Dow Jones Futures: Stocks hit record highs despite this Fed rate shift; Broadcom jumps in late

Dow Jones futures fell slightly after hours, while S&P 500 futures and Nasdaq futures rose. Broadcom (Afgo) jumped late on strong earnings and a big stock split.

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The stock market surged Wednesday morning on the back of CPI inflation data, with the S&P 500 and Nasdaq hitting all-time highs. They largely held on to those gains even after the Fed forecast just one rate cut in 2024. But stocks faded somewhat at the close.

apple (Camel) rose again, with Nvidia (NVDA) And Tesla (TSLA) rose strongly. Small stocks jumped but closed near session lows.

inspiration (ORCL), Booking Holding (Baking), ASML (ASML), Reddit (RDT) And Dwarf beauty (dwarf) And Mr. Cooper Group (Cooperative) Scan new purchase points.

On Thursday, the focus will be on Tesla as it holds its annual shareholder meeting, where investors vote on Elon Musk’s massive pay deal.

The Fed sees only one rate cut in 2024

Federal Reserve policymakers are aiming for just one rate cut this year, defying market expectations of two cuts. This is based on a “dot plot” of individual forecasts, with four members predicting no moves at all in 2024.

In March, Fed officials narrowly backed three interest rate cuts.

Fed Chairman Jerome Powell said the main reason for lower interest rate cut expectations is the raising of the target for core personal consumption expenditures inflation at the end of the year. But there are reasons to believe that inflation may fall short of the Fed’s targets. This would give more room to cut interest rates sooner.

Powell seemed relatively happy with the overall economy, with growth holding up while labor markets and inflation slowly decline.

Taming CPI inflation

Before the opening, the Labor Department reported that the Consumer Price Index for May was flat compared to April, slightly below views. CPI inflation was 3.3%, with annual gains unexpectedly slowing slightly for the second month in a row.

Core CPI rose 0.2%, also lower than expected. Core inflation was 3.4% compared to the previous year, the smallest advance since April 2021.

Following the Fed news and CPI inflation report, the odds of a September rate cut rose to 61.5% from 52.8% on Tuesday. Markets view at least one rate cut in 2024 as a default lock (92.8%), with a 60.7% chance of the Fed cutting rates twice this year.

Nvidia, ELF Beauty, and ASML stock is on IBD Leaderboard. Booking stock is on SwingTrader. ELF and Nvidia shares are in the market Bahraini dinar 50. Nvidia stock exists IBD Big Cap 20 index. Booking Holdings was IBD Stock of the Day on Wednesday.

The video embedded in this article discusses Wednesday’s market action and BKNG stock analysis, Adel Ishaq (Fico) And KB Home (KBH).

Dow jones futures today

Dow Jones futures were down 0.2% versus fair value. Standard & Poor’s 500 futures rose 0.2%. Nasdaq 100 futures rose 0.6%. AVGO stock is a component of the S&P 500 and Nasdaq 100.

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

Join IBD experts as they analyze leading stocks and the market on IBD Live

Stock market pool

The stock market’s rally on Wednesday was fueled by inflation that was surprisingly tamed before the open. It held those gains despite somewhat tighter Fed rate expectations as Powell spoke, but faded somewhat in the final half-hour as Treasury yields continued to pare losses.

The Dow Jones Industrial Average fell 0.1% in stock market trading on Wednesday, shrugging off a broad market advance even with strong gains by Apple and Amazon. Microsoft (MSFT). The S&P 500 rose 0.85%. The Nasdaq Composite Index rose 1.5%.

The Russell 2000 small-cap index jumped 1.6%, back above its 50-day line, but closed near session lows. Invesco S&P 500 Equal Weight Fund (RSP) rose 0.5%, also reclaiming the 50-day range. The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) advanced by 0.8%, approaching record levels.

Blue chip stocks had a strong session overall, but many of them faded of late.

The Nasdaq closed 7.4% above its 50-day line, above the 5-6% level that was starting to look extended. The high-tech complex may continue to expand, but the downside risks will also increase. Nvidia stock is 31% above its 50-day line, although it has topped 40% several times in the past year. Apple stock is up 17% from its 50-day.

US crude oil prices rose 0.8 percent to $78.50 per barrel.

The 10-year Treasury yield rose 11 basis points to 4.29%, although it rose to 4.32% after the official close at 3pm ET. The yield reached a two-month low of 4.25% ahead of slightly tightening Fed rate expectations.

Megacap winners

Apple stock jumped 2.9% on Wednesday after rising 7.3% on Tuesday. Nvidia shares rose by 3.55%. Microsoft stock rose 1.9%, moving into a buy zone. Microsoft remains the most valuable company at $3.277 trillion. AAPL stock is approaching $3.267 trillion and Nvidia is at $3.086 trillion.

For its part, Tesla stock rose 3.9% as Cathie Wood’s Ark Invest set a new price target of 2,600. The electric car giant has reclaimed its 50-day line but remains well below the 200-day line. TSLA stock has a market capitalization of $565.4 billion.

ETFs

Among the growth ETFs is the iShares Expanded Technology Software Sector ETF (IGV) by 2.3%, with MSFT holding a large share. VanEck Vectors Semiconductor ETF (Trait) jumped 3%. Nvidia is the No. 1 holding in SMH, and shares of ASML and Broadcom are also major components.

Reflecting more speculative stocks, the ARK Innovation ETF (Ark(2.1% and ARK Genomics ETF)Arkj) emerged 2.6%. Tesla stock is the #1 stock in Ark Invest’s ETFs.

SPDR S&P Metals and Mining Fund (XME) by 0.4%. SPDR S&P Homebuilders ETF (XHB) jumped 3.55%. Energy Select SPDR ETF (XLE(Down by 1.1% and Healthcare Sector SPDR Fund)Forty-fifth) decreased by 0.2%.

Selected Industrial Sector SPDR Fund (forty-first) by approximately 0.95%. Financial Select SPDR ETF (XLF) decreased by 0.1%.

Time the market with IBD’s ETF market strategy

Broadcom profits

Broadcom’s earnings slightly beat views in its fiscal second quarter, with the chip and software giant also up on full-year revenue. The company announced plans for a 10-for-1 stock split.

AVGO stock rose more than 10% overnight. Shares rose 2.4% in Wednesday’s session to 1,495.51, rising within a 5% buy zone from a flat entry level of 1,438.17.

Stocks are in buy zones

Oracle stock jumped 13.25% to 140.29 on Wednesday, surpassing a key buy point of 132.77 COP. The database software giant missed earnings per share and revenue Tuesday night, but announced AI-related deals with OpenAI and Google-parent the alphabet (Google).

Booking stock rose 2.3% to 3,876.41 points, surpassing 3,853 buy points. Investors can view this as an early entry within a flat base or as an official buy point in a double bottom pattern.

ASML stock rose 3.2% to 1,068.86, surpassing an alternative entry level of 1,056.34. Shares rose above the 992.88 entry level on June 5 on sales to a major client, then paused at the consolidation highs for a few days.

Fellow chip equipment giant L Research (LRCX) showed a similar action Wednesday, while Integris (Intg) Clear trend line entry.

Reddit stock jumped 7.1% to 65.93 after briefly moving above its IPO base of 66.15 cup-with-handle. Investors can use the 63.80 level as an early entry. The latest IPO is growing rapidly and is expected to become profitable in 2024.

ELF stock rose 4.1% to 197.32, breaking out of the 202.58 cup-with-handle buy point and breaking the handle’s downtrend. It is already a bullish outside week after ELF rebounded from its 10-week line on Monday.

Mr. Cooper’s stock rose 3% to 83.35, rebounding from the 50-day line and breaking a short downtrend. It’s the first test of the 50-day line since the February breakout, according to Marketsorg. Mr. Coop is a mortgage origination and servicing company.

What are you doing now

The stock market rally looks strong, with the Nasdaq and S&P 500 hitting new highs. The Fed meeting is a long way off, although there could still be a reaction on day two.

The Nasdaq looks extended, supported by Nvidia and Apple, even as small caps and the Dow Jones battle over the 50-day limits.

Investors can add exposure, but do so gradually. If you have a large exposure, you can wait or simply adjust your portfolio.

Read The Big Picture every day to stay on top of market trend and leading stocks and sectors.

Please follow Ed Carson on topics at @edcarson1971 And X/Twitter at @IBD_ECarson For stock market updates and more.

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