Dow Jones Futures: Stocks Dive on Call for Biggest Fed Rate Hike in 40 Years; Apple, Tesla Tumble

As with S&P 500 futures and Nasdaq futures, Dow Jones futures changed little overnight. The stock market’s rally fell on Tuesday on reports of higher-than-expected inflation, with major indices breaking below their 50-day moving averages and eroding all or nearly all of their recent gains.




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August Consumer Price Index was much worse than expected. Consumer prices rose 0.1% along with increases in food prices and fares, versus a 0.1% decline in the view, despite a drop in gasoline prices. Core CPI, which does not include food and energy, rose 0.6%, more than double what was expected. Headline inflation cooled somewhat again to 8.3%, but Wall Street expected 8%. Core inflation rose above forecast to 6.3%.

This prompted a Wall Street firm to speculate that the Federal Reserve would raise rates by a full percentage point at the September 20-21 Fed meeting. This would be the highest since the early 1980s, when then-Fed chief Paul Volcker waged an all-out war on inflation.

net storage ,PSTG), Tesla rival NIO ,NIO, Devon Energy ,dvn, wolfspeed ,wolf) And Enphase Energy ,ENPH) showed relatively healthy action on Tuesday.

megacaps Apple ,AAPL) And Tesla ,TSLA), which had sparked buy signals recently, fell below key levels on Tuesday. NVIDIA ,NVDA) and Facebook parent meta platform ,meta), no one has any idea about the current market leaders, falling to 2022 lows.

DVN stock is current IBD leaderboard, PSTG stock is current swing trader and it was tuesday IBD Stock of the Day, Tesla is on stock and Devon Energy IBD 50, Devon and ENPH are on stock IBD Big Cap 20,


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dow jones futures today

Dow Jones futures rose 0.1% versus fair value. S&P 500 futures rose 0.15%. Nasdaq 100 futures remained flat.

At 8:30 a.m. ET the Labor Department will release the August Producer Price Index.

Remember that overnight action dow futures and nowhere else necessarily translates into actual business in the next routine Share Market session.


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stock market rally

The stock market rally suffered its worst loss since 2022, with major indices closing the session close on reports of heated inflation and fears of a Fed rate hike.

Another factor? The US is considering the option of broader sanctions versus China to prevent any invasion of Taiwan, Reuters reported on Tuesday. The European Union is facing pressure to do so. This would increase the risk of large-scale economic disintegration between China and the West.

The Dow Jones Industrial Average dropped 3.9% on Tuesday stock market trading, The S&P 500 index fell 4.3 percent. The Nasdaq Composite dived 5.2%. The small-cap Russell 2000 declined 3.9%.


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Nvidia stock and Meta stock fell more than 9%, both hitting their 2022 lows.

US crude oil prices fell 0.5% to $87.31 a barrel.

The 10-year Treasury yield rose 6 basis points to 3.42%. The benchmark yield hit 3.45% intraday, just below an 11-year high of 3.48% on June 14. Short-term yields rose significantly.

ETFs

in the middle Best ETFsThe Innovator IBD 50 ETF (ffty) retreated 2.9%, while the Innovator IBD Breakout Opportunities ETF (boxing) lost 2.35%. iShares Extended Tech-Software Sector ETF (tub) sank 4.7%. VanEck Vector Semiconductor ETF (smh) fell about 6%. NVDA stock is a major SMH holding.

SPDR S&P Metals & Mining ETF (XME) left 3.7%. SPDR S&P Homebuilders ETF (XHB) dived 5.9%. The Energy Select SPDR ETF (XLE) retreated 2.5% and the Financial Select SPDR ETF (45) 3.75% shed. Health Care Select Sector SPDR Fund (xlv) dropped 3.3%.

Reflecting the more speculative story stocks, the ARK Innovation ETF (arkk) took 6.8% and the ARK Genomics ETF (ARKG) 5.6%. TSLA stock is a major holding in Ark Invest’s ETF.


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Stocks showing strength

PSTG stock fell 3.8% to 29.64 on Tuesday, but closed above its 21-day line. Pure Storage working on stock one cup-with-handle base With 31.62 buy point. Investors could use a move from Monday’s high of 30.88 as an entry slightly lower.

NIO stock rose 0.9% to 21.95 after skyrocketing 13.5% on Monday, touching the 200-day line intraday. Shares of the China EV startup have risen 28% over the past five sessions, four by massive amounts. Analysts are increasingly bullish on NOO’s lineup. Nio has started the deliveries of the ET5 sedan, which is the third new EV from this year. point of purchaseBut investors can use a decisive move above the 200-day line as an early entry.

DVN stock fell 3% to 69.07 after breaking a handle’s trendline on Monday. The cup-with-handle purchase point is 75.37. Investors can now use Monday’s high of 71.57 as an early entry. A longer pause will allow the 50-day moving average to hold up to some extent.

WOLF stock fell 2.5% to 113.98 on Tuesday after sinking to 111.26 shortly after the open. The Evercore ISI kicked off the chipmaker with an improved performance, saying it’s a great way to drive the EV space. Investors can consider the recent action as a handle for a huge consolidation with 123.35 buying point. A move above Monday’s high could offer an early entry, but as Wolfspeed stock has been elevated, it has outperformed some of its moving averages.

ENPH stock fell 1.1% to 305.50 after testing its 21-day line. Investors can now buy Enphase stock from the 21-day line, although market conditions increase the risk. The 50-day bullish rising line could form some ground for a longer ENPH stock halving.

apple stock

Apple stock fell 5.9%, falling heavily below its 50-day and 200-day lines, giving up gains from the past two sessions. AAPL stock had broken a downtrend on Monday in a handle that was offering early entry, but is now off the table. Shares of Dow Jones Tech Titan are trading at 176.25 buy point from that handle.

Apple iPhone 14 Pre-Order Appears to be as strong or sturdier than last year’s iPhone 13. The actual iPhone 14 sales start on Friday.


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Tesla Stock

Tesla stock fell 4% to 292.13, slightly below its 200-day line, but comfortably above its 21-day and 50-day highs. Volume was light, but higher than the five-day rally.

TSLA stock arguably has a short base within the much larger consolidation with a 314.74 buy point. A move above Monday’s high of 305.49 could offer an early entry.

Tesla’s investor relations chief Martin Wicha said at a conference Tuesday that supply-chain constraints and costs for EVs are looming, which should drive prices down. Wiecha said Tesla would eventually unveil a cheaper EV model, but did not provide any details on when that might happen. Tesla recently introduced a lower-range Model Y in Europe at a much cheaper price.

market rally analysis

The recently revived stock market rally seen on Tuesday made headlines in the discussion of CPI inflation. The major indexes and the Russell 2000 all fell below their 50-day moving averages. The Dow Jones hit last week’s lows while the S&P 500 did almost the same. The Nasdaq wiped out most of the gains in the last four sessions.

Major stocks, many of which had made some strong progress in recent days, also suffered losses on Tuesday. After a strong market expansion in recent days, the losers outnumbered the winners.

Apple’s stock showed damaging action Tuesday. Tesla also backtracked after some modest gains, but its chart looks a bit better.

While Pure Storage and Nio stocks still look fine, chances are they will falter if the market comes under more pressure.

The stock market has gained momentum over the past several days on hopes of containing inflation. In turn, this would prompt the Fed to raise rates less aggressively.

But following the heated inflation report, Nomura Securities predicts Fed policymakers will hike rates by 100 basis points on Sept. 21. Late Tuesday, Ed Yardney of Yardney Research said a full-percentage point Fed rate hike is “more likely” than a 75 basis points hike. ,

Markets as a whole are pricing in at least 75 basis points for the Fed’s third straight meeting next week. But now there is a one-third chance of about 100 basis points, which is above zero before the CPI data. Markets are betting on higher rates at the end of the year.

The 10-year Treasury yield continued its bullish run over the past several weeks.

A more aggressive Fed, higher Treasury yields and a stronger dollar are not a great recipe for stocks. Especially when the markets were betting on the contrary.

Now the question is where does the market go from here. Will the major indices break past week’s lows and move towards June lows? It is possible that the market will be range bound as Wall Street awaits real signs that the Fed will slow rate hikes.


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What should we do now

Investors may want to take profits in Tuesday’s CPI inflation report, which is the price of good news in small amounts upfront. At this point, you want to lock in the remaining gains in recent purchases, or cut losses.

It’s a good idea to keep exposure light. With heated inflation data weakening the short-term bull case for a Fed rate hike, the market’s direction is now uncertain.

At some point, whether it is next week, next month or next year, the market will clearly be on an uptrend. Only then will real money be made.

So work on your watchlist, focusing on relative strengths and signals that larger institutions are gaining shares.

Reading big picture Every day to keep pace with market direction and major stocks and sectors.

Please follow Ed Carson on Twitter @ibd_ecarson For stock market updates and much more.

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