Overnight, Dow futures fell slightly, along with S&P 500 futures and Nasdaq futures. The stock market rose slightly on Wednesday in a bullish and bearish session as upbeat Fed Minutes brought some surprises. Treasury yields rebounded, and still warn of a recession. Crude oil prices are down again, but have pulled back from their lows.
X
Shares of Microsoft and Google Parent the alphabet (The Google) retraced the 50 day moving averages. Amazon.com (AMZN) And the apple (AAPL) moved over the ten week lines. Microsoft (MSFT) and Google’s stock Long-term leaders of IBD.
Tesla competitors BYD (BYDDF) And the Lee Otto (LI) in the areas of purchase. BYD stock rose modestly inside the buy zone while Li Auto returned to the range. Tesla stock fell.
GME stock split
After closing on Wednesday, the original meme stock Jim Stop (GME) reported plans for a 4-for-1 stock split. GME stock jumped 9% overnight after closing 2.4% down at 117.30.
The stock split returned in his favour. Amazon shares were split 20 for 1 in early June. Google stock will split 10 for 1 on July 15 while Tesla proposes a 3 for 1 split. But these tech giants have or have high stock prices, making it difficult to trade AMZN stock options, for example. This is not the case with GME stocks.
Dow jones futures contracts today
Dow futures were down 0.1% against fair value. S&P 500 futures dropped 0.15% and Nasdaq 100 futures lost 0.1%.
Crude oil prices fell 1%.
The 10-year Treasury yield rose one basis point at 2.91%. The two-year yield rose one basis point to 2.97%.
At 8:15 a.m. ET, the ADP will release its June estimate for private sector employment. At 8:30 AM ET, the Labor Department releases its weekly report on unemployment claims. This comes ahead of Friday’s June jobs report.
Remember to work overnight in Dow Jones futures contracts and anywhere else that does not necessarily translate into actual circulation in the next regular session Stock market session.
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Fed Minutes, Economic Data
The Fed meeting minutes from the June 14-15 policy meeting revealed that policy makers said there was a need for “restrictive policy,” and they may need to become “more restrictive,” fearing inflation could become “entrenched.”
Policy makers saw a rally in late July of probably 50 or 75 basis points, according to the Federal Reserve’s meeting minutes. But Fed Chairman Jerome Powell already said so after the meeting.
Overall, the Fed minutes did not present any real surprises and emphasized the significant shift in economic conditions in the past three weeks.
The Federal Reserve’s meeting minutes mentioned “inflation” 90 times but never once mentioned “recession”. Since the Fed meeting in mid-June, recession fears have inflated while commodity prices have fallen sharply.
The Fed minutes slightly boosted market expectations for a 75 basis point rate hike later this month, with 50 basis point in September. December still marks the potential end of an interest rate hike by the Federal Reserve.
Earlier Wednesday, the Labor Department’s JOLTS survey showed job openings fell to 11.254 million in May from an upwardly revised 11.68 million in April. That was slightly higher than expected, but the biggest monthly drop since August 2020.
The ISM non-manufacturing index for June fell to a two-year low but outpaced views and still indicated solid growth. The jobs sub-index fell to 47.4 from 50.2, below the break-even point level of 50.
stock market rise
The stock market rally moved between slight gains or losses for most of Wednesday’s trading. Major indicators gained momentum after the release of the Fed’s meeting minutes at 2 PM ET, but they pared back the progress on the closing minutes.
The Dow Jones Industrial Average rose 0.2% on Wednesday stock market trading. The S&P 500 rose 0.4%. The Nasdaq Composite Index advanced 0.35%. Small cap Russell 2000 fell 0.8%.
Microsoft and Google shares rose just over 1% to cross the 50-day moving averages. Amazon stock rose 0.7%, hitting the 50-day streak and above the 10-week streak. Apple’s stock fell below 50 days, but Wednesday’s 1% gain pushed the iPhone giant above the 10-week streak.
US crude oil prices fell 1% to $98.53 a barrel, far from morning lows but after falling 8.2% on Tuesday. Gasoline futures, which topped $4 a gallon just a few weeks ago, fell 4% to $3.20. Prices at the pump have fallen over the past three weeks and are set to drop significantly in the next few weeks.
The 10-year Treasury yield rebounded 10 basis points to 2.9% after falling 30 basis points in the previous three sessions. The two-year Treasury yield jumped 14 basis points to 2.96%. The Treasury yield curve is now slightly more inverted, reflecting higher recession risks.
ETFs
between the Best ETFsThe Innovator IBD 50 ETF (fifty(was static, while the Innovator IBD Breakout Opportunities ETF)fit) gained 1%. iShares Expanded Technology and Software Fund (ETF)IGV) was up 0.1%, with MSFT stock topping the high. VanEck Vectors Semiconductor Corporation (SMH) rose 0.7%.
SPDR S&P Metals & Mining ETF (XME(Down 0.7%, Global X US Infrastructure Development ETF)cradle) rose 0.1%. US Global Gates Foundation (ETF)Planes) down 1.5%. SPDR S&P Homebuilders ETF (XHB) lost 0.6%. SPDR Specific Energy Fund (SPDR ETF)XLE) gave up 1.7% and the Financial Select SPDR ETF)XLF) decreased by 0.25%. SPDR Healthcare Sector Selection Fund (XLV) rose 0.7%.
Shares reflect more speculative stories, the ARK Innovation ETF (see you) is down 2.25% and the ARK Genomics ETF (ARKG) is down 0.2% after both rose above the 50-day lines on Tuesday. Tesla shares are principal ownership via Ark Invest’s ETFs. Cathie Wood’s Ark Invest also owns some shares of BYD.
Top 5 Chinese stocks to watch right now
China EV stock in buying areas
BYD stock rose 1.1% to 40.55, after briefly testing the buy point at 39.81 from the deep-handled cup base for the fifth consecutive session of the day. On Sunday, BYD announced June sales of 134,036 electric and hybrid vehicles, up 224% over the previous year. In the second quarter, BYD topped Tesla’s sales with more than 100,000 vehicles. Tesla continues to lead in all-electric vehicle (BEV) sales, although that gap has shrunk dramatically over the past year.
Li Auto stock fell 3.5% to 38.60. Intraday stocks fell to 37.10 but closed above a buy point of 37.55 from a long and deep base. LI stock is still 39% above the 50-day line. Ideally, the hybrid SUV maker would form a short base here, allowing Li Auto stocks to digest their huge gains from early May to late June. Li Auto will begin delivery of its second luxury SUV, the L9, in late August.
Tesla stock fell 0.6% to 695.20 on Wednesday, just below the 21-day streak.
China’s Ministry of Commerce and 16 other departments issued a joint notice on July 7 supporting the purchase of New Energy Vehicle (NEV) and will consider extending the exemption from the NEV purchase tax by the end of last year. This follows similar signals from a high-level meeting on June 22 when it will expire.
This could benefit BYD, Li Auto, Tesla and other electric car makers in China.
Tesla vs. BYD: Which EV giant is the best one to buy?
Market Rise Analysis
The stock market rally added to Tuesday’s bounce from intraday lows, but it appears that major indicators are still looking for direction.
The Nasdaq Composite moved above its 21-day moving average on Wednesday, but the S&P 500 and Dow Jones hit resistance at that short-term average. The three major indices are now back above their June 24 lows Follow-up days. The drop below FTDs last week pushed the market rally to “under pressure”, where it stands.
The late June streak and the 50-day streak loom above the 21-day streaks, with the peaks of early June above that.
While major indexes rose on Wednesday, their breadth was poor, with losers easily outnumbering gainers on the Nasdaq and the New York Stock Exchange.
The good news about inflation and Fed rate hikes, including commodity prices and easing labor markets, is bad news for a possible recession. So the markets don’t quite know how to deal with economic data.
The market could go sideways for some time. This will allow for a lot of rules to be formed and for clarity about the economy and Fed policy. But until that happens, there may be fakes and heads-ups along the way for individual stocks and the market as a whole.
Medical stocks remain on the clear front at the moment, including defect 50 Individuals advanced health (EVH), McKesson (MCK), United Health (United nations), Harmony in the biological sciences (HRMY) And the AstraZeneca (AZN).
Time to Market with IBD’s ETF Market Strategy
What are you doing now
The stock market rally is under pressure, with major indices still facing a lot of major resistance levels. While a number of medications and a handful of other stocks work well, they can be subject to noticeable vibrations.
So if you are going to take positions, keep it small and look for early entries. Consider taking at least partial profits quickly to reap some gains. Feel free to cut losses.
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