Dow Jones futures opened Sunday night alongside S&P 500 futures and Nasdaq futures, with a focus on the upcoming Federal Reserve meeting.
The major stock indexes sold off sharply late last week, falling below key levels, and the most recent breakout failed badly. The Nasdaq tumbled on Friday, closing below its May 26 low, a very bearish sign. The current uptrend has been “under pressure” after Thursday’s sell-off.
NetEase (NTES), Northrop Grumman (NOC), Eli Lilly (LLY), Albemarle (ALB), and Onsemi (ON) all showed relative strength near buy points.
These deserve your attention, but investors should be cautious about new purchases and reduce their current exposure.
Albemarle, Northrop and LLY stocks are on the IBD leaderboard, and ON stocks are on the leaderboard watch list. NTES stock and Eli Lilly are on the IBD 50. The video embedded in this article discusses market movements in detail, while also analyzing NOC stock, Onsemi, and Albemarle.
Meanwhile, large-cap growth stocks have yet to show a lead. Apple (AAPL), Microsoft (MSFT), Google parent Alphabet (GOOGL), Meta Platforms (META), Amazon (AMZN) and Nvidia (NVDA) were all hit hard, with Google stock, Amazon and Nvidia all down by their 10-week moving averages. Downtrend reversal. Tesla (TSLA) lost 1% on a weekly basis, relatively modest. But TSLA stock closed near weekly lows after repeatedly hitting resistance at its 21-day moving average.
Late Friday, Tesla announced plans to split TSLA stock 3-for-1, subject to shareholder approval at its Aug. 4 annual meeting. The electric car giant announced plans to split its stock again in March. Tesla shares were up 1.8% late on Friday.
Oracle chairman and co-founder Larry Ellison will also not seek re-election to Tesla’s board.
Oracle (ORCL) reported Monday night, Adobe (ADBE) Thursday night. The software giant will provide insight into enterprise IT spending. But ORCL stock and Adobe are in deep downtrends.
Fed meeting
The Fed meets on Tuesday and Wednesday. The Fed will announce its latest rate hike at 2 p.m. On Wednesday, Federal Reserve Chairman Jerome Powell held a news conference at 2:30 p.m. ET. Eastern time.
A key driver of the stock market sell-off has been investor fears that Fed policymakers will have to more aggressively rein in price pressures, increasing recession risks. Markets are now pricing in a 50 basis point move through the next four Fed meetings in November, after Friday’s CPI report showed inflation unexpectedly rose to a fresh 40-year high of 8.6%.
But there were calls on Wednesday for the Fed to raise rates by 75 basis points on Wednesday. Markets are pricing in a slim but not remote possibility of a sharp rate hike by the Fed.
Surprises would be out of place. Fed Chair Jerome Powell tends to communicate monetary policy moves ahead of time. Fed officials have not indicated that a three-quarters move is likely. In fact, after the meeting in early May, Powell said 75 basis points was not “actively considered” by policymakers.
One option is for the Fed to keep raising rates by half a basis point in the coming week, but Fed Chairman Jerome Powell said he would raise rates by 75 basis points at the end of July.
Dow Jones Futures Today
Dow Jones futures open at 6:00 p.m. ET Sunday, as well as S&P 500 futures and Nasdaq 100 futures.
Keep in mind that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular trading session.
Stock market review
Stocks started the week in their current range, but fell below those levels on Thursday and fell even more on Friday.
The Dow Jones Industrial Average fell 4.6% last week. The S&P 500 fell 5.1%. The Nasdaq Composite tumbled 5.6%. The small-cap Russell 2000 fell 4.5%.
The 10-year Treasury yield jumped 20 basis points to 3.16%, its highest level since late 2018. The yield on the 2-year U.S. Treasury note, which is closely linked to the Fed’s interest rate moves, rose 25 basis points to 3.07% on Friday alone. This flattening of the yield curve underscores concerns about stagflation.
U.S. crude futures rose 1.5% to $120.67 a barrel, their seventh straight weekly gain.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) lost 5.3% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) lost 4.4%. The iShares Expanded Tech-Software Sector ETF (IGV) fell 5.9%, with shares of Microsoft, Adobe and ORCL all worth watching. The VanEck Vectors Semiconductor ETF (SMH) fell 7.4%, with Nvidia stock playing a big role.
The SPDR S&P Metals & Mining ETF (XME) lost 4.45% last week. The Global X U.S. Infrastructure Development ETF (PAVE) fell 5.6%. The U.S. Global Jets ETF (JETS) fell 7.2%. The SPDR S&P Homebuilders ETF (XHB) fell 5.8%. The Energy Select SPDR ETF (XLE) was down 0.8% and the Financial Select SPDR ETF (XLF) was down 6.8%. The Healthcare Select Sector SPDR Fund (XLV) fell 3.3%. LLY stock is a large XLV holding company.
Reflecting more speculative stocks, the ARK Innovation ETF (ARKK) tumbled 7.1% and the ARK Genomics ETF (ARKG) tumbled 8.4% last week. Tesla stock remains the top pick in the Ark Invest ETF.
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