[ad_1]
Dow Jones futures fell slightly early Thursday as S&P 500 futures fell sharply and Nasdaq futures fell as the 10-year Treasury yield rose above by 1.7% for the first time since January 2020. This comes amid concerns that the Federal Reserve and other central banks will let inflation accelerate too quickly.
X
It’s a reversal from Wednesday, when a conciliatory Fed policy statement and comments from Fed chief Jerome Powell sparked a stock rally. The Dow Jones hit an all-time high as the Nasdaq reversed higher as Treasury yields reduced sharp gains.
Williams-Sonoma (WSM), Five below (FIVE) and Upstart Holdings (UPST) titled major earnings after the close. In the meantime, Translate Bio (TBIO) and Lordstown Engines (RIDE) was also on the news.
The Treasury reports a peak
The 10-year Treasury yield jumped 9 basis points to 1.735%, as the second day’s reaction to the Fed meeting was very different from Wednesday’s. On Wednesday, the Federal Reserve announced it would not start rate hikes until 2024, unchanged from before. Fed chief Jerome Powell said it was not time to talk about cutting back on big central bank asset purchases.
This is despite more optimistic economic forecasts, as coronavirus restrictions ease and stimulus controls roll out of the new $ 1.9 trillion spending program.
The Fed sees 2.4% inflation this year, but a cooling to 2% in 2022. The Fed has an inflation target of 2%, but says it’s OK with price increases above that level for a short time.
The 10-year Treasury yield hit 1.69% ahead of the Fed’s meeting announcement. The 10-year yield ended up 2 basis points at 1.64%, slightly below what it was before the Fed’s 2 p.m. ET announcement.
But while the Fed’s calm over inflation calmed investors on Wednesday, it didn’t last long.
If the Fed isn’t worried about inflation, bond traders will. With commodity prices high and US retail gasoline prices rising for 46 consecutive days, some underlying inflationary pressures are skyrocketing.
Dow Jones Futures today
Dow Jones futures fell less than 0.1% from fair value after rising slightly for most of the morning. S&P 500 futures fell 0.7%. Nasdaq 100 futures plunged 1.6%. This suggests that the Nasdaq composite will test its 50-day moving average again.
Remember that an overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular trading session.
Join the IBD experts as they analyze the exploitable stocks during the stock market rally on IBD Live.
Coronavirus news
Coronavirus cases around the world have reached 121.93 million. Covid-19 deaths have exceeded 2.69 million.
Coronavirus cases in the United States have reached 30.29 million, with deaths exceeding 550,000.
Stock market rally today
Snapshot of the US Stock Market Today |
||||
|---|---|---|---|---|
| Index | symbol | Price | Loss of profit | % Change |
| Dow jones | (0DJIA) | 33016.16 | +190.21 | +0.58 |
| S&P 500 | (0S and P5) | 3974.16 | +11.45 | +0.29 |
| Nasdaq | (0NDQC) | 13525.20 | +53.63 | +0.40 |
| Russell 2000 | (Etc.) | 232.37 | +1.87 | +0.81 |
| IBD 50 | (FFTY) | 47.63 | +0.42 | +0.89 |
Last updated: 4:22 PM ET 03/17/2021 |
||||
The stock rally traded lower for much of the session before the major indices rallied after the Fed and Powell met.
The Dow Jones Industrial Average rose 0.6% in Wednesday’s stock trading. The S&P 500 Index rose 0.3%. The Nasdaq composite climbed 0.4% after falling nearly 1.5% intraday.
The 10-year Treasury yield, which jumped to a 13-month high of 1.69%, reduced gains to 1.64%.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) rose 0.9%, while the Innovator IBD Breakout Opportunities ETF (BOUT) rose 1.3%. The iShares Expanded Tech-Software Sector (IGV) ETF fell 0.2%. The VanEck Vectors Semiconductor ETF (SMH) rose 0.9%.
Reflecting more speculative stocks, Ark Innovation ETF rose 0.75% and Ark Genomics ETF 1.1%. But both ARK ETFs are down almost 2% in pre-market trading because You’re here (TSLA) and many other highly valued securities retreat with higher treasury yields.
Main gains
Williams-Sonoma posted better-than-expected earnings and a third consecutive quarter of accelerating revenue growth. The premium home furnishings and housewares retailer saw same-store growth of more than 20% across all of its chains. Williams-Sonoma also announced a $ 1 billion buyback and an 11% dividend hike.
WSM stock jumped 11% in pre-market trading, signaling a move above a buy point of 151.26 from a seven-week cut base, according to chart analysis by MarketSmith. Williams Sonoma also has an early entry of 140.24 from a grip too low in the base to be valid.
The WSM stock is part of the IBD 50.
Five Under earnings also beat as expectations were well above views. FIVE stocks jumped 5% early Thursday, retreating past a fixed-base buy point of 198.20 in a base-based pattern.
Upstart Holdings easily beat EPS views, but revenue fell slightly. The AI lending platform has guided above. Upstart also announced that it will buy Prodigy, a manufacturer of automotive retail software. UPST stock climbed 40% early Thursday. This will send the Upstart stock well above its 50 day line, but still below its Feb 11 high of 105.58.
Technically Lordstown Motors has reported profits, but the EV pickup startup has virtually no income. Lordstown said its full-size Endurance pickup truck will begin production in September, with the first beta vehicles ready for testing by the end of the month. An electric van is expected to start at the end of 2022. But Lordstown has also revealed an SEC probe. It comes after Hindenburg Research accused Lordstown of fraud. RIDE stock, which plunged last week on the Hindenburg report, fell 5% before the open.
Finally, Translate Bio reported poor results for its treatment for cystic fibrosis. TBIO’s stock plunged 25% in pre-market trade. Translate Bio stock had held its 21 and 50 day lines.
Analysis of stock market rallies
The Fed’s decision and comments from Fed Chief Powell initially provided a much needed boost. The Nasdaq was undermining the 50-day line on Wednesday and testing its 21 days, before bouncing off the policy statement and Powell. Some big winners of 2020 such as CrowdStrike (CRWD) and Twilio (TWLO) rebounded after his 50-day testing. Meanwhile, some recent breakouts and flashing stocks from early purchases have shored up, including MKS Instruments (MKSI), Westlake Chemical (WLK) and 5G chipmaker Qorvo (QRVO).
But as the Nasdaq futures show today, the stock rally remains sensitive to Treasury yields, especially growth stocks. All of Wednesday’s wins, and even some, could be forfeited. The tech sector remains a work in progress. If the Nasdaq composite falls below the 50-day mark and continues to sell, tech stocks will come under heavy pressure.
Meanwhile, the reopening of the games has made great strides. Many are above pre-coronavirus levels, although incomes are likely much lower than pre-pandemic reports. So don’t get too carried away.
Focus on stocks that are trading above their 21 and 50 day moving averages.
Read The Big Picture every day to stay in tune with market direction and major stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
YOU MAY ALSO LIKE:
Why this IBD tool makes it easier to find the best stocks
Want to get quick profits and avoid big losses? Try SwingTrader
Best growth stocks to buy and watch
IBD Digital: Unlock IBD Premium Stock Lists, Tools & Analysis Today
[ad_2]
Source link