Dow futures rise: Fed rate hike imminent, but that’s what counts; Tesla flirts with buying points

Earlier Wednesday, Dow Jones futures were higher along with S&P 500 futures and Nasdaq futures, with the Fed meeting announcement in focus. Major stock indexes retreated on Tuesday as the Federal Reserve began its two-day policy meeting.




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Tesla stock briefly flashes positive buy signal despite more weaker-than-expected signs Tesla (TSLA) demand in China.This is in a big Ford (F) Warning on Supply Costs and Unfinished Vehicles. Ford shares plunge 12% General Motors (General Motors) fell 5.6% despite reaching EV supply deal hertz (HTZ).

Besides Tesla, chipmakers ON Semiconductor (on) and kid (PI) with Neuroendocrine Bioscience (NBIX) and the lithium giant square meter (square meters).

apple (AAPL) rose for a second straight session. Apple stock remains below a key level.Meanwhile, other large tech stocks Microsoft (MSFT) and Google parent letter (GOOGL) is at a 52-week low.

NBIX stock is on the IBD leaderboard. TSLA stock and Onsemi, also known as Onsemi, are on the IBD 50. ON stocks are on the IBD Big Cap 20. Impinj is Tuesday’s IBD stock today.

The video embedded in this article discusses Tuesday’s market behavior and analyzes Neurocrine Biosciences, wolf speed (WOLF) and PI stocks.

Fed meeting

Policymakers appeared to have locked in a third straight 75 basis point rate hike by the Fed, with an announcement at 2 p.m. ET. The market does see a small chance of a significant rate hike.

The point is what the Fed sees now. Quarterly forecasts will indicate where the central bank sees the federal funds rate at the end of 2023, and under what economic conditions. Federal Reserve Chairman Jerome Powell made it clear in a speech at Jackson Hole on August 26 that the Fed is willing to risk a recession to control inflation.

Powell is due to speak at 2:30 p.m. ET, possibly hinting at a near-term Fed rate hike. Currently, the market is betting on a fourth move of 75 basis points in November and 50 basis points in December. That would push the year-end federal funds rate up to 4.25%-4.5% from the current 2.25%-2.5%. Ahead of the August CPI on Sept. 14, the market was expecting 3.75%-4% by the end of 2022.

Meanwhile, Russia’s Vladimir Putin announced a partial mobilization to address his manpower shortage in the Ukrainian invasion. Conscripts’ terms will be automatically extended and reservists will be called up, among other measures, including a new nuclear threat.

Northrop Grumman (NOC) rose 2%, signaling out of consolidation. lockheed martin (LMT) and other defense giants also rose.

Dow Jones Futures Today

Dow Jones futures rose 0.4% to fair value. S&P 500 futures rose 0.3% and Nasdaq 100 futures rose 0.1%.

The 10-year Treasury yield fell 3 basis points to 3.54%.

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U.S. crude futures rose more than 2 percent. U.S. natural gas prices rose 5%. Part of Putin’s military mobilization could push energy futures higher.

Keep in mind that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading on the next regular stock market day.


Analyse actionable stocks in a stock market rally with an IBD expert on IBD Live


stock market tuesday

Stocks fell on Tuesday ahead of the announcement of the Fed meeting. The late afternoon rally faded away.

The Dow Jones Industrial Average was down 1% in stock market trading on Tuesday. The S&P 500 fell 1.1%. The Nasdaq Composite fell 0.95%. The small-cap Russell 2000 fell 1.4 percent.

Shares of Apple, a component of the Dow, S&P 500 and Nasdaq Composite, rose 1.6% to 156.90. AAPL stock hit resistance at the 21-day and remains below the 50-day and 200-day SMA after a sharp downside reversal last week. But decisive moves above the 50-day and 200-day antennas could provide new early entry opportunities.

U.S. crude fell 1.5% to $84.45 a barrel in October. Crude oil for November delivery, now the front-month contract, was down 1.7% at $83.94.

The 10-year Treasury yield jumped 8 basis points to 3.57%, another 11-year high.

ETFs

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) fell 1.3%. The iShares Expanded Tech-Software Sector ETF (IGV) fell 1.5%. The VanEck Vectors Semiconductor ETF (SMH) fell 1.4%.

The SPDR S&P Metals & Mining ETF (XME) fell 2.7%. The Energy Select SPDR ETF (XLE) was down 0.7% and the Financial Select SPDR ETF (XLF) was down 1.5%. The Healthcare Select Sector SPDR Fund (XLV) fell 1.2%.

Reflecting more speculative stocks, the ARK Innovation ETF (ARKK) fell 2.5% and the ARK Genomics ETF (ARKG) retreated 1.6%. TSLA stock is a major holding of the Ark Invest ETF.


The five best Chinese stocks to watch right now


PI stock

Impinj shares fell 2.5 percent to 89.66 on Tuesday. Shares of the tracking chip maker found support at the 21-day and 10-week lines. PI stock is in the midst of a new consolidation that should serve as a proper base at Friday’s close with a 99.10 buy point. Investors could use 93.46, just above the short-term high, as an early entry point still close to the 10-week line.

The RSI is at a high, which is a bullish sign for PI stock as it outperforms the S&P 500.

In stock

ON Semiconductor shares fell 2.4 percent to 68.48 after rising 1.8 percent on Monday. Shares of the electric vehicle-focused chipmaker closed just below its 21-day and 10-week line.

The RS line for Onsemi stock is right around the high.

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After failing to break out from a long-term base in late August, ON stock could have a new shallow base next weekend. Investors can use 73.03 as an aggressive entry, which would also return above the top of the previous consolidation.

NBIX stock

Neurocrine shares fell 0.7% to 107.09, again finding support at the 21-day moving average. According to MarketSmith analysis, NBIX stock has a flat base with a buy point of 109.36. The flat base just sits on top of the previous consolidation, making it a base-based pattern. Investors can use a break above Monday’s high of 108.71 as a small entry. The RS line for NBIX stock is at a new high.

square meter inventory

SQM shares fell 2.4 percent to 104.66, near the 21-day antenna. Shares of the Chilean lithium and fertilizer giant attempted to break out of a chaotic cup handle bottom earlier this month, but never closed above the 113.80 buy point. The good news is that the 50-day line is starting to catch up.

The RS line for SQM stock is nearing a high.

Tesla stock

Tesla shares rose as high as 313.33, extending gains slightly and breaking above a very aggressive 309.22 buy point. But shares fell 0.1 percent to 308.73. TSLA stock is approaching the 314.74 buy point from a bearish consolidation that could be an appropriate base for the weekend in a larger consolidation.

The RS line has been surging recently to just below its early April highs.

Buying TSLA stock, or any stock, would be very aggressive in the current market environment.

CEO Elon Musk tweeted Tuesday about Optimus, which he might show off at the company’s Artificial Intelligence Day on Sept. 30. A useful general-purpose humanoid robot is still decades away, most experts say. He also hinted at improved Smart Summon or self-parking features, which have been problematic for years.

However, Tesla’s sales in China have fallen short of expectations. Local sales should still hit a record high in September as Shanghai capacity expands again. But Tesla auto insurance registrations fell in the most recent week, when they would normally increase sharply.

Wait times for Tesla China have fallen sharply over the past few weeks, with the electric-car giant resorting to huge insurance subsidies to drive quarter-end sales. That could herald an actual price cut later this year.


Tesla vs. BYD: Which electric car giant is more worth buying?


stock market analysis

Well, it’s a stock market correction. The S&P 500 and Dow fell below Friday’s lows on Tuesday before recovering.

The good news on Tuesday was that stocks didn’t rise on major Fed-related news. This is in stark contrast to Fed Chair Powell’s August 26 Jackson Hole speech or the September 14 CPI inflation report.

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It’s no coincidence that stocks are struggling amid soaring Treasury yields.

The summer bull case revolves around the Fed. First, the Fed is expected to slow the pace of rate hikes soon before starting to cut rates in 2023. Then, there is still hope that the Fed will pause rate hikes by the end of the year.

But now the Fed is on track to raise rates significantly before the end of the year, with 2023 more likely. That means more pain for the economy.

The current low-growth, high-inflation environment is not easy for the company. ford, FedEx (FDX) and General Electric (General Electric) was one of the warnings issued over the past week.

The sell-off in Ford shares on Tuesday, following FDX and GE last week, showed that investors weren’t pricing in a big disappointing earnings. More warnings are expected in the coming weeks.

Given the weakness over the past few weeks, markets are likely to bounce back on Wednesday following the Fed meeting and comments from Fed Chair Jerome Powell. Keep in mind that markets typically reverse in the second day of reactions to Fed meetings.

It’s hard to see meaningful progress in markets until it’s clear when the Fed is likely to start slowing and stop tightening. It’s not hard to see the major indexes test or break below their June lows.


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what to do now

With the Federal Reserve on the verge of another big rate hike, the market correction has restarted with no end in sight. The company announced a major warning amid tough macroeconomic conditions that could get worse.

Investors should have little or no exposure and refrain from making new purchases. Wait until an uptrend is confirmed, which could involve the major indexes reclaiming their 50-day moving averages. Even in this case, other technical hurdles, as well as the Fed and economic backdrop, should keep investors cautious.

For now, investors should keep an eye on their watch lists for stocks with relative strength, such as NBIX stock, On Semi, and Tesla. Keep in mind that today’s relative winners could start to crumble if the correction intensifies.

Read the big picture every day to stay abreast of market direction and leading stocks and sectors.

Follow Ed Carson on Twitter @IBD_ECarson Stock market updates and more.

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