Dow Jones futures are rising as the market expects a large Fed rate hike

Dow Jones futures rose early on Wednesday, along with S&P 500 futures and Nasdaq futures, while Bitcoin continued to fall while bond yields fell slightly.

The stock market correction had a mixed session on Tuesday, as Treasury yields continue to rise sharply. Investors are concentrating on announcing Wednesday’s Federal Reserve meeting, and policymakers will approve a big or very big Fed rate hike.

How many Services (PWR), HealthEquity (HQY), Cheniere Energy (LNG), Dollar Tree (DLTR) and Li Auto (LI) are actions to consider. They all show strong relative strength lines, even if stock prices are struggling to keep up.

The LNG stock is in the IBD classification. PWR shares are on the ranking watch list and at IBD Big Cap 20. Li Auto shares are at IBD 50. HealthEquity was the existence of IBD on Tuesday.

The video embedded in the article talks about market action and analyzes the actions of Cheniere Energy, Li Auto and DLTR.

Meanwhile, Tesla (TSLA) reversed slightly higher after advancing to its May 24 low of 620.54. Shares of Tesla closed up 2.4% to 662.67, but far from their November high of 1,243.49. The National Highway Traffic Safety Administration is likely to release collision data involving driver assistance systems in the coming days, highlighting the high number of Tesla autopilot incidents. The NHTSA has been expanding a Tesla autopilot probe.

Fed meeting

A two-day Fed meeting ends Wednesday with an announcement at 2 p.m. ET, followed by a press conference by Fed Chairman Jerome Powell. Following the CPI report on Friday, which showed that inflation reached a 40-year high of 8.6%, there was growing speculation that Fed policymakers would raise rates on Wednesday by 75 basis points. not just 50 basis points.

The Fed doesn’t like to be surprised, and Powell said after the May Fed meeting that 75 basis points were off the table. The central bank is still likely to raise rates by 50 basis points, and Powell says there are 75 basis points on the table for July and September.

But after Fed officials apparently leaked to The Wall Street Journal on Monday that a large-scale rate hike is being considered, markets see a move of 75 basis points as overwhelmingly likely.

Dow Jones futures today

Dow Jones futures rose 0.5% from fair value. S&P 500 futures were up 0.6%. Nasdaq 100 futures rose 0.8%.

The 10-year Treasury yield fell 10 basis points to 3.38%.

The price of crude oil fell by 1%. Natural gas futures rose modestly after falling on Tuesday.

The price of Bitcoin fell below $ 21,000, reaching new 18-month lows amid more general concerns about cryptocurrencies.

Chinese economic data for May was slightly better than expected amid still intense Covid restrictions. Retail sales fell 6.7% year-on-year, beating views by 7.1%. Industrial production rose by 0.7% compared to the forecast of a fall of 0.7% and a fall of 2.9% in April. When Shanghai essentially ended its blockade on June 1, economic activity is expected to pick up this month.

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

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Tuesday stock exchange

The stock market was trading mixed in Tuesday’s session, with volume light ahead of the announcement of Wednesday’s Fed meeting.

The Dow Jones Industrial Average fell 0.5% on the stock market on Tuesday. The S&P 500 index fell 0.4%. The Nasdaq compound rose 0.2%. The small Russell 2000 capitalization sank 0.4%.

The 10-year Treasury yield rose 12 basis points to 3.48%, following large movements in recent days. The two-year yield rose 15 basis points to 3.43% The 30-year Treasury yield rose 6 basis points to 3.43%, but is now below the 10-year yield and even with performance at 2 years. If the two-year yield moves above the 10-year yield, the curve will be reversed from the two-year yield to the 30-year yield. The upward and flattening yield curve reflects the risks of inflation, with the odds of recession rising as inflation and Fed rate hikes take their toll.

US crude oil prices reversed to close at 1.7% to $ 118.93 a barrel.

Natural gas prices fell 16%. The Freeport LNG terminal, which was closed due to a June 8 fire, will not reopen for 90 days and will not be fully operational until the end of the year. This means fewer natural gas exports.

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 0.8%, while the Innovator IBD Breakout Opportunities ETF (BOUT) sank 0.6%. The ETF of the iShares Extended Technology Software (IGV) sector rose 0.6%. The VanEck Vectors Semiconductor ETF (SMH) advanced 0.7%.

The SPDR S&P Metals & Mining ETF (XME) fell 1.3% and the Global X US Infrastructure Development ETF (PAVE) fell 0.7%. US Global Jets ETF (JETS) yielded 1%. SPDR S&P Homebuilders ETF (XHB) was down 0.8%. The Energy Select SPDR ETF (XLE) was up 0.2% and the Financial Select SPDR ETF (XLF) was down 0.9%. The SPDR Fund for the Selected Health Sector (XLV) yielded almost 1%.

Reflecting more speculative stocks, ARK Innovation ETF (ARKK) rose 1.1% and ARK Genomics ETF (ARKG) 1.3%. Tesla shares remain one of the main holdings of Ark Invest ETFs.

Top five Chinese stocks to watch now

Actions to see

Shares of Quanta Services fell 1.8% to 123.55 on Tuesday, just above its 50-day line. The stock of PWR is in a cup base with a handle with a point of purchase of 138.56.

Shares of HealthEquity rose 5.9% to 68.42 on Tuesday, recovering from its 50-day line, removing some short-term levels and breaking a trend line. In a better market, Tuesday’s action would have offered early entry. Right now, the HQY stock is expanding from this entry. Approaching an official 72.80 point of purchase from a cup base. HealthEquity has almost doubled since early December after a long fall, while earnings have been on a downward trend for several quarters.

LNG stocks rose 2.2% to 130.40, still below the 50-day moving average. Cheniere’s shares lowered their consolidation low on Monday, which could set the stage for a double-bottomed base with a buy point of 146.45. Cheniere Energy, with its LNG export terminal, should benefit from the problems at the Freeport LNG terminal, which are lowering domestic natural gas prices and raising global LNG prices.

DLTR shares rose 0.65% to 156.02, reaching resistance on its 50-day line. Dollar Tree shares have a 166.45 cup buy-in point, according to MarketSmith analysis. Shares fell and rebounded in the second half of May with Target’s initial earnings (TGT) warning and warning, following strong gains and Dollar Tree’s guidance.

Shares of Li Auto soared nearly 11% to 32.22, reaching their best level since Jan. 3. Shares have skyrocketed since 18.82 on May 9, rising above the 200-day line on June 6. deep consolidation, with a potential of 37.55 points of purchase. But stocks could use a long handle or even a separate base within deep consolidation to allow major averages to catch up, especially the 50-day line. Li Auto is rising with other electric vehicle stocks from China Nio (NIO), Xpeng (XPEV) and BYD (BYDDF), as Covid’s headwinds subside, local governments are expanding subsidies to electric vehicles.

All car manufacturers have new models in the coming weeks, and Nio will launch the ES7 on Wednesday, a fully electric SUV. Le Auto introduces a new hybrid SUV, the L9, on June 21st. More generally, US stocks listed in the United States, including those on the Internet, have recovered in recent weeks.

Market analysis

The Dow Jones, S&P 500 and Nasdaq lowered Monday’s lows, but closed mixed. The Russell 2000 lowered its May lows, reaching its worst levels since November 2020. The small capitalization rate is below pre-Covid highs.

Given the huge Fed meeting on Wednesday afternoon, Tuesday’s low-volume market share isn’t as significant.

Whether the Federal Reserve raises rates by 50 basis points or 75 basis points on Wednesday, the macroeconomic climate is not favorable for the market and may not be so for a while. The risks of recession are high, while inflation will remain high in the foreseeable future.

Still, the reaction to the news is what really matters. The stock market could recover after the Fed’s rate hike on Wednesday and Powell’s comments, but that wouldn’t indicate a change in character on its own. Investors should see a follow-up day to confirm any recovery attempt. Even then, a confirmed uptrend could be another short-term rebound in the bear market.

Right now, the composite Nasdaq and the S&P 500 are in bearish markets, while the Dow Jones is in a strong correction.

Time to market with IBD’s ETF market strategy

What to do now

A bear market is not the time to be brave. Investors should be on the sidelines. The only exceptions could be the long-term winners or some positions in the energy sector, but even here investors have to consider making at least partial profits.

Right now, investors should be working on their watch lists, reviewing previous trades and historic bear markets.

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