Dow Jones futures fell slightly overnight, while S&P 500 futures and Nasdaq futures in particular rose with parent company Facebook. Meta Platforms (META) is rising in the earnings report. This comes after a big day for the stock market rally, where investors hail comments from Fed chairman Jerome Powell.
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Apple, Amazon and Google parents Alphabet (GOOGLE) open.
Major indexes rebounded on Wednesday and rose after the much-anticipated Fed meeting and especially Fed chairman Powell. The Federal Reserve raised interest rates by a quarter point and said it still sees “continuing increases” ahead of them. Powell backed this, but said it was “a good thing” and “satisfying” that inflation fell even before labor markets weakened.
As the market rally broke through more key levels on Wednesday, multiple stocks, including the Chinese search and artificial intelligence giant, broke out or gave other buying signals. Baidu (BIDU), chip gear manufacturer Slide Research (LRCX), network monitoring software manufacturer Dynatrace (CE), Delta Airlines (GIVEN) and more.
Significant Earnings
Meta Platforms earnings fell short, but revenue, sales guidance, and Facebook users outnumbered views. It also announced a $40 billion share buyback. The Facebook and Instagram parent lowered its spending forecast, including capital expenditure. META stock rose 20% after hours. Stocks rose 2.8% to 153.12 in Wednesday’s session, hitting the 200-day mark for the first time in more than a year. blow up (BLAST).
corvo (QRVO) exceeded fiscal Q3 earnings. However, like many other chip stocks, Qorvo fell sharply in the current quarter. QRVO shares fell 3^ in expanded trading. Shares of the 5G and Apple iPhone chip maker rose 4.5% to 113.53 on Wednesday.
ELF Beauty (ELF) crushed earnings looks and comfortably beat in revenue. EPS doubled and growth accelerated for the third consecutive quarter. Sales increased by 49% for the fourth consecutive quarter, gaining momentum. The cosmetics manufacturer also guided. ELF stock rose 16% to an overnight record. Shares rose 1.8% to 58.58 on Wednesday, just below Jan. 6 records.
Earlier on Thursday, pharmaceutical giants Eli Lilly (LLY), Merck (MRK) and Bristol Myers Squibb (BMY) to report. However, the big pharma sector, which performed well in the 2022 bear market, has so far been left behind in the growth-oriented 2023 market rally. LLY stock is below the Merck and Bristol Myers 50-day moving averages.
late thursday, Apple (AAPL), amazon.com (AMZN) and Google report. All recovering in 2023, but below the 200-day lines. GOOGL stock and Amazon rose nearly 4% overnight in sympathy for Meta.
Fed Rate Increases ‘Continues’
As expected, the Fed raised interest rates by a quarter point on Wednesday, raising the fed funds rate to 4.5% to 4.75%. This follows the Fed’s half-point rate hike in December and four consecutive 75 basis-point moves before that.
The Fed policy statement still stated: policymakers expect “continuous increases” At the federal funds rate, it’s a clear sign that Fed rate hikes aren’t over.
Fed Chairman Powell’s ‘Good Thing’
Fed chairman Jerome Powell backed this up, saying there was “more work to be done” and later stated that “we’re talking about a few more rate hikes.” He added that labor markets continue to be “extremely tight”.
However, Powell also said that “the process of fighting inflation has begun”. Noting that inflation fell even before business conditions were eased significantly, he said that was a “good thing” and “satisfying”. He also said that policymakers “have no desire or incentive to over tighten.”
This phrase seemed to trigger an afternoon rally.
On Wednesday morning, the Department of Labor reported that job postings had risen to 11.01 million, well above views. On Friday, the January employment report is ready. But Powell’s comments suggest that markets don’t need to be as fixated on labor data as they used to.
The market overwhelmingly expects the Fed to raise rates by another quarter point at the end of March, with the rate rising slightly to 86% on Wednesday.
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But despite Powell’s backing of “a few more” increases, investors still believe March’s Fed rate hike will be the culmination. This would leave the federal funds rate range at 4.75%-5%, below the Fed’s forecast of 5%-5.25%.
Meanwhile, the European Central Bank and the Bank of England are expected to raise interest rates by 50 basis points on Thursday morning.
Dow Jones Futures Today
Dow Jones futures fell 0.3%. reasonable value. S&P 500 futures rose 0.15%. Nasdaq 100 futures rose 0.8%, led by META stock alongside Google and AMZN stocks.
Remember, overnight action Dow futures and elsewhere it doesn’t necessarily turn into real trade on the next regular trade Exchange session.
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Stock Rally
The stock market rally fell moderately ahead of the Fed news, but escalated with Fed chairman Powell’s speech.
The Dow Jones Industrial Average rose slightly on Wednesday stock market trading, but after falling more than 1% in the day before the Fed announcement. The S&P 500 index rose just over 1%. The Nasdaq composite jumped 2%. Minor Russell 2000 won 1.5%.
US crude prices fell 3.1% to $76.41 a barrel as domestic crude inventories increased for the sixth week in a row. Natural gas prices continued their epic slump, falling 8%. Copper futures fell 2.8% as prices settled ahead of the Fed’s rate hike announcement.
The 10-year Treasury yield slipped 13 basis points to 3.4%. The two-year Treasury yield, which is more closely tied to Fed policy, fell 10 basis points to 4.11%. That’s well below the current federal funds rate range.
The US dollar fell to an eight-month low.
ETFs
Growth ETFs include the Innovator IBD 50 ETF (fifty) rose 1.5%. iShares Extended Technology-Software Industry ETF (IGV) jumped 2.85%. VanEck Vectors Semiconductor ETF (SMH) rose 4.7%. Lam Research and AMAT stock are major SMH holdings, of which QRVO stock is also a component.
Reflecting more speculative story stocks, the ARK Innovation ETF (ARKK) ran at 4.4% and the ARK Genomics ETF (ARKG) gained 2.4%.
SPDR S&P Metals & Mining ETF (XME) 1.8% and Global X US Infrastructure Development ETF (FLOOR) 1.5%. US Global Jets ETF (JETS) up 1%, DAL stock one upstream. SPDR S&P Homebuilders ETF (XHB) increased by 2%. Energy Select SPDR ETF (XLE) fell 2% and the Financial Select SPDR ETF (XLF) was straight. Health Sector Selected SPDR Fund (XLV) rose 0.5%.
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Market Rally Analysis
Major indices continued to gain momentum with major developments after Fed chairman Powell began to speak.
The Nasdaq is firmly above its 200-day moving average and its late 2022 highs. Russell 2000 clearly passed this level.
The S&P 500 also seems to be leaving the 200-day mark behind. The indicator index also moved to the highest levels of December.
The Dow Jones, now the lagging index, tested the 200-day line before leaping for a thin gain.
Keep in mind that the market is usually the second-day reaction to Fed meetings.
Meanwhile, the rest of the week remains full of news. Big wins on Thursday night Apple, Amazon, Google, Qualcomm (QCOM), ford engine (F) and more, along with Friday’s January employment report.
The S&P 500’s biggest daily winners and losers over the past few weeks have been dominated by the gains movers.
DT stock, OI Glass (OI), Stryker (SYK) and Atkor (ATKR) was excluded from bases on earnings on Wednesday.
But there were many good moves with no gains on Wednesday, especially after Fed chairman Powell’s statements.
LRCX stock and other equipment giant Applied Materials (AMAT) output from the bottoms, DAL stock and JB Hunt Transport Services (JBHT) and Performance Meal Group (PFGC) cleared traditional points of purchase. BIDU shares also exploded.
Arista Networks (A NETWORK), Pure Storage (PSTG) and Global Foundries (GFS) All early entries were cleared on Wednesday. However, Meta Platforms’ reduced capital expenditure plans may impact Arista and Pure Storage. ANET stock fell modestly hours later.
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what to do now
The stock market rally continues to strengthen with the Nasdaq, Russell 2000 and leading stocks. With growing clarity about the central bank’s endgame, the Fed meeting is off track.
There is growing evidence that the current market rally will be a permanent uptrend.
Thus, traders could add new positions on Wednesday, taking advantage of fresh buying opportunities. It’s still wise to do this gradually so as not to buy long term or become too concentrated. If this market rally has legs, the ever-increasing exposure can quickly get you fully invested or beyond. If this market rally stumbles, even for a short time, you won’t be caught. With Apple and Google gains looming in 2023 and the Nasdaq rising fast, a pullback wouldn’t come as a surprise.
Before you buy stocks, you need to find and study them. Prepare your watch lists and game plan.
To read big picture Staying in sync with market direction and leading stocks and industries every day.
Please follow Ed Carson on Twitter: @IBD_ECarson for stock market updates and more.
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