Dow Jones futures tilted lower early Wednesday, along with S&P 500 futures and Nasdaq futures. FedEx (FDX) reported late Tuesday, with Fed chief Jerome Powell set to testify before Congress today.
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The stock market rally saw losses for a second straight session. The Nasdaq and even the S&P 500 had been getting extended, so a pullback wasn’t a surprise and may even be welcome. The major indexes gave up ground grudgingly, especially the Nasdaq, with Tesla (TSLA) and Nvidia (NVDA) continuing to move higher.
Market breadth was weak Tuesday, but has been improving.
Meritage Homes (MTH) reclaimed a buy point Monday, while Allegro MicroSystems (ALGM) and Lantheus Holdings (LNTH) flashed early entries. ELF Beauty (ELF) presented a tight entry. ATI (ATI) is moving toward a possible entry.
Buying stocks with the market potentially starting a pullback carries extra risk, however.
Tesla and Nvidia stock are on IBD Leaderboard, with ELF stock on the Leaderboard watchlist. ELF Beauty and ALGM stock are on the IBD 50. Tesla stock is on the IBD Big Cap 20. Meritage Homes was Tuesday’s IBD Stock Of The Day.
Fed Chief Powell
Fed chief Jerome Powell testifies before the House Financial Services Committee at 10 a.m. ET, then appear before the Senate Banking Committee on Thursday. Last week, the Fed left interest rates steady, but signaled two more rate hikes are coming this year. Markets largely expect a hike in either July or September, but see scant chance of a second hike by year-end. Fed chief Powell, along with several other policymakers this week, could try to bolster expectations of a second hike. But Powell was relatively dovish in his post-meeting comments last week. In any case, inflation reports and other economic data in the coming weeks and months will tell the tale.
Dow Jones Futures Today
Dow Jones futures were little changed vs. fair value. S&P 500 futures lost a fraction and Nasdaq 100 futures fell 0.1%.
The 10-year Treasury yield rose 3 basis points to 3.76%.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
FedEx Earnings
FDX stock declined more than 2% in extended trade after FedEx earnings narrowly beat fiscal Q4 views while revenue missed. The shipping giant also gave 2024 EPS guidance that was largely below views. FedEx stock dipped 0.8% to 231.65 in Tuesday’s regular session, just below a 235.81 buy point from a flat base that’s part of a base-on-base formation. Shares just topped that entry last Thursday.
United Parcel Service (UPS) fell 1% overnight. UPS stock edged down 0.7% on Tuesday, trading around its 50-day line and 200-day, far below its February 2022 peak.
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Stock Market Rally
The stock market rally opened with decent losses, but came off lows after the first hour of trading.
The Dow Jones Industrial Average lost 0.7% in Tuesday’s stock market trading. The S&P 500 index declined 0.5%. The Nasdaq composite gave up less than 0.2%. The small-cap Russell 2000 fell 0.5%.
U.S. crude oil prices fell 1.8% to $70.50 a barrel. The 10-year Treasury yield fell 4 basis points to 3.73%.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) edged up 0.2%. The iShares Expanded Tech-Software Sector ETF (IGV) slid 1%. The VanEck Vectors Semiconductor ETF (SMH) edged down 0.35%. NVDA stock, the No. 1 major SMH holding, climbed 2.6%, hitting a fresh record high.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) dipped 0.1% and ARK Genomics ETF (ARKG) edged up 0.35%. TSLA stock, the No. 1 holding across Ark Invest’s ETFs, raced 5.3% higher on strong China EV sales and another U.S. charging tech deal, this time with Rivian (RIVN). Tesla kept rising early Wednesday.
SPDR S&P Metals & Mining ETF (XME) fell 0.5%. U.S. Global Jets ETF (JETS) descended 0.3%. SPDR S&P Homebuilders ETF (XHB) stepped up 0.6%. The Energy Select SPDR ETF (XLE) slumped 2.2% and the Health Care Select Sector SPDR Fund (XLV) nudged 0.1% lower.
The Financial Select SPDR ETF (XLF) gave up 0.75%. The SPDR S&P Regional Banking ETF (KRE) retreated 1.3%.
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Stocks Near Buy Points
Meritage Homes rose 2% to 132.89, back above a 130.68 buy point from a flat base, according to MarketSmith analysis. MTH stock has been trading around that entry for the past two weeks. Surprisingly strong housing starts helped buoy homebuilder stocks.
Allegro Micro stock popped 4% to 41.76. Shares rebounded from their 50-day line, broke a trendline in its consolidation and topped short-term resistance. ALGM stock did all this in higher volume.
Lantheus stock jumped 5.2% to 92.87, moving strongly above the 50-day line….
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