Dow Jones futures fell slightly overnight, along with S&P 500 and Nasdaq futures, with Fed Chief Jerome Powell due to deliver his much-anticipated Jackson policy speech Hole Friday morning.
The stock market rally had a strong session on Thursday, with major indexes rallying above a key short-term level, despite fears that Fed chief Powell is signaling the need for tight monetary policy in the long term. .
Ultimate beauty (ULTA) was facing charges on Thursday, but it turned a profit after the close. ULTA stock edged higher on strong earnings and guidance. Shares closed 1.75% higher on Thursday at 419.25, eliminating buy points at 417.08 and 418.89.
Axcelis and STLD shares merge IBD classification Thursday. GFS stock and Steel Dynamics are new swingers on Swing Trader. ACLS stock is on the INN 50. Steel Dynamics action is on Thursday IBD stock of the day.
The video embedded in the article discussed Thursday’s stock market rally and what to expect from Fed chief Powell. He also analyzed Axcelis, Steel Dynamics and PODD stocks.
Fed Chief Powell’s speech seen Hawkish
Fed Chief Powell, who is scheduled to speak at 10 a.m. ET Friday at the Jackson Hole symposium, is unlikely to provide much insight into the magnitude of the Fed’s rate hike in September. Instead, it should focus on long-term inflationary pressures. This would include chronic labor shortages, but also possibly a sustained rise in energy and commodity prices, rising trade barriers and tight housing supply.
All of this suggests that the Federal Reserve will need to raise interest rates significantly — and keep them there for the foreseeable future. Fed chief Powell might even hint that a recession or a long period of sub-par growth will be needed to drive up unemployment to curb inflationary pressures.
This could mean sluggish demand, a strong dollar and higher and sustained Treasury yields. This could weigh on corporate profitability and valuations, particularly on highly valued growth.
Just a few weeks ago, markets saw rate hikes cool off quickly after September and possibly come back down next year.
Dow Jones Futures Today
Dow Jones futures were down 0.1% from fair value. S&P 500 futures fell 0.1% and Nasdaq 100 futures fell 0.1%.
Ahead of Powell’s speech and the opening bell, the Commerce Department will release its July income and expense report. This report includes the Personal Consumption Expenditure Index, the Fed’s preferred gauge of inflation.
Stock market rally
The stock market rally had a solid session, especially tech and small caps, returning above some key levels despite mixed earnings and guidance from some notable companies.
The Dow Jones Industrial Average rose 1% on Thursday stock market tradingeven with Salesforce.com (RCMP) falls solidly on earnings. The S&P 500 index jumped 1.4%. The Nasdaq composite jumped 1.7%. The small-cap Russell 2000 rose 1.55%.
US crude oil prices fell 2.5% to $92.52 a barrel.
The 10-year Treasury yield fell 8 basis points to 3.03% after rising 23 basis points in the previous four sessions.
From best ETFsthe Innovator IBD 50 ETF (FFTY) rose 1.7%, while the Innovator IBD Breakout Opportunities ETF (FIGHT) climbed 1.1%. The iShares Expanded Tech-Software Sector ETF (VIG) gained 0.8%, despite CRM stock being a large component. The VanEck Vectors Semiconductor ETF (SMH) jumped 3.4%.
SPDR S&P Metals & Mining ETF (XME) jumped 2.6%, with STLD stock a major holding. ETF SPDR S&P Home Builders (XHB) increased by 1.8%. The SPDR Energy Select ETF (XLE) increased by 0.8%. SPDR Healthcare Sector Fund (XLV) rose 1.1%.
Stocks in shopping areas
ACLS stock exploded in massive volume, jumping 13% to 81.73. According MarketSmith Analysis. The relative force line hit a new high, a bullish signal on a breakout as ACLS stock outperforms the S&P 500 Index.
GFS stock jumped 6.8% to 64.50 in heavy trade, breaking the downtrend in a handful. The official controller point of purchase is 66.06 as part of a very deep double-bottom consolidation. Shares of GlobalFoundries went public in October 2021.
Steel Dynamics stock rebounded 6.6% to 86.76, breaking the downtrend by a handful and the official 86.04 cup with handle point of purchase. The volume was way above normal. Nucor (NUDE) and Trade metals (CMC) also broke the downward trends of the handles, but in a lighter volume.
Wednesday, Cleveland Cliffs (FLC) announced a price increase of at least $75 per ton for carbon steel products.
PODD stock rose 3.35% to 282.86, clearing a buy point of 276.48. Volume was slightly lower than normal, but Insulet stock rebounded from its 21-day line on Wednesday in above-average trading.
RPM stock gained 5.6% to 97.83, clearing an entry at 95.80 from a ‘handful’ that needed one more day to be correct. The RS line for RPM stock has hit a new high.
Market rally analysis
Fed chief who? The stock market rally came strong on Thursday, despite big news on Friday.
The Dow Jones, S&P 500 and Nasdaq composite moved back above their 21-day moving averages, after hitting resistance there in the previous two sessions. The small-cap Russell 2000 and the S&P Midcap 400, which both recovered the 21-day line on Wednesday, point to the 200-day line.
Even better, an increasing number of stocks are giving buy signals and coming from various sectors. Movements in ACLS, Steel Dynamics and more stocks reflect handles that developed or extended during the market pullback.
Previous breakouts continue to work.
So there are a lot of positive actions. But that comes just before Powell’s speech.
Powell may or may not be particularly hawkish, but in the end, it’s the market’s reaction that matters. The good news is that markets are bracing for hawkish rhetoric.
Fed chief Powell could propel major indexes higher, giving a boost to major stocks and potential leaders emerging. But a negative reaction to Powell’s speech could push the market rally down significantly, erasing strong gains from winning stocks.
What to do now
Well, now we are waiting. Thursday’s breakouts and buy signals certainly gave investors reason to take new positions. If you decided discretion was the best part of bravery before Powell’s speech, that’s fine. If the market continues to move higher in the coming days, a number of setups will soon turn into buy signals.
Build your watchlists. Be sure to cast a wide net to find top stocks across a range of industries. Pay particular attention to a selected group in or near shopping areas.
Be ready to act on Friday. The market rally could have a saw effect on Powell’s speech, but at some point you may want to add or reduce exposure.
Lily The big picture every day to stay in tune with market direction and key stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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