Dow Jones futures rose slightly early Wednesday, along with S&P 500 futures and Nasdaq futures. The consumer price index is due before the open, followed by the Federal Reserve meeting announcement in the afternoon.
Oracle jumped overnight on big AI deals, while the European Union announced big tariff hikes on Chinese-made EVs, including China EV makers and Tesla.
The stock market rally had a mixed session Tuesday, but the Nasdaq and S&P 500 set fresh highs. The Dow Jones, small caps and financials were losers, but came off lows.
Apple stock surged out of a base in a day two reaction to Monday's AI announcements. Apple stock reclaimed a $3 trillion market cap while Nvidia fell just below that threshold. Microsoft remains No. 1, as it edged into a buy zone.
Arista Networks and e-commerce giant PDD Holdings are in buy range.
On the downside, Tesla stock fell below key support ahead of the EV giant's shareholder meeting.
Nvidia stock is on IBD Leaderboard. Microsoft stock is on the IBD Long-Term Leaders list. PDD stock, Arista Networks and Nvidia are on the IBD 50. The video embedded in this article discusses Tuesday's market action, and highlights Apple, Lam Research and ANET stock.
Federal Reserve Meeting
The two-day Federal Reserve meeting ends with a policy statement at 2 p.m. ET Wednesday followed by Fed chief Powell at 2:30 p.m. The Fed's latest economic projections and policymakers' updated "dot plot" rate outlook will be key, along with Powell's comments.
In March, Fed policymakers narrowly favored three cuts in 2024. This time, officials may back two Fed rate cuts, but perhaps only one.
CPI Inflation
The Fed news will come hours after the May consumer price index, due at 8:30 a.m. ET.
The CPI should rise just 0.1% vs. April, with gasoline prices retreating. The CPI inflation rate should hold at 3.4% vs. a year earlier. Core CPI is seen climbing 0.3% once again, with annual Core CPI inflation edging down to 3.5%.
Dow Jones Futures Today
Dow Jones futures climbed 0.1% vs. fair value. S&P 500 futures and Nasdaq 100 futures rose 0.15%.
The 10-year Treasury yield edged down to 3.39%.
Crude oil rose more than 1%.
The CPI inflation report will swing Dow futures and Treasury yields one way or the other before the open. But it may be a waiting game until after the Federal Reserve meeting and Fed chief Jerome Powell.
Overnight, China consumer prices rose 0.3% vs. a year earlier, just below views. Producer prices fell 1.4%, slightly less than expected.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Oracle Earnings, AI Deals
Oracle earnings and revenue fell short but ORCL stock soared in extended trade, signaling a possible breakout. The software giant said it'll bring its database to Google Cloud. Meanwhile, Microsoft-backed OpenAI will use Oracle's public cloud, expanding on an existing Oracle alliance with Microsoft's Azure.
Oracle stock has a 132.77 cup-base buy point, but investors could use resistance just below 127 as an early entry.
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Stock Market Rally
The stock market rally continued its recent string of strong closes, though the key indexes ended mixed.
The Dow Jones Industrial Average fell 0.35% in Tuesday's stock market trading, rebounding off lows but closing just below the 50-day line. The S&P 500 index rose 0.3% and the Nasdaq composite was up 0.9%.
Apple stock buoyed the major indexes.
The small-cap Russell 2000 lost 0.4%, but was well off lows.
U.S. crude oil prices edged up 0.2% to $77.90 a barrel.
The 10-year Treasury yield slumped 6.5 basis points to 4.4%, still between the 50-day and 200-day lines.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF rose 0.3%, with Microsoft and Oracle stock key holdings. The VanEck Vectors Semiconductor ETF dipped 0.15%, with Nvidia stock the dominant member.
Reflecting more-speculative story stocks, ARK Innovation ETF closed fractionally higher and ARK Genomics ETF advanced 0.3%. Tesla stock is the No. 1 holding across Ark Invest's ETFs.
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Apple Stock
Apple stock soared 7.3% to 207.15, running above a 199.62 cup-base buy point to a record high, but 14.6% above its 50-day line. That comes after Monday's 1.9% decline amid Apple's big AI announcements at its Worldwide Developers Conference.
Investors may be betting that the sluggish Dow giant's belated AI launch will spur faster growth.
Apple stock moved decisively above a $3 trillion market cap, closing at $3.176 trillion. That passed Nvidia, which fell 0.7% to finish with a $2.979 trillion valuation.
Microsoft stock climbed 1.1% to 432.68, just above a 430.82 flat-base buy point, according to MarketSurge analysis. MSFT stock has a $3.215 trillion market cap.
Other Stocks In Buy Areas
Arista Networks stock rose 2.4% to 304.77, above the 300 level after several days of tight action as well as breaking a short trendline A 307.74 cup-base buy point is another place to buy or fill out an ANET position.
PDD stock dipped 1% to 146.93 on Tuesday, but held the bulk of Monday's 3.2% gain. That followed Friday's fractional gain after an upside reversal, successfully testing a 142.32 cup-with-handle buy point. PDD runs the Chinese e-commerce giant Pinduoduo and the fast-growing international site Temu.
Tesla Vs. BYD: EV Giants Vie For Crown, But Which Is The Better Buy?
Chinese EV Tariffs
The European Union provisionally will impose additional tariffs of up to 38.1% on Chinese EVs starting in July, on top of the current 10% duties. Specifically, a 17.4% tariff will imposed on EV giant BYD, 20% on Geely, which owns Zeekr, and 38.1% on state-owned SAIC.
All three have been "sampled" by the EU. For other automakers, they'll receive an average duty of 21% on battery electric vehicles if they cooperate and 38.1% if they do not.
Tesla, which exports the Model 3 and some Model Y vehicles from its Shanghai plant, also is affected. It may receive an "individually calculated duty rate" later.
Notably, the tariffs do not appear to affect plug-in hybrids. That's good news for BYD, which is exporting PHEVs as well as BEVs to Europe.
BYD plans to build a plant in Hungary, but it may not be ready until 2027. For Nio and XPeng, which have no EU factories planned, the tariffs may substantially limit exports to the region long term.
China has said it could respond.
Tesla Stock
Tesla stock fell 1.8% on Tuesday to 170.66, closing below the 50-day line that had been a support area for several weeks.
Tesla may show off a robotaxi concept on Aug. 8, but robotaxi revenue is likely years away, JPMorgan said Tuesday. It cited conversations with the EV giant's investor relations team.
Investors also may be nervous about the outcome of shareholder votes on Elon Musk's mammoth pay deal and whether to reincorporate Tesla in Texas. The results should be revealed at Thursday night's annual meeting. It's unclear how stocks will react to the actual news, but expect big swings.
TSLA shares edged lower early Wednesday amid the EU tariffs as well as a Wall Street Journal article on Musk's alleged sexual misconduct at SpaceX.
Market Rally Analysis
The market rally is definitely mixed, which is not ideal. But there are still a number of stocks that are working, flashing buy signals or setting up.
But some stocks are struggling or breaking down. Make sure you cut those losers.
Investors may want to hold off on new buys Wednesday before the Fed announcement and Powell's comments. Remember also that markets may have a day two Fed reaction that reverses Wednesday's action.
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