Dow futures rise after Fed sell-off; Apple, 5 Titans mask market weakness

Dow Jones futures rose early Thursday, while S&P 500 futures rose modestly and Nasdaq futures jumped. An attempted rally in the stock market suffered a nasty negative reversal on Wednesday after the Fed’s meeting and Treasury Secretary Janet Yellen’s comments. KB Home and Coinbase were the main movers overnight.

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The Fed raised interest rates by a quarter point and has indicated only one hike this year. Soon after, Fed Chairman Jerome Powell said he was still committed to fighting inflation. But he also said that tightening conditions from the banks’ problems takes some of the pressure off monetary policy.

Meanwhile, Treasury Secretary Yellen, testifying before a Senate committee, said there would be no “universal insurance” for all deposits, dismissing a report that regulators were considering such a move. On Tuesday, Yellen, Powell’s predecessor as Fed chair, signaled that regulators were ready to cover deposits more widely at smaller banks, if needed.

Bank stocks suffered significantly First Republic Bancorp (FRC) And Backwest Bancorp (PACW).

More broadly, the attempt to climb the market relied heavily on six mega-corporations: Apple shares, Microsoft (MSFT), a parent from Google the alphabet (Google), Tesla (TSLA), Meta platforms (meta) And nvidia (NVDA). It has increased in strength in recent weeks, masking its overall weakness in breadth. apple (AAPL), Google stock and Meta are all actionable now, despite Wednesday’s reversal. Microsoft is just below the buy point during Tesla stock setup. Nvidia has been greatly extended.

Nvidia stock and Meta running IBD Leaderboard. AAPL and Meta stocks are on SwingTrader. Microsoft and Google are among the long-term leaders of IBD.

But even with those 6 massive tops, this wasn’t a confirmed uptrend yet. Investors should be careful.

Dow jones futures today

Dow futures rose 0.2% against fair value. S&P 500 futures rose 0.5%. Futures for the Nasdaq 100 rose 1%.

Crude oil futures fell 1% to around $70 a barrel.

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

raise the federal interest rate

The Fed raised interest rates by a quarter point to a range of 4.75%-5% as expected. The new quarterly projections show that policymakers expect the Fed’s key interest rate to end in 2023 at 5.1%, which would imply another rate hike.

But even this height is not evident. “Some additional policy tightening may be appropriate,” the Fed’s policy statement said, and is less optimistic than the language of previous statements about “continued interest rate increases.” Fed Chair Powell said people should pay attention to “maybe” and “some.”

The Fed rate outlook will depend heavily on the banking system. Fed Chair Powell said bank deposits are “safe” because of the Federal Reserve, the Federal Insurance Corporation and the Treasury Department. But he said it was too early to tell how monetary policy would respond to banking pressures.

The statement also noted that banking problems “are likely to lead to tougher credit conditions.” Powell said this means monetary policy has little to do.

Markets now see only a 44% chance of a quarter-point increase in May, down from 60% on Tuesday.

Investors still see interest rate cuts over the summer, even as Powell indicated that was unlikely.

Main earnings

KB major (KBH) reported after closing. KBH stock rose 2.7% in extended trading after KB Home earnings beat outlook and management gave bullish guidance. Shares rose 0.4% to 36.80 on Wednesday, a day after reclaiming the 50-day line. KB Home stock has 41.02 buy points on a new base after up 62% from late September to February 2nd.

commercial minerals (CMC) slightly outperformed viewership before Thursday’s opening., Accenture (ACN) topped expectations, but gave some weak guidance. Stock is not active yet.

Darden Restaurants (DRI), general mills (Geographic information systems) And FactSet Research Systems (FDS) also early Thursday.

SEC warns Coinbase of possible charges

The Securities and Exchange Commission late Tuesday issued a notice to Wells Coinbase (currency), an official warning to the cryptocurrency exchange that the regulator may take “enforcement action” for possible violations of securities laws. Coinbase said it will operate normally for now.

COIN stock is down 13% in pre-market trading. In Wednesday’s session, Coinbase stock fell 8.2% as bitcoin and other cryptocurrencies sold off after the Fed’s interest rate hike.

Join IBD experts as they analyze actionable shares in the bullish stock market on IBD Live

Stock market rise

The stock market rally bid was quiet until the Fed’s rate hike and Fed Chair Powell’s comments, then pulled back in the last two hours of trading, closing at session lows. Banking stocks were big losers on Wednesday, weighed down by Powell’s comments.

The Dow Jones Industrial Average fell 1.6% in stock market trading Wednesday. The S&P 500 lost 1.6%, with FRC stock being the worst performer of the day. The Nasdaq Composite lost 1.65%. Small cap Russell 2000, heavily weighted in the financials, sold off 2.9%

US crude oil prices rose 1.8% to $70.90 a barrel, up 6.2% so far this week. Copper futures, which closed ahead of the Fed’s meeting decision, rose 1.2%, their fifth consecutive advance.

The 10-year Treasury yield fell 11 basis points, to 3.5%. The two-year Treasury yield fell 20 basis points, to 3.98%.

The US dollar fell sharply to its lowest levels since early February, continuing the losing streak.

Exchange Traded Funds

Among the ETFs, the Innovator IBD 50 ETF (fifty(down 1.3%, while the Innovator IBD Breakout Opportunities ETF)fit) lost 1%. iShares Expanded Technology and Software ETF (IGV) fell 2%, as MSFT stock was a major component of IGV. VanEck Vectors Semiconductor Corporation (SMH) fell 0.6%. Nvidia shares are SMH’s primary ownership.

Reflecting more speculative stories, the ARK Innovation ETF (ARK)ark(slip 4.8% and ARK Genomics ETF)ARKG) lost 4.3%. Tesla stock is a massive holding via Ark Invest ETFs.

SPDR S&P Metals & Mining ETFs (XME(down 2.2% and the US X Global Infrastructure Development Fund (ETF) )cradle) down 2.1%. US Global Gates Foundation ETF (Planes) fell 2.3%. SPDR S&P Homebuilders ETF (XHB) lost 1.7%. Energy Defined Fund SPDR ETF (xle) Decreased 2.1% SPDR Fund (SPDR Healthcare Fund)XLV) 1.5%.

Bank stocks

SPDR Financial Selection Fund (XLF) sank 2.3%. ETF S&P Regional Banking ETF (KRE) fell 5.7% after rising 5.8% on Tuesday.

First Republic and PACW stock, among several KRE holdings, fell 15.5% and 17%, respectively. Bloomberg reported Tuesday that First Republic may receive government support to help facilitate an investment or acquisition. PACW stock said Wednesday that it forgave a capital raise and secured $1.4 billion in liquidity from Atlas SP, which is owned by… Apollo Global Management (APO). While bank deposits may be “safe,” Powell stated, bank shareholders could suffer huge losses or be wiped out.

FRC stock and PacWest rose modestly overnight.

Top five Chinese stocks to watch now

Market rally analysis

The stock market rally bid initially responded well to the Fed rate hike and Chairman Powell’s comments, but sold off hard into the close.

The S&P 500 briefly crossed the 50-day line, but then reversed lower above the 200-day line. The Nasdaq Composite touched 12,000 before retreating.

Dow Jones reversed below the 200-day line. The Russell 2000 Index fell sharply, well below the major moving averages.

The losers led the winners about 3 to 1 on both the NYSE and the Nasdaq. Breadth has been a concern throughout the market’s attempt to rally.

Nvidia stock rose slightly on Wednesday while Apple, Google, Meta and Microsoft stocks fell and Tesla fell modestly. But over the past several weeks, those six mega-cap companies have fueled the S&P 500 and the Nasdaq. But the Invesco S&P 500 Equivalent ETF (RSP), which was only approaching the 200-day line this week, fell 2.25% on Wednesday to its worst close in four months. Meanwhile, the large Nasdaq 100 index reversed lower, but after hitting its best level in nearly seven months. Direxion NASDAQ-100 Weighted Equivalent Index (QQQE) fell 2.1%, retreating from its 50-day price.

The market often has a second day reaction to the Fed meetings which mirrors the initial move. But the Fed-led sell-off could continue. This is still just an attempt to bullish the market. Look for a follow-up day to confirm the new uptrend.

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What are you doing now

The stock market rally attempt has shown some promising hints at times, but it is still divided, volatile and news-driven. Until the banking crisis plays into the background and the market shows broad advances, investors should be careful.

Investors can have modest exposure, assuming their positions work. But don’t let the losses mount.

There is nothing wrong with waiting for a confirmed uptrend for the market to start moving away from the sidelines.

Don’t try to force the problem. Prepare for the next sustainable market rally by building your watch lists.

Read the big picture every day to stay in sync with market trend, leading stocks and sectors.

Please follow Ed Carson on Twitter at @tweet For stock market updates and more.

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200-day average: recent support line?