Dow Jones futures fell early Thursday, along with S&P 500 futures and Nasdaq futures after a big Fed-fueled rally Wednesday. The Federal Reserve raised interest rates by a half point on Wednesday, but the stock market surged and Treasury yields fell as Fed chief Jerome Powell signaled supersize rate hikes are off the table in June and July. Apple stock flashed an early entry while Exxon Mobil broke out.
Lithium giant Albemarle and cybersecurity leader Fortinet were notable after-hours earnings winners.
Fed Meeting
The Fed meeting ended Wednesday afternoon with a half-point rate hike to a new target range of 0.75%-1%. Policymakers also voted to begin scaling back the central bank's massive balance sheet, with that runoff rising to $95 billion a month in September. Both moves were expected.
Fed chief Powell says it's crucial that inflation is brought down quickly. But Powell said he sees rate hikes of "50 basis points" on the table for the next couple of Fed meetings. He added that policymakers aren't actively considering 75 basis points. Markets had priced in a good chance of three-quarters of a point hikes at the June and July Fed meetings.
Fed chief Powell's less-hawkish-than-feared rate-hike forecast sent stocks sharply higher and Treasury yields lower.
Key Earnings
After the close, Albemarle spiked 14% higher on strong earnings and guidance. ALB stock already ran up 9.3% to 215.47 in Wednesday's regular session, reclaiming its 50-day line as rival Livent skyrocketed 30% Wednesday on its earnings and outlook, flashing early entries. Albemarle stock is signaling a gap up above its 200-day line, potentially breaking a trendline and another early entry.
Fortinet topped quarterly views, though it gave some mixed guidance. FTNT stock rose 7% in overnight trading, but has some distance before being in buy range. The cybersecurity play tumbled intraday Wednesday, approaching 2022 lows before rebounding for a wafer-thin gain.
E-commerce software leader Shopify badly missed on earnings and sales Thursday morning, sending SHOP stock plunging before the open. That follows weak guidance from eBay and Etsy late Wednesday. Datadog topped views and guided higher, while also announcing an acquisition. DDOG stock fell modestly. The two former software leaders were near 52-week lows.
Stocks In Buy Zones
Exxon Mobil and LNG stock flashed buy signals Wednesday, with energy prices soaring and Cheniere Energy reporting booming revenue growth.
Growth stocks rebounded strongly Wednesday, but remain damaged. Apple just triggered a buy signal. Tesla stock is the only other megacap above its 200-day and 50-day lines.
Tesla and LNG stock are on IBD Leaderboard. Fortinet stock is on IBD Long-Term Leaders. CF stock is on the IBD 50. CF Industries and PXD stock are on the IBD Big Cap 20, which is filled with energy, fertilizer and other commodity names.
The video embedded in the article discussed Wednesday's strong market rally and analyzed XOM stock, Mattel and General Dynamics.
Dow Jones Futures Today
Dow Jones futures fell 0.4% vs. fair value. S&P 500 futures sank 0.5% and Nasdaq 100 futures lost 0.6%.
The 10-year Treasury yield rose 4 basis points to 2.96%. U.S. crude oil prices climbed more than 1%.
The Bank of England raised rates by a quarter point once again, to 1%.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock Market Rally Wednesday
The stock market rally attempt was up and down before the Fed meeting announcement and immediately after. But the major indexes moved sharply higher into the close after Fed chief Powell signaled 75 basis point rate hikes off the table.
The Dow Jones Industrial Average jumped 2.8% in Wednesday's stock market trading. The S&P 500 index leapt 3%. The Nasdaq composite ran up 3.2%. The small-cap Russell 2000 popped 2.7%.
U.S. crude oil prices shot up 5.3% to $107.81 a barrel. The European Union, as expected, proposed phasing out Russian crude oil imports over six months. There's no final deal yet.
The 10-year Treasury yield fell 4 basis points to 2.92%, after edging above 3% intraday once again.
Among the best ETFs, the Innovator IBD 50 ETF rose 1.2%, while the Innovator IBD Breakout Opportunities ETF gained 3.3%. The iShares Expanded Tech-Software Sector ETF popped 3%. The VanEck Vectors Semiconductor ETF added 3.4%.
SPDR S&P Metals & Mining ETF advanced 2.9% and the Global X U.S. Infrastructure Development ETF climbed 3.3%. U.S. Global Jets ETF climbed 1.3%, even with crude oil prices spiking. SPDR S&P Homebuilders ETF ascended 3.3%. The Energy Select SPDR ETF ran up 4.15%, with XOM stock a major component. The Financial Select SPDR ETF picked up 3.1%. The Health Care Select Sector SPDR Fund tacked on 2.2%
Reflecting more-speculative story stocks, ARK Innovation ETF leapt 5.1% and ARK Genomics ETF 4.35%, both rebounding from sharp intraday losses. TSLA stock remains the No. 1 holding across Ark Invest's ETFs.
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Exxon Stock
Exxon stock rose 4% to 91.70, clearing an 89.90 cup-with-handle buy point in above-average volume. The relative strength line is at a new high, a bullish sign. The RS line is the blue line in the charts provided.
While oil prices are high, refining margins are widening considerably. That's good news for an integrated oil giant like Exxon Mobil.
LNG Stock
Cheniere Energy stock popped 4.2% to 145.89, briefly topping a 149.52 flat-base buy point intraday. But LNG stock is actionable from a bounce off the 50-day line and breaking a shallow downtrend.
The RS line is at a new high.
Cheniere Energy reported a sizable first-quarter loss early Wednesday. But revenue leapt 142%, crushing views and the fifth straight quarter of accelerating growth. Meanwhile, while U.S. crude oil and natural gas prices rose sharply, electricity prices continue to skyrocket in Europe. That's good news for liquefied natural gas specialist Cheniere Energy.
Apple Stock
Apple stock popped 4.1% to 166.02 on Wednesday, moving above the 200-day moving average and just closing above its 50-day line. The move above the 50-day line also broke a short downtrend, offering an early entry for AAPL stock. The official buy point is 183.04, though investors could use 179.71 as another early entry for the Dow Jones tech titan.
The RS line is at a new high on a weekly chart. That reflects Apple stock's strong performance vs. the S&P 500 index. The RS line is the blue line in the charts provided.
Tesla has reclaimed its 200-day and 50-day lines as well, jumping 4.6% to 952.62 on Wednesday. The EV giant has some potential buy points, though the chart isn't easy on the eye. Tesla stock also isn't close to an obvious early entry.
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Market Rally Analysis
The stock market rally attempt got a big boost Wednesday afternoon as Fed chief Powell eased rate-hike fears slightly.
With such an important Fed meeting, and so many crosscurrents for investors to consider, it wouldn't be a surprise to see a second-day Fed reaction that gives back much of Wednesday's gains.
Still, investors can now be on the lookout for a follow-through day to confirm the new uptrend. A follow-through day — at least a few days into a new rally attempt — involves a big price gain on one or more of the major indexes in higher volume than the prior session. That suggests big institutions are betting the new market rally has legs. Confirmed uptrends don't always work, but they are a strong signal.
The energy sector is still looking strong, with Exxon and LNG stocks among the many in buy zones or setting up. Fertilizer makers have rebounded from key support. Some steelmakers are also holding up around their 50-day lines. Some wood and building products firms are showing bullish action, as well as some drug and biotech stocks. Airlines and a few other travel plays are possibly setting up. Defense firms that had been hanging around key support in new bases made solid moves Wednesday. Lithium plays such as ALB stock suddenly look white hot again.
A few good market days and a number of stocks would look interesting. But a few bad days would likely break more charts.
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What To Do Now
The stock market rally has not been confirmed, but does look promising. Aggressive investors could have bought, say, XOM stock or a broad market ETF to gain some exposure. But if you get in early you have to be ready to scale back out just as fast, if not faster.
There's nothing wrong with waiting for a confirmed market rally. That's especially true now, with few stocks in position yet. Even when there is a follow-through day, add exposure slowly.
If this market rally has legs, you'll have plenty of opportunity to build up exposure and make big gains. If the upside momentum fizzles out in the next few days, you'll be glad your exposure is light.
For now, get your watchlists into shape, paying extra attention to stocks that are close to being actionable.
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