market rallies strongly with Wednesday’s Fed rate hike and Fed Chair Powell’s comments, there will likely be some buying opportunities. But for slightly safer entries, add exposure gradually, using early entries and pullbacks.
When a market rally goes from a wave action to a sustained uptrend, increasing exposure is risky.
Many stocks are built from different sectors. So you want to be prepared by working on your watchlists. Engage so that stocks can act as clear buy points.
Read it The Big Picture daily to stay in sync with market direction and leading stocks and sectors.
Follow Ed Carson on Twitter @IBD_ECarson for stock updates and more.
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