Dow Jones futures were little changed after hours, along with S&P 500 futures and Nasdaq futures. The Federal Reserve will announce its policy decision Wednesday afternoon, with markets expecting a “hawkish pause.”
X
The stock market rally continued as CPI inflation data reinforced bets that the Fed will take no action on Wednesday. Meanwhile, hopes for China stimulus also buoyed commodities, industrials and many Chinese stocks.
Tesla (TSLA) continued its record-breaking run. Nvidia (NVDA) cleared a buy point for existing investors, though it was an aggressive entry.
The major indexes rose modestly with the Nasdaq and S&P 500 at 52-week highs and the Dow Jones moving to a four-month high. Small and midcap stocks led amid strong market breadth. But the Nasdaq is getting close to being extended — and so are many leaders.
Lattice Semiconductor (LSCC) made a bullish move while Cloudflare (NET) rebounded back above a buy point. Unity Software (U) topped an early entry in its handle. Vertex Pharmaceuticals (VRTX) is flashing an early entry. Freeport-McMoRan (FCX) gapped above its 50-day line.
Still, investors should be cautious about adding exposure, especially in tech stocks, in the current environment.
Tesla and Nvidia stock are on IBD Leaderboard. NET stock is on the IBD 50. TSLA stock is on the IBD Big Cap 20.
The video embedded in this article highlighted the market action and analyzed LSCC stock, Vertex and Freeport-McMoRan.
Fed Meeting Decision
The Consumer Price Index inflation rate fell to a two-year low of 4% in May, slightly cooler than expected. Core CPI dipped to a still-high 5.3%, in line with estimates.
With no negative surprises, the CPI inflation report essentially locked in expectations that the Fed will leave its target rate at 5%-5.25%. The key will be the Fed rate-hike outlook, including from Fed chief Jerome Powell. Markets are pricing in a 65% chance of a Fed rate hike in late July.
The Fed meeting announcement is at 2 p.m. ET Wednesday, with Fed chief Powell due at 2:30 p.m.
Dow Jones Futures Today
Dow Jones futures fell 0.25% vs. fair value. S&P 500 futures and Nasdaq 100 futures edged higher.
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
The stock market rally showed a broad advance on Tuesday, shrugging off the upside reversal in Treasury yields.
The 10-year Treasury yield rose 7 basis points to 3.84% after initially falling to 3.68%. That’s the highest since May 26 and the strongest close in three months.
The U.S. tame inflation report eased concerns heading into the Fed meeting decision. Meanwhile, China’s central bank trimmed a short-term rate with optimism growing that Beijing will adopt new fiscal stimulus amid disappointing economic data.
The Dow Jones Industrial Average rose 0.4% in Tuesday’s stock market trading, to the highest point in four months. The S&P 500 index climbed 0.7% and the Nasdaq composite advanced 0.8%, both at fresh 52-week highs. The small-cap Russell 200 jumped 1.2%, a three-month best.
U.S. crude oil prices jumped 3.4% to $69.42 a barrel. Copper futures popped 2.1%. Commodities rallied on China stimulus talk and a weaker dollar.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) climbed 1.4% to a six-month high. The Innovator IBD Breakout Opportunities ETF (BOUT) popped 1.6%. The iShares Expanded Tech-Software Sector ETF (IGV) rose 0.7%, with Unity stock an IGV holding. The VanEck Vectors Semiconductor ETF (SMH) gained 1.4%, with NVDA stock the No. 1 component.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) rallied 2.3% and ARK Genomics ETF (ARKG) jumped 3.3%. Tesla stock is the biggest holding across Ark Invest’s ETFs. Cathie Wood trimmed her TSLA stock stake on Monday. Tesla stock jumped 3.55% to 258.71. It’s now advanced for 13 straight sessions, with the last 12 in above average-average volume, both records.
SPDR S&P Metals & Mining ETF (XME) bounced 2.75%, with FCX stock a notable component. The Global X U.S. Infrastructure Development ETF (PAVE) climbed 1.7%. U.S. Global Jets ETF (JETS) ascended 2.1%. SPDR S&P Homebuilders ETF (XHB) stepped up 1.3%. The Energy Select SPDR ETF (XLE) edged up 0.5% and the Health Care Select Sector SPDR Fund (XLV) nudged 0.5% higher, with VRTX stock a holding. The Industrial Select Sector SPDR Fund (XLI) gained 1.15%, setting a 52-week high.
The Financial Select SPDR ETF (XLF) rose 0.6%. The SPDR S&P Regional Banking ETF (KRE) rebounded 2.25%.
Five Best Chinese Stocks To Watch Now
Nvidia Stock
Nvidia rose 3.9% to 410.22, clearing the bulk of a three-weeks-tight pattern to…
Read More: Dow Jones Futures: Nasdaq Looks Extended As Fed Decision Looms; What Investors