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Dow futures slide ahead of Fed rate hike, Powell comments; Tesla stock continues to decline

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Dow futures traded early Wednesday, flat, in a holding pattern ahead of the Federal Reserve’s interest rate decision this afternoon, followed by a news conference with Fed Chair Jerome Powell. best buy (BBY) fell by more than 3% after the downgrade of Bank of America’s credit rating.




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Fed Decision, Powell Comments

The Two-day Fed policy meeting Wed ends. A rate decision is due at 2 p.m. ET followed by comments from Fed Chair Powell at 2:30 p.m.

The Fed has indicated that it will concede the pace of rate hikes this meeting, with widespread expectations for a half-point hike to a range of 4.25% to 4.5%. However, it is not clear to what extent the milder-than-expected November CPI report on Tuesday could influence expectations of a Fed rate hike.

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This may not make much difference, but investors will carefully analyze Jerome Powell’s comments, following signs that the Fed may change its stance on inflation. According to the FedWatch CMETraders place a 79% chance of a 50 basis point rate hike.

early tuesday, REV group (REVG) And the Weber (WEBR) on their quarterly earnings results. REVG stock rose more than 3%, while Weber shares lost less than 1%. Other earnings reports this week include: Darden Restaurants (DRI) And the Linar (flexible).

Best Buy shares fell more than 3% after Bank of America downgraded the stock to underperform from neutral, with a new price target of 69, down from 80. Delta Airlines (DAL) jumped more than 4% after raising fourth-quarter guidance and issuing upbeat forecasts for fiscal years 2022 and 2023.

electric car giant Tesla (TSLA) fell 1.5% on Wednesday. Technology pioneers at Dow Jones apple (AAPL) And the Microsoft (MSFT) was mixed before stock market today Open.

Allegro Microsystems (ALGM), IBD Leaderboard stock dexcom (DXCM), Kosovo Liberation Army (KLAC) And the United Rentals (URI) – as well as the names of the Dow Jones Larva (cat), Home Depot (HD) And the United Health Group (United nations) – among the top stocks to buy and watch.

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Dexcom and Trane are the two IBD Leaderboard Stores. United Health were featured In this week Arrows near the buy zone column. Allegro was modern IBD 50 shares to watch. Caterpillar, United Rentals and Dexcom were all new IBD stock today comp.


IBD’s newest MarketDiem service gives you actionable ideas for stocks, options and cryptocurrencies directly in your inbox.


Dow jones today: oil prices and treasury yields

Before the opening bell on Wednesday, Dow futures hovered around breakeven, as did S&P 500 futures. The high-tech Nasdaq 100 futures fell in the morning move, with Communication charter (CHTR) diving by more than 8% to the bottom of the index. A handful of analysts lowered their price target for Charter after the company increased its capital spending guidance for 2023 on Tuesday.

within Exchange traded fundsNasdaq 100 Invesco QQQ Trust Tracker (QQQ(down 0.15% and the SPDR S&P 500 ETF)spy) fell 0.2% early Wednesday.

The 10-year US Treasury yield was little changed at 3.51% Wednesday morning ahead of the Fed’s interest rate decision. The 10-year Treasury yield fell on Tuesday Great CPI inflation data.

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Meanwhile, US oil prices rose by about 1% on Wednesday morning, after both the International Energy Agency and the Organization of the Petroleum Exporting Countries expected a recovery in demand over the next year. WTI futures closed Tuesday at $75.39 a barrel.

Stock market rise

The stock market ended with moderate gains on Tuesday, but major stock indexes closed off their highs for the day. The Nasdaq Composite was up 1%, the S&P 500 was up 0.7%, and the Dow Jones Industrial Average was up 0.3%.

Tuesday’s Big Picture column He commented, “But the stock market sent a clear message on Tuesday: There remains concern about a recession next year. Inflation is still too high for the Fed, which is still dealing with a very tight job market and low unemployment. The Fed wants to see some Softness in the labor market to help it fight inflation.”

Now is an important time to read IBD’s The Big Picture column Amidst the constant fluctuations in the stock market.


Five Dow Jones stocks to buy and watch now

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Dow Jones stocks to buy and watch: Caterpillar, Home Depot, UnitedHealth

Dow Jones member Caterpillar continues to move away from the 238 cup base Point purchaseAnd the to me IBD MarketSmith Pattern Recognitionfollowing Tuesday’s 1% rise. CAT stock 95 constants from the 99 IBD rating show the perfect compound, per IBD stock check. CAT stock fell 0.2% on Wednesday.

Home Depot, the home improvement retailer, ended Tuesday in a range buy above the 329.77 buy point of a cup base with a handle following the day’s breakout. HD stock was trading lower Wednesday morning.

Healthcare giant UnitedHealth Group is tracking a flat base with 558.20 buy points. The stock is only 3% off the most recent entry. United Nations shares fell 0.2% early Wednesday.


4 growth stocks to watch in Cursstock market rally


Top stocks to buy and watch: Allegro, Dexcom, KLA, and United Rentals

Allegro Microsystems ended Tuesday in a long range crossing a buy point of 32.07 cups by a handle following the day’s gain of 1.5%. ALGM stock rose 0.5% on Wednesday.

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IBD Leaderboard Dexcom stock is trying to break through the 123.46 buy point in a flat base just below the entry point amid Tuesday’s 2.4% rally. Dexcom shares It was flat early Wednesday.

Chip leader KLA is in the top 5% buy range after entering 392.60 cups with a handle after Tuesday’s 2% advance. Chasing zone rises 5% to 412.23. On the upside, the RSI line continues to make new highs in light of the constant fluctuations in the market. KLA shares were flat on Wednesday.

United Rentals is trying to get over the buy point of 368.04 in mug with handle pattern, according to IBD Market Smith analytics. The stock topped the entry on Tuesday before closing just below it. URI arrow It was inactive Wed.

Stocks to buy and watch

These are the seven biggest stocks to buy and watch in the stock market today, including three Dow leaders.

The Company’s name Code The right point of purchase base type
Allegro Microsystems (ALGM) 32.07 mug with handle
dexcom (DXCM) 123.46 Flat base
Kosovo Liberation Army (KLAC) 392.60 mug with handle
United Rentals (URI) 368.04 mug with handle
Larva (cat) 238.00 Glass
Home Depot (HD) 329.77 mug with handle
United Health (United nations) 558.20 Flat base
Source: IBD data as of December 13, 2022

Join IBD experts as they analyze the leading stocks of the current stock market rally on IBD Live

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Tesla stock

Tesla shares It slid 4.1% on Tuesday, falling sharply for the second day in a row and hitting a new 52-week low. Shares traded down 1.5% Wednesday morning, threatening to extend the losing streak into three days. Early Wednesday, Goldman Sachs cut its price target from 305 to 235, citing weak demand.

On Tuesday, TSLA stock hit its lowest level since November 18, 2020, and reached a new 52-week low of 156.91. The shares closed about 60% off their 52-week high.

Dow Jones leaders: Apple and Microsoft

within Dow Jones stockApple shares rose 0.7% on Tuesday, above its main 50-day line. The 50 day line, which was a key support level, has turned into a resistance area to watch. The stock is down about 20% from its 52-week high. Apple stock was trading up 0.2% on Wednesday.

Microsoft stock jumped 1.75% on Tuesday, as shares are now testing the long-term 200-day line. The software giant is still about 25% off its 52-week high. Microsoft shares rose 0.1 percent early Wednesday.

Be sure to follow Scott Lehtonen on Twitter at @tweet Learn more about developing stocks and the Dow Jones Industrial Average.

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Top growth stocks to buy and monitor

Learn how to time the market with IBD’s ETF market strategy

Find the best long-term investments with IBD’s long-term leaders

MarketSmith: Research, charts, data and training in one place

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How to Find Growth Stocks: Why the IBD Tool Simplifies Your Search for Top Stocks



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Stock, bond and cryptocurrency investors remain on edge after a rough year for the markets

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This version is for personal, non-commercial use only. Distribution and use of this material is subject to our Subscriber Agreement and copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.

https://www.wsj.com/articles/stock-bond-and-crypto-investors-remain-on-edge-after-brutal-year-for-markets-11672403124

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Dow Jones losses are heading towards the closing bell as US stocks approach their worst year since 2008

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US stocks were trimming losses heading towards the closing bell on Friday, but were still on track to post their worst annual loss since 2008, as the harvest of tax losses combined with concern over the outlook for US corporate and consumer earnings took its toll.

How are stock indices traded?
  • Dow Jones Industrial Average
    DJIA,
    -0.22%

    It fell about 182 points, or 0.6%, to 33,039 points.

  • S&P 500 index
    SPX,
    -0.25%

    It fell nearly 26 points, or 0.7%, to about 3,824.

  • The Nasdaq Composite Index fell 72 points, or 0.7%, to about 10,406 points.

Stocks posted their biggest gains of the month on Thursday, with the Dow Jones rising 345 points, or 1.05%, to 33,221 as major stock indexes rebounded after losses incurred earlier in the week that pushed the Nasdaq Composite to a new closing low for the year. . The S&P 500 was on track on Friday to wrap up its fourth consecutive losing week, the longest streak of weekly losses since May, according to FactSet data.

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What drives the markets

US stocks traded lower on Friday afternoon, on pace to close the last trading session of 2022 with weekly and monthly losses.

Stocks and bonds have been crushed this year as the Federal Reserve raised its benchmark interest rate more aggressively than many expected, as it sought to crush the worst inflation in four decades. The S&P 500 is on track to end the year with a loss of nearly 20%, its worst annual performance since 2008.

“Investors were on edge,” Mark Heppenstahl, chief investment officer at Penn Mutual Asset Management, said in a phone interview Friday. “It seems as if being able to bring prices down might be a little easier given how bad the year has been.”

Stock indices have fallen in recent weeks as the recent rally inspired by hopes in the Fed’s policy focus faded in December after the central bank indicated it would likely wait until 2024 to cut interest rates.

On the last day of the trading year, the markets were also hit by selling to capture losses that could be written off from tax bills, a practice known as tax harvesting, according to Kim Forrest, chief investment officer at Bouquet Capital Partners. .

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Forrest added that an uncertain outlook for 2023 has also weighed in, as investors worry about the strength of corporate earnings, the US economy and consumer as the fourth-quarter earnings season approaches early next year.

“I think the Fed, and then earnings in mid-January — they’ll set the tone for the next six months. Until then, it’s anyone’s guess.”

The US central bank has raised its benchmark interest rate by more than four percentage points since the start of the year, pushing borrowing costs to their highest levels since 2007.

The timing of the first Fed rate cut will likely have a significant impact on markets, according to Forrest, but the outlook remains uncertain, even as the Fed tries to signal that it plans to keep interest rates higher for longer.

On the economic data front, the Chicago PMI for December, the latest major data release for the year, Came stronger than expected. Climbing to 44.9 from 37.2 in the previous month. Readings below 50 indicate contraction.

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In the coming year, Heppenstahl said, “we are likely to shift toward concerns about economic growth rather than inflation.” “I think the decline in growth will eventually lead to an even greater drop in inflation.”

Read: Stock market investors face 3 recession scenarios in 2023

Eric Sterner, chief information officer at Apollon Wealth Management, said in a phone interview on Friday that he expects the US to fall into a recession next year and that the stock market could see a new bottom as companies likely review their earnings. “I think the earnings outlook for 2023 is still very high,” he said.

The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite were all on pace Friday afternoon posting weekly losses of around 1%, according to FactSet data, at last check. For the month, the Dow was down about 5%, the S&P 500 was down about 7% and the Nasdaq was about to crash down about 10%.

Read: Value stocks are outperforming growth stocks in 2022 by a large margin historically

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As for bonds, Treasury yields rose on Friday as the US sovereign debt market was set to post its worst year since at least the 1970s.

The yield on the 10-year Treasury note
TMUBMUSD10Y,
3.879%

It rose about four basis points on Friday at 3.88%, according to FactSet data, in the latest check. Ten-year yields jumped about 2.34 percentage points this year through Thursday, on track for the biggest annual gain ever based on data going back to 1977, according to market data from Dow Jones.

Meanwhile, the yield on the two-year note
TMUBMUSD02Y,
4.423%

Up about 3.64 percentage points in 2022 through Thursday to 4.368%, 30-year return
TMUBMUSD30Y,
3.971%

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It jumped 2.03 percentage points over the same period to 3.922%. That marks the largest increase in a calendar year for each based on data going back to 1973, according to market data from Dow Jones.

Outside the US, European stocks capped their biggest percentage drop in a calendar year since 2018, with the Stoxx Europe 600
xxxp,
-1.27%
And the
It is an index of euro-denominated stocks, down 12.9%, according to market data from Dow Jones.

Read: A downturn in the US stock market is trailing these international ETFs as 2022 draws to a close

Companies in focus

Steve Goldstein contributed to this article.

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Fed’s reverse repo facility reaches $2.554 trillion by Reuters

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© Reuters. FILE PHOTO: The Federal Reserve Building in Washington, US, January 26, 2022. (Reuters)/Joshua Roberts/File Photo

Written by Michael S Derby

NEW YORK (Reuters) – A key facility used by the Federal Reserve to help control short-term interest rates saw record inflows on Friday, the last trading day of the year.

The New York Fed said its reverse repo facility took in $2.554 trillion in cash from money market funds and other eligible financial firms, beating the previous high seen on Sept. 30, when inflows totaled $2.426 trillion.

The cash rally was almost certainly tipping into record territory in the usual end-of-quarter pattern that could worsen further towards the end of the year. On those dates, for a variety of reasons, many financial firms prefer to deposit money in the central bank rather than in the private markets.

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The Fed’s reverse repo facility has been very active for some time. After seeing almost no absorption for a long time, money began to gravitate toward the central bank in the spring of 2021 and then grew steadily. Daily reverse repo usage has been steadily above the $2 trillion mark since June.

The reverse repo facility takes cash from qualified financial firms in what is an actual loan from the Federal Reserve. The current rate is 4.3%, a yield that is often better than rates for short-term private sector lending.

The reverse repo facility is designed to provide a soft floor for short-term rates and the federal funds target rate, and is the Fed’s primary tool for achieving its function and inflationary mandates. To mark the higher end of the range, the Fed is also pushing deposit-taking banks to deposit cash at the central bank, where the interest rate on reserve balances is now 4.4%.

The federal funds rate is currently set between 4.25% and 4.5% and is trading at 4.33% as of Friday, sandwiched between the reverse repo rate and interest on reserve balances.

There are no signs of shrinkage

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Even with the heavy use of reverse repo, Fed officials have always remained unconcerned about large outflows, even as some in financial markets worried about the potential for the Fed to drain the borrowing and lending lives of private money markets.

Fed officials also expected that as the central bank continues to raise interest rates with the goal of bringing down very high levels of inflation, the use of the reverse repo facility should decrease. But that hasn’t happened yet, and some in the markets now believe that the consistently high utilization of the Fed facility will be around for some time to come.

Research by the Federal Reserve Bank of New York indicated that banking regulation issues make demand for the Fed’s reverse repo instrument high. Meanwhile, the Kansas City Fed added its view that large inflows are related to limited private market investment opportunities and policy uncertainty.

Strong cash flows to the central bank may not have alarmed central banks, but they have driven their operations to an actual loss. The Federal Reserve finances itself through interest on the bonds it owns as well as the services it provides to the financial community. It usually makes a noticeable profit and by law returns it to the treasury.

Currently, the cost of paying interest on reverse repo agreements and reserve balances outweighs income. The Fed reported Thursday that as of Dec. 28, the accounting metric it uses to track losses was $18 billion. Many observers expect that the Fed’s plans to raise interest rates further and keep them at high levels will mean fairly large losses for the central bank over time, even if these losses will not affect the action of the Fed’s monetary policy.

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