Dow Jones Futures Rise Ahead of CPI Inflation Report; US airline flights grounded

Dow Jones futures rose slightly early Wednesday, along with S&P 500 and Nasdaq futures. US domestic flights were grounded, while WWE, Wells Fargo, Axcelis Technologies and Impinj were also in focus ahead of the opening.




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The stock market rally was indecisive for much of Tuesday, but major indexes gained momentum, with the S&P 500 moving its 50-day moving average. Investors await the December CPI inflation report on Thursday morning.

Medpace (MEDP) rose solidly on Tuesday, sending a new buy signal after a similar move failed in late 2022. First Solar (FSLR) bounced off its 50-day line, also offering early entry. But elf beauty (ELF) and super microcomputer (SMCI) fell after Monday’s reversals.

MEDP and ELF Beauty shares are on the IBD ranking. SMCI stock is on IBD 50. Medpace was Tuesday’s IBD stock of the day.

You’re here (TSLA) and UnitedHealth (UNH) edged lower as many large caps continue to struggle.

Investors should remain cautious, especially with the CPI inflation report looming.

Economic news

The FAA halted all domestic flights until 9 a.m. ET due to a major systems outage. Flights had been suspended since early Wednesday morning. The FAA expects to “repopulate” the system soon, but airlines will have to scramble to get back on schedule. Airline stocks, including Delta Airlines (DAL) and United Airlines (UAL) are down slightly.

Vince McMahon is again president of World wrestling entertainment (WWE), after her daughter Stephanie stepped down as chairman and co-CEO on Tuesday night. Mr McMahon, a major shareholder, resigned last year over payments related to sexual misconduct claims. Shares of WWE have risen solidly in premarket trading, having soared in recent days following reports of his expected return to lead a sale of the company.

Meanwhile, Wells Fargo (WFC) will largely exit the mortgage business amid regulatory pressure, CNBC reported Tuesday evening. It will only offer home loans to existing banking and wealth management customers and borrowers from minority communities. The WFC stock was little changed in the extended trade.

Axcelis Technologies (ACLS), which has been stepping up in recent sessions, said December fourth-quarter revenue topped $250 million from the chipmaker’s previous forecast of $232 million to $240 million. of dollars. ACLS stock rose slightly after hours.

Leprechaun (PI) says fourth-quarter sales topped $76 million compared to the RFID chip maker’s earlier forecast of $71.5 million to $73.5 million. PI stock, already slightly above the 50-day line, rose solidly overnight. This could offer a quick entry or approach the flat-based buy point of Impinj’s stock. PI stock is also on the leaderboard.

Earnings season also begins to pick up at the weekend. Taiwan semiconductor (TSM) reports Thursday morning. Friday, JPMorgan Chase (JMP), Bank of America (BAC), Citigroup (C) and Wells Fargo all report before opening, along with Delta Air and UnitedHealth.

Dow Jones Futures Today

Dow Jones futures were up 0.15% from fair value. S&P 500 futures climbed 0.2% and Nasdaq 100 futures rose 0.1%.

The 10-year Treasury yield fell 4 basis points to 3.58%.

Crude oil futures edged higher despite the American Petroleum Institute’s estimate of a huge weekly jump in US inventories. The Energy Information Administration will release U.S. crude and petroleum product data at 10:30 a.m. ET.

Remember that overnight action on futures contracts on Dow and elsewhere does not necessarily translate into actual trading in the next regular trading session.


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Stock market rally

After Monday’s disappointing disappointment, the stock market rally strengthened on Tuesday afternoon, closing near session highs.

The Dow Jones Industrial Average rose 0.6% in trading on Tuesday. The S&P 500 index climbed 0.7%. The Nasdaq composite climbed 1%. The small-cap Russell 2000 jumped 1.5%

Tesla stock edged down 0.8% on Tuesday after rebounding 5.9% on Monday. Shares reversed on Friday after setting a bear market low of 101.06 after the electric vehicle giant announced major price cuts in China and other key Asian markets. The TSLA stock needs a lot of repairs.

Shares rose 2% ahead of Wednesday’s open. Tesla has asked Texas for a big expansion of its Austin assembly plant, the Austin Business Journal reported Tuesday. Tesla Austin continues to expand its existing capacity.

UNH stock fell 0.8% to its worst levels since last June. Health insurer Dow Jones has already fallen 8.3% in 2023, after ending 2022 in fairly good shape. UnitedHealth’s results and forecast on Friday will be important for the suddenly beleaguered sector.

U.S. crude oil prices rose 0.7% to $75.12 a barrel. Natural gas prices fell 6.9%.

The 10-year Treasury yield jumped 10 basis points to 3.62% after slipping 20 basis points in the previous two sessions.


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Among growth ETFs, the Innovator IBD 50 ETF (FFTY) rose 1.1%, while the Innovator IBD Breakout Opportunities ETF (BOUT) edged up 0.15%. The iShares Expanded Tech-Software Sector ETF (IGV) gained 0.1%. The VanEck Vectors Semiconductor (SMH) ETF rose 1.3%, narrowly above the 200-day line after breaking through 50 days on Friday. TSM stock is a big SMH holding.

Reflecting more speculative stocks, ARK Innovation ETF (ARKK) jumped 2.5% and ARK Genomics ETF (ARKG) 3.6%. Tesla stock is still a major holding at Ark Invest, with Cathie Wood strengthening her position in recent weeks.

The SPDR S&P Metals & Mining ETF (XME) gained 2.5% and the Global X US Infrastructure Development ETF (PAVE) climbed 1.6%. The US Global Jets ETF (JETS) climbed 2.4%, with DAL stock among the notable holdings. The SPDR S&P Homebuilders ETF (XHB) rose 1%. ETF Energy Select SPDR (XLE) gained 0.7% and ETF Financial Select SPDR (XLF) gained 0.6%. The SPDR healthcare sector fund (XLV) closed up 0.8%, with UNH stock being one of XLV’s top holdings.


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Market rally analysis

The stock market rally spent much of the morning around breakeven, but ended Tuesday with a relatively strong performance.

The S&P 500 broke above the 50-day line. The 200-day average is slightly higher than that.

The Dow Jones rebounded from a test of its 50-day line after breaking above that key level on Friday. The Nasdaq moved from its 21-day line to the nearby 50-day line.

The Russell 2000 is back above its 50-day line, just below its 200-day.

The S&P MidCap 400 rose on Tuesday after finding 50-day support. That’s after jumping above its 21-day, 50-day and 200-day lines on Friday. Invesco S&P 500 Equal Weight ETF (RSP) looks quite similar.

RSP and the MidCap 400 show how large caps such as Apple (AAPL), Tesla and UNH shares weighed on the market.

A sustained stock market rally may not materialize until it is clear when the Federal Reserve will stop raising rates. Markets are strongly expecting a rise of just a quarter point at the policy meeting on February 1 and again at the end of March.

Thursday’s CPI inflation report could lock in expectations of a quarter-point hike. Inflation is expected to continue its downward trend over the next few months, if only because year-over-year comparisons are so steep.


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Main mixed actions

A number of leading stocks have been issuing buy signals in recent days and weeks. But most quickly faltered. In some cases, like the MEDP stock, they rebound a few days later.

Medpace jumped 5.9% to 223.29 in heavy volume, rebounding from the 50-day line and erasing its peak from Dec. 29, when MEDP attempted to break out.

First Solar climbed 7.4% to 171.01, continuing a mini-winning streak. Crossing the 50-day line offered an early entry into a new base, but now looks a bit drawn out. But the official buy point of 173.78 is not far away.

Other names keep coming.

ELF stock saw a promising break on Friday, but gave up most of those gains on Monday and plunged 8.3% on Tuesday to 51.15, dropping below the 50-day line and undercutting its low. flat base.

SMCI stock soared Monday morning, offering early entry, but only closed marginally higher. Shares fell 7.55% below the 50-day line on Tuesday after a short seller report.

Many other actions revolve around potential buying points.


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What to do now

The stock market rally is still in full force, but major indices, sectors and especially major stocks are subject to reversals. Thursday’s CPI inflation report could trigger big gains, with major indices pushing decisively above some key levels. But it could also go the other way.

Investors should be careful with their exposure and be wary of new purchases, especially ahead of the CPI report.

If you are making new purchases, know your exit strategy before entering. Consider taking partial profits early to lock in some gains.

It’s still a window-shopping market. But there are plenty of intriguing stocks to watch in a variety of sectors. Prepare these watch lists.

Read The Big Picture every day to stay in tune with market direction and top stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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