Dow futures fell sharply early Wednesday, along with S&P 500 and Nasdaq futures, sending a fresh stock market rally on track to erase many of Tuesday’s strong gains. Treasury revenues and crude oil prices also declined significantly. Federal Reserve Chairman Jerome Powell will testify before Congress amid growing concerns that raising Fed rates will push the economy into recession.
Vertex Pharmaceuticals (VRTX) and Bristol-Myers Squibb (BMY) regained its 50 streaks on Tuesday, while United Therapeutics (UTHR) in the buy range. All three drug stocks have relative strength lines at high levels.
at the same time, Tesla (TSLA) and Google Parent the alphabet (GOOGL) Two of the magnitudes that have yet to cut are still lows in late May. This is not market leadership, but a solid mass of strength.
UTHR stock is on SwingTrader. Google stock is in IBD Long-Term Leaders. Vertex and BMY stocks are in IBD 50 and IBD Big Cap 20.
Fed Chairman Powell testifies
Fed Chairman Powell will testify before the Senate Banking Committee on Wednesday, followed by the House Financial Services Committee on Thursday. The session begins at 9:30 a.m. ET, right at the opening bell. The Fed can issue Powell’s pre-made comments.
Powell is likely to reaffirm the central bank’s commitment to taming inflation, which reached a 40-year high in May according to the Consumer Price Index. As a result of the surprise CPI inflation report, the Fed raised interest rates by 75 basis points on June 15, the largest increase in 28 years. After the Fed meeting was announced, Powell said policy makers could raise interest rates by 50 basis points or 75 in late July. Markets almost fully priced it in another move of 75 basis points.
On June 15, Powell said a soft landing was still possible, but the next day markets decided that the Fed’s strong anti-inflation drug makes at least a mild recession a possibility. Will Powell try to calm investors about economic growth?
On Wednesday, Citigroup sees a 50-50 chance that the US will plunge into a recession. The most likely recession would be a mild “parks”-type slowdown, but there are risks of a “hard landing” and “stagflation”.
Dow jones futures contracts today
Dow Jones futures are down 1.4%, against the difference. fair value. S&P 500 futures fell 1.5%. Nasdaq 100 futures fell 1.4%.
US crude oil prices are down more than 6%, trading below $105 a barrel and crude oil futures pointing toward their first monthly decline since November. Oil markets are increasingly concerned about a recession that will dampen oil demand. Meanwhile, President Joe Biden has called on Congress to suspend the federal gasoline tax of 18.4 cents per gallon for three months.
Copper prices fell more than 3%. The 10-year Treasury yield fell to 3.16% from 3.31% on Tuesday.
Remember that pre-market action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
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stock to watch
Vertex stock rebounded above the 50-day line on Tuesday after a strong move on Friday. The biotech giant has 292.85 buy points, but investors can use 279.23 as an early entry. The downward sloping trend line may offer a slightly lower entry.
BMY stock jumped again above the 50-day line on Tuesday, arguably offering an early entry. Technically, Bristol stock is a few weeks into a new base, but it can also be said that it is in a consolidation state going back to early April.
UTHR stock jumped 4.3% on Tuesday to 228.84, bounced off the 21-day line and broke a short downtrend. United Thera stock is still in a range of 218.48 buying points.
Tesla stock jumped 9.3% to 711.11 on Tuesday, just above its 21-day moving average. But it’s still below the fast-declining 50-day streak, with a 200-day average well above that. Last week, TSLA stock fell to 626.08, but settled above an 11-month low of 620.57 on May 24. Shares were down 1% on Wednesday morning.
Google stock rose 4.1% to 2230.88 on Tuesday, just below the 21-day streak. It’s not too far from the fast-declining 50-day streak, but the 200-day streak is a long way off. Last week, GOOGL stock fell to just over 2100, just above the May 24 low of 2037.69. Shares were down 1% early Wednesday.
Market Rise Analysis
The Dow Jones Industrial Average is up 2.15% in the stock trading session on Tuesday. The S&P 500 Index jumped 2.45%. The Nasdaq Composite Index jumped 2.5%. Small cap Russell 2000 rose 1.8%.
Tuesday’s solid gains were fine, but the markets saw many one-day or short-term rallies in the midst of sharp downtrends. The big drop in the Dow Jones futures contracts on Wednesday indicates that the attempt to rise the new stock market is already facing problems.
Assuming the major indicators do not undermine last week’s lows, investors can look for a follow-up day to confirm a new rally attempt.
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What are you doing now
Investors should remain on the sidelines, waiting for a confirmed upward trend in the market. Even so, investors should be careful. The relative lack of good stocks in a position to buy is probably one of them.
Read the big picture every day to stay in sync with market trend, stocks and leading sectors.
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