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

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




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The stock market rally had a strong session on Thursday, with major indices rising above a key short-term level, despite concerns that Fed chief Powell would signal the need for tighter monetary policy over the longer term.

Exelis Technologies ,ACL, Global Foundries ,GFS, steel mobility ,STLD, insulate ,pod) And RPM International ,rpm) were among several stocks showing breakout or flashing buy signals.

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upside down beauty ,ULTA) was actionable on Thursday, but it took off after the close. On the upside, strong results and guidance buoyed the stock marginally. Shares closed 1.75% higher at 419.25 on Thursday, with buy points closing at 417.08 and 418.89.

working day ,WDAY) And Confirm Holdings ,AFRM) also reported. WDAY stock jumped 10% overnight, but was still below the 200-day line. AFRM’s stock fell more than 10% due to large losses and weak guidance.

Exelis and STLD Stocks Joined IBD Leaderboard on Thursday. GFS Stock and Steel Dynamics are the new swingers on SwingTrader. ACLS is on stock IBD 50, Steel Dynamics Stock is Thursday’s IBD Stock for the day.

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


Fed Chair Powell’s speech: Two words troubling the S&P 500


Fed Chief Powell’s speech looked hawkish

Fed chief Powell, scheduled to speak Friday at 10 a.m. at the Jackson Hole symposium, likely won’t divulge much about the size of the September Fed rate hike. Instead, they are expected to emphasize long-term inflationary pressures. This would include chronic labor shortages, but perhaps, continued high energy and commodity prices, rising trade barriers and tight housing supplies.

All of this would suggest that the Federal Reserve would need to raise interest rates significantly higher – and keep them there for the foreseeable future. Fed chief Powell could also mean that a longer stretch of recession or subpar growth would be necessary to lift unemployment to contain wage-inflation pressure.

This could mean sluggish demand, a stronger dollar and continued higher Treasury yields. This can have an impact on the profitability and valuation of companies, especially highly valued growth.

Just a few weeks ago, the markets saw a sharp increase in rates after September and perhaps lower sometime next year.

dow jones futures today

Dow Jones futures dropped 0.15% versus fair value. S&P 500 futures and Nasdaq 100 futures declined.

Before Powell’s speech and the opening bell, the Commerce Department will release its July earnings and expense report. That report includes the Personal Consumption Expenditure Index, the Fed’s preferred inflation gauge.

Remember that overnight action in Dow futures and elsewhere does not necessarily entail actual trading in the next regular stock market session.


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


stock market rally

The stock market rally had a solid session, tech and small-cap in particular, moving above some key levels despite mixed earnings and guidance from some majors.

The Dow Jones Industrial Average rose 1% in Thursday’s stock market trading, even as salesforce.com ,CRM) Huge drop on earnings. The S&P 500 index rose 1.4%. The Nasdaq Composite jumped 1.7%. The small-cap Russell 2000 advanced 1.55%.

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

The 10-year Treasury yield fell 8 basis points to 3.03% after moving up 23 basis points over the past four sessions.

ETFs

Among the best ETFs, the Innovator IBD 50 ETF (ffty) rose 1.7%, while the Innovator IBD Breakout Opportunities ETF (boxing) climbed 1.1%. iShares Extended Tech-Software Sector ETF (IGV) CRM stock rose 0.8% despite being a major component. VanEck Vector Semiconductor ETF (smh) grew 3.4%.

SPDR S&P Metals & Mining ETF (XME) rose 2.6%, with STLD stock being a major holding. SPDR S&P Homebuilders ETF (XHB) rose 1.8%. The Energy Select SPDR ETF (XLE) increased by 0.8%. Health Care Select Sector SPDR Fund (xlv) advanced 1.1%.

Reflecting the more speculative story stocks, the ARK Innovation ETF (arkk) 2.9% and the ARK Genomics ETF (ARKG) 2.5%.


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BUY STOCK IN AREAS

ACLS stock gained a massive 13% to 81.73. According to MarketSmith analysis, Exelis stock first broke above a handle’s downtrend, then went beyond the official cup-with-handle buying point of 79.93. The relative strength line reached a new high, a bullish signal on the breakout as ACLS stock outperformed the S&P 500 index.

GFS stock rose 6.8% to 64.50 in heavy trading, breaking the declining trend in a handle. The official handle buy point is 66.06 as part of a consolidation like very deep double-bottom. GlobalFoundries stock went public in October 2021.

Steel Dynamics stock rose 6.6% to 86.76, breaking a handle’s downtrend and 86.04 official cup-with-handle buying point. Volume was way above normal. Nukor ,NUE) And commercial metal ,CMC) also broke the handle downtrend, but with a smaller amount.

on Wednesday, cleveland-rocks ,CLF) announced a price increase of at least $75 per tonne for carbon steel products.

PODD stock rose 3.35% to 282.86, clearing 276.48 handle buy points. Volume was slightly below normal, but Insulate stock rebounded from its 21-day line on Wednesday in above-average trading.

RPM stock rose 5.6% to 97.83, clearing a 95.80 entry from a “handle” that needed another day to justify. The RS line reached a new high for RPM stock.

market rally analysis

Who heads the Fed? Despite the big news on Tap Friday, there was a strong rally in the stock market on Thursday.

The Dow Jones, S&P 500 and Nasdaq Composite moved above their 21-day moving averages, after finding resistance there over the past two sessions. The small-cap Russell 2000 and the S&P Midcap 400, which both reclaimed the 21-day line on Wednesday, pointed to the 200-day line.

Even better, a growing number of stocks are showing buying signals, and from different sectors. ACLS stock, Steel Dynamics and more mirrored handle moves that developed or expanded during pullbacks of a market rally.

The earlier breakouts continue to work.

So there’s a lot of affirmative action out there. But it’s coming right before Powell’s speech.

Powell may or may not be particularly hawkish, but ultimately it is the market’s reaction that matters. The good news is that the markets are ready for sharp speeches.

Fed chief Powell could push major indices higher, setting leading stocks and potential leaders. But a negative reaction to Powell’s speech could significantly curtail the market’s rally, eroding strong gains in winning stocks.


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What should we do now

Well, now we wait. Thursday’s breakout and buy signals certainly gave investors reason to take some fresh positions. If you decided that the better part of the heroism in Powell’s speech was conscience, that’s okay. If the market continues to rally in the coming days, many setups will soon turn into buy signals.

Create your watchlist. Be sure to cast a wide net to find major stocks from an array of industries. Pay close attention to a select group in or near the purchase area.

Be ready for action on Friday. Market rally on Powell’s speech may be conscious, but at some point you may want to add or reduce risk.

Read The Big Picture every day to keep up with the market direction and key stocks and sectors.

Please follow Ed Carson on Twitter @ibd_ecarson For stock market updates and much more.

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