Dow futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures, with a focus on the Federal Reserve meeting.
The stock market suffered devastating losses last week due to a sudden rise in the CPI inflation report as well as some gloomy earnings reports or warnings. Major indices pulled back from their 50-day moving averages and trimmed some other key levels on Friday. Many blue-chip stocks also suffered.
It’s time for investors to get minimal exposure, at most. Build watch lists with stocks that have strong relative strength and hold key levels. Tesla (TSLA), Energy Enphase (ENPH), Centennial collectibles (CELH), Wolfspeed (wolf) And the Vertex Pharmaceuticals (VRTX) are all eligible.
Of course, shares of Tesla, Enphase, etc. look strong now, but they may not be in the coming days. Lots of stocks looked strong until last Tuesday. Others looked solid until Thursday or Friday.
The Fed meeting takes place September 20-21. In the wake of Tuesday’s CPI, which showed strength everywhere outside of gasoline, markets bolstered expectations for a third consecutive Fed rate hike of 75 basis points. (There is little chance of a huge 100 basis point move.) Investors will focus on what the Fed’s policy indicates in the future.
The Fed’s quarterly forecast will indicate where policy makers see the Fed funds rate further.
At the moment, the market is leaning towards another rate hike of 75 basis points in November, followed by 25 or 50 basis points in December. This would push the Fed funds target rate to either 4%-4.25% or 4.25%-4.5%, versus expectations of 3.75%-4% before the CPI report.
Fed Chair Jerome Powell will provide his comments after the meeting at 2:30 PM ET. Powell made clear in his Jackson Hole August 26 speech that the Fed would not repeat the mistakes of the 1970s by easing policy too quickly.
Dow jones futures contracts today
Dow Jones futures open at 6 p.m. ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.
stock market last week
The stock market suffered sharp losses last week, retreating sharply after strong gains on Monday.
The Dow Jones Industrial Average fell 4.1% last week stock market trading. The S&P 500 fell 4.8%. The Nasdaq Composite tumbled 5.5%. Small-size company Russell 2000 shares fell 4.5%.
The 10-year Treasury yield rose 13 basis points to 3.45%, the seventh consecutive weekly gain. At one point on Friday, the 10-year bond yield was 3.483%, exactly matching the 11-year high hit on June 14.
US crude oil futures fell 1.9% to $85.11 a barrel last week, the third consecutive weekly decline. Natural gas prices fell 2.7%, but after a busy week of gains and losses.
between the Best ETFsThe Innovator IBD 50 ETF (fifty) slipped 5% last week, while the Innovator IBD Breakout Opportunities ETF (fit4.2% surrendered. iShares Expanded Technology and Software Fund (ETF)IGV) decreased by 8.3%. VanEck Vectors Semiconductor Corporation (SMH) gave up 6%.
SPDR S&P Metals & Mining ETFs (XME) down 10.3% last week. Global Infrastructure Development Fund X US (cradle) 7.5%. US Global Gates Foundation (ETF)Planes) slipped 5%. SPDR S&P Homebuilders ETF (XHB) decreased 6.9%. SPDR Specific Energy Fund (SPDR ETF)XLE) gave up 2.7% and the Financial Select SPDR ETF)XLF) lost 3.9%. SPDR Healthcare Sector Selection Fund (XLV) decreased 2.3%
Enphase stock rose 4% last week to 318.01, continuing to find support at the 21-day high line. Pulling back to 21 days, and possibly pausing the 50-day streak to catch up, may provide a safer buying opportunity. A number of solar plays still look strong.
CELH stock fell 4.9% to 100.70 last week, but found support at the 10-week moving average. A move above Thursday’s high of 108.37 could provide a solid entry. In a few weeks, the percentage stock could have a new base at 118.29 buying points.
EV-focused chip maker Wolfspeed surged 5.25% to 120.21 last week, including Friday’s 2.8% gain. Investors can treat 123.35 as a buy point for WOLF stock from a handle in a longer consolidation.
Vertex stock fell 0.9% last week to 289.42, but rose 0.8% on Friday to cross the 21-day, 50-day and 10-week lines. A move above the September 12 high at 296.14 would provide an early entry. VRTX stock is likely to have a flat base in a few days, with 306.05 buying points.
Tesla stock rose 1.2% to 303.35 last week, after rising 10.9% the previous week. The electric vehicle giant’s shares held support at the 200-day moving average.
The line relative force TSLA stock has improved significantly. Over the past two weeks, it hit its highest level in five months. The RS line, the blue line in the provided chart, tracks the stock’s performance against the S&P 500.
Investors can use the movement above Thursday’s high at 309.12 as a strong entry, or the short-term high at 314.64. This would still be far from the traditional point of purchase.
For all of these stocks, weak market conditions increase the risk of any buy now.
stock market analysis
The stock market started last week with solid gains on Monday, which now looks like a long time ago. Major indices slipped through their 50-day moving averages on Tuesday. On Friday, the Nasdaq and S&P 500 closed below their September and late July lows, even if they pulled back from their intraday lows.
Major indices have now recovered more than half of their gains from mid-June to mid-August.
Yes, some of the leading stocks have held up, but for every Tesla, Vertex or Celsius, there have been many quality names that have suffered devastating losses.
Tuesday’s CPI report not only caused serious technical damage to the market, but undermined the case for a broader rally. Investors have been betting that a report on inflation will prompt the Fed to start slowing rate hikes, at least after September. Those hopes have been dashed.
It’s the second time the markets have been so rosy about Fed policy. The summer rally was largely driven by investors who expected the Fed to soon finish raising interest rates – and then start cutting sometime in 2023. Powell Jackson Hole’s speech ended talk of a “Fed pivot” to cutting rates.
Wednesday’s actual Fed meeting likely won’t be much of a market mover, given how much investors have adjusted in the past three weeks.
Prices will go up and you will stay there for a long time. The Fed is ready to push the US into recession in order to wring out inflation.
Far from declining jobless claims, which only added to the Fed’s fears, recent economic data has been disappointing. The environment of high inflation, low wages and low growth is a huge challenge for any company.
disaster FedEx (FDX) earnings and comments, mixed results from Adobe (ADBE) and warnings from Nokor (NEW) And the US Steel (X) reflects that companies are facing an extended period of uneven or poor results. The multinationals and issuers that dominate the S&P 500 could be particularly vulnerable, given the dollar’s strength combined with weakness in Europe and China.
What are you doing now
The stock market is not in good shape. Poor macroeconomic conditions. Investors need to take into account that the market could pull back from its June lows or be range-bound for weeks or even months until there is real clarity about the end game for a Fed rate hike.
Investors’ exposure should be minimal. There is nothing wrong with being 100% cash, especially if the recent trades are against you.
Focus on building your watch lists, paying attention to stocks that show resilience. If the market remains weak, some of these names will falter, while others will emerge. The key is to have an updated list when market conditions improve, and be prepared to take advantage of it.
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