Dow Jones Futures Fall: Market Expects This From Fed Chief Powell; 5 Stocks In Buy Zones

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Dow Jones futures fell slightly overnight, along with S&P 500 futures and Nasdaq futures, and Fed chief Jerome Powell will deliver his much-anticipated policy speech on Jackson Hole Friday morning.




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The stock market rally saw a strong session on Thursday, with major indices moving back above important short-term levels, despite concerns that Fed chief Powell will signal the need for tight monetary policy for the long term.

Axcelis Technologies (ACLS), GlobalFoundries (GFS), Steel dynamics (STLD), insulation (PODD) and RPM International (RPM) were among several stocks that broke out or flashed buy signals.

Income

Ulta Beauty (ULTA) was executable on Thursday but had gains after the close. ULTA stocks rose modestly on strong results and guidance. Shares closed 1.75% higher to 419.25 on Thursday, freeing up buying points at 417.08 and 418.89.

Business day (WDAY) and Confirm position (AFRM) also reported. WDAY shares jumped 10% overnight but were still below the 200-day line. AFRM shares plunged more than 10% on large losses and weak guidance.

Axcelis and STLD stock were added to IBD Leaderboard on Thursday. GFS stocks and Steel Dynamics are new swingers on SwingTrader. ACLS stock is on the IBD 50. Steel Dynamics stock is Thursday’s IBD stock.

The video in the article discussed Thursday’s market rally and what to expect from Fed chief Powell. It also analyzed Axcelis, Steel Dynamics and PODD stocks.


Fed Chair Powell Speech: The Two Words That Could Upset the S&P 500


Speech by Fed Chief Powell seen as a hawk

Fed chief Powell, who will speak at the Jackson Hole symposium Friday at 10 a.m. ET, is unlikely to provide much insight into the magnitude of the Fed’s rate hike in September. Instead, he is expected to focus on long-term inflationary pressures. That includes chronic labor shortages, but perhaps also continued higher energy and commodity prices, increasing trade barriers and tight housing supply.

All of that would indicate that the Federal Reserve will have to drive interest rates significantly — and keep them there for the foreseeable future. Fed chief Powell might even suggest that a recession or a long period of subpar growth will be needed to lift unemployment and curb pressure on wage inflation.

That could mean sluggish demand, a strong dollar and continued higher government bond yields. That could weigh on corporate profitability and valuations, especially highly valued growth.

Just a few weeks ago, markets saw interest rate hikes cooling off rapidly after September and perhaps falling lower sometime next year.

Dow Jones Futures Today

Dow Jones futures fell 0.2% from fair value. S&P 500 futures were down 0.2% and Nasdaq 100 futures were down 0.2%.

Ahead of Powell’s speech and opening bell, the Commerce Department will release its July revenue and expenditure report. That report includes the Personal Consumption Expenditure Index, the Fed’s preferred inflation gauge.

Keep in mind that an overnight action in Dow futures and elsewhere does not necessarily lead to actual trading in the next regular trading session.


Join IBD experts as they analyze actionable stocks during the stock market rally on IBD Live


stock market rally

The stock market rally had a solid session, especially tech and small caps, and bounced back above some key levels despite mixed gains and guidance from some notable companies.

The Dow Jones Industrial Average rose 1% in Thursday’s stock trading, even by Salesforce.com (CRM) falling sharply on profits. The S&P 500 index fell 1.4%. The Nasdaq composite rose 1.7%. The small-cap Russell 2000 rose 1.55%.

The price of crude oil in the US fell 2.5% to $92.52 a barrel.

Ten-year government bond yields fell by 8 basis points to 3.03% after rising 23 basis points in the previous four sessions.

ETFs

Among the top ETFs, the Innovator IBD 50 ETF (FFTY) was up 1.7%, while the Innovator IBD Breakout Opportunities ETF (BOUT) was up 1.1%. The iShares Expanded Tech-Software Sector ETF (IGV) gained 0.8%, despite CRM stocks being a large component. The VanEck Vectors Semiconductor ETF (SMH) shot up 3.4%.

SPDR S&P Metals & Mining ETF (XME) was up 2.6%, with STLD stocks a key position. SPDR S&P Homebuilders ETF (XHB) rose 1.8%. The Energy Select SPDR ETF (XLE) rose 0.8%. The Health Care Select Sector SPDR Fund (XLV) rose 1.1%.

As a result of more speculative story stocks, ARK Innovation ETF (ARKK) gained 2.9% and ARK Genomics ETF (ARKG) 2.5%.


Five best Chinese stocks to watch right now


Shares in Buying Zones

ACLS stock shot up in massive volume, rising 13% to 81.73. Axcelis shares broke above a handle’s downtrend first, then moved past the official buy point of 79.93 with a handle, according to MarketSmith’s analysis. The relative strength line hit a new high, a bullish signal on a breakout, as ACLS stocks outperform the S&P 500 index.

GFS shares rose 6.8% to 64.50 in heavy trading, breaking the downtrend into a grip. The official buy point is 66.06 as part of a very deep double bottom consolidation. GlobalFoundries shares went public in October 2021.

Steel Dynamics shares rose 6.6% to 86.76, breaking the handle downward trend and the 86.04 official buy point for handle cup. Volume was well above normal. Nucor (NUE) and Commercial Metals (CMC) also broke the downtrend, but in lighter volume.

On Wednesday, Cleveland Cliffs (CLF) announced a price increase of at least $75 per tonne for carbon steel products.

PODD shares rose 3.35% to 282.86, hitting a buy point of 276.48. Volume was slightly lower than normal, but Insulet stock recovered from its 21-day line in above-average trading on Wednesday.

RPM shares gained 5.6% to 97.83, erasing an entry of 95.80 from a “handle” that took another day to be correct. The RS line for RPM stocks hit a new high.

Market rally analysis

Fed chief who? The stock market rally came on a strong Thursday, despite the big news on tap Friday.

The Dow Jones, S&P 500 and Nasdaq composite bounced back above their 21-day moving averages after building resistance there in the previous two sessions. The small-cap Russell 2000 and S&P Midcap 400, which both retook the 21-day line on Wednesday, are pointing towards the 200-day line.

In fact, a growing number of stocks are flashing buy signals from a variety of sectors. The movements of ACLS stocks, Steel Dynamics and more reflect handles developed or expanded during the market rally pullback.

Previous pimples continue to work.

So there is a lot of positive action. But it comes right before Powell’s speech.

Powell may or may not be particularly hawkish, but in the end it’s the market’s response that matters. The good news is that the markets are bracing for an aggressive speech.

Fed chief Powell could propel major indices higher, giving a turbo boost to leading stocks and potential leaders that are building up. But a negative reaction to Powell’s speech could significantly lower the market rally, negating strong gains in winning stocks.


Time the Market with IBD .’s ETF Market Strategy


What to do now

Well, we wait. Thursday’s breakthroughs and buy signals certainly gave investors reasons to take some new positions. If you decided that discretion was the best part of courage in Powell’s speech, then that’s okay. If the market continues in the coming days, some setups will quickly turn into buy signals.

Build your watchlists. Be sure to cast a wide net to find leading stocks from a wide range of sectors. Pay close attention to a select group in or near buying zones.

Be ready to trade Friday. The market rally could take a blow to Powell’s speech, but at some point you may want to add or reduce exposure.

Read The Big Picture every day to stay up to date on market direction and leading stocks and sectors.

Follow Ed Carson on Twitter at @IBD_ECarson for stock updates and more.

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The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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