Dow Jones futures edged higher overnight, along with S&P 500 and Nasdaq futures. All eyes are on the September CPI inflation report on tap for release on Thursday morning.
X
Stock markets were relatively quiet on Wednesday ahead of Thursday’s consumer price index, with the producer price index and Fed minutes having little impact. The major indexes, down slightly on Wednesday, are close to bear market lows. But at least they have avoided repeating the mistake of focusing on key Fed economic data.
Investors should stay on the sidelines. Even the best stocks are struggling to withstand the water, and they can quickly go down.
Vertex Pharmaceuticals (VRTX), one of the strongest stocks, is falling back to the 50-day line. VRTX stock chart is fine, but biotech isn’t making progress.
Meanwhile, two other EV-related matches had a tough break on Wednesday. Albemarle (ALB) suddenly plummeted with other lithium plays. ALB stock is holding up well, along with early buy signals. Aehr test system (AEHR) fell, with EV exposure chip equipment giving up nearly all of Friday’s big earnings gap.
For its part, Tesla (TSLA) posted a gain of 0.3%, marking a five-day decline. But Tesla stock is near a 52-week low.
VRTX stock is on IBD Rankings and IBD 50. Albemarle stock is on the Leaderboard watchlist. Both Vertex and ALB stock are on IBD Big Cap 20.
Main income
Delta Airlines (DAL) and Commercial Metals (CMC) began earning for their respective fields on Wednesday morning.
DAL stock was up 1.3% on Wednesday, but not far from a two-year low.
CMC stock fell 1.3% on Wednesday, back below the 50-day moving average after testing the trendline on Tuesday. Without the bear market and earnings on tap – two colossal values - then CMC stock would have endorsed an early buy signal. Dynamic steel (STLD), reports next week, has similar charting action.
CPI . Inflation Report
The Labor Department will release the September consumer price index at 8:30 a.m. ET. Economists expect the overall consumer price index to rise 0.2% from August. The core CPI, which excludes food and energy, rose 0.4% after reading 0.6%. hot August.
Year-over-year, the CPI inflation rate should ease slightly to 8.1% from 8.3% in August, with June’s 9.1% marking a 40-year high. But core inflation should accelerate to 6.5% from 6.3% in August, with rents the main driver. That would match March’s 39-year high.
On Wednesday, September producer price index rose 0.4 percent from August, double forecasts. Wholesale inflation stood at 8.5%, down slightly from 8.7% in August but higher than the 8.4% forecast. Core PPI rose 0.3%, in line with views. Core PPI inflation cooled to 7.2% from 8.1% in August.
Fed meeting minutes
On Wednesday, the central bank released the minutes of the Fed’s September 20-21 meeting. Many officials. According to the Fed minutes, “the cost of taking too little action to bring down inflation will likely outweigh the cost of taking too much action.” Some participants wanted to “calibrate” future tightening to economic conditions.
However, the Fed is looking for clear and convincing evidence that inflation is cooling significantly before slowing the pace of rate hikes. So far that has not happened.
Fed rate hike expectations
The Fed’s rate hike expectations spiked after the August CPI inflation report was hotter than expected on September 13. The main indexes, which have regrouped the CPI data, edged lower on the results. actual results. Treasury yields continue to be higher.
There is an 84% chance that the Federal Reserve will raise interest rates by 75 basis points for its fourth consecutive meeting in November, up slightly from Tuesday. That’s according to CME FedWatch Tool. Markets expect at least 50 basis points in December, which would put the year-end feeding fund fluctuating 4%-4.25%.
Dow Jones Futures Today
Dow Jones futures are up 0.2% above fair value. Futures contracts on the S&P 500 and Nasdaq 100 rose 0.2%.
The CPI inflation report is sure to change future yields on Dow and Treasuries.
Remember that action overnight in Dow futures contract and elsewhere it doesn’t necessarily translate into actual trading the next week stock market meeting.
Join IBD experts as they analyze stocks that could act in the stock market rally on IBD Live
Wednesday Stock Market
The stock market was quiet on Wednesday, moving between gains and thin losses as investors awaited Thursday’s CPI report.
The Dow Jones Industrial Average fell 0.1% on Wednesday stock market trading. The S&P 500 index fell 0.3%. The Nasdaq composite index fell 0.1%. The small-cap Russell 2000 fell 0.3%.
Who’s the big winner: Cruise line stocks take a beating. Norwegian Cruise Line (NCLH), Royal Caribbean (RCL) and Carnival Corp. (CCL) were the S&P 500’s top performers on Wednesday, all up 10% or more.
U.S. crude oil prices fell 2.3% to $87.27 a barrel, continuing to recoup most of last week’s massive gains due to OPEC+ production cuts.
The yield on the 10-year Treasury note fell 4 basis points to 3.9%. The 10-year yield remains near a 12-year high of nearly 4%.
ETF
Among the Best ETFsThe Innovator IBD 50 ETF (FFTY) increased by 0.6%. iShares Expanded Software-Technology Sector ETF (IGV) increased higher. VanEck Vectors Semiconductor ETF (SMH) decreased by 0.6%.
Reflecting a more speculative narrative on stocks, the ARK Innovation ETF (ARKK) rose 1.3% and the ARK Genomics ETF (ARKG) 0.6%. Tesla stock is the #1 holding on Ark Invest ETFs.
SPDR S&P Metals & Mining ETF (XME) flat. US Global Jets ETF (JETS) rose 1.2%, with Delta Air as the main component. The Energy Select SPDR ETF (XLE) advanced 0.8% and the ETF SPDR financial options (XLF) embedded 0.2%. SPDR Fund for the Healthcare Sector (XLV) decreased by 0.5%.
The five best Chinese stocks to watch right now
EV emits trouble
Lithium Play was one of Wednesday’s biggest discounts. ALB stock, which looks strong, fell 7.9%, easily becoming the S&P 500’s worst performer. The stock fell from a 50-day moving average to a two-month low. SQM (SQM), Life (LTHM) and other lithium stocks also sold off.
AEHR stock fell 6.35%, breaking through the 50-day threshold. Shares of the chip-gear maker exposed to EVs are down 14% for the week. On Friday, the Aehr Test System rose 24% on blown resultsbut whoever bought that void is now underwater.
ALB stock and Aehr Test System followed major sell-offs in other electric vehicle-related playoffs, including On semiconductors (ABOVE).
Tesla stock, which a few weeks ago flirted with positive entries, is currently trying to hold above its May lows.
Sometimes there is a specific catalyst, such as a disappointing Tesla delivery. But, in the end, the bear market comes to everyone.
Tesla Vs. BYD: Which EV Giant is better to buy?
Stock market analysis
The major indexes were little changed on Wednesday, with investors reluctant to bet big ahead of the CPI inflation report.
Lower-than-expected inflation data is likely to revive the “Fed pivot” talk, especially with global markets strained by the Fed’s aggressive policy. Perhaps policymakers are looking for an excuse to take advantage of a big rate hike, but so far their rhetoric has been hawkish.
The major indexes are all below their 21-day moving averages. When was the last time they closed above that short-term level? September 12, the day before the August consumer price index. The Dow, S&P 500 and Nasdaq were also above their 50-day lines that day, but are now significantly below that currently falling average.
Ignoring Wednesday’s price gains, investors weren’t focused on key Fed inflation data, unlike before Fed Director Jerome Powell’s Jackson Hole speech, the August CPI and the newspaper. September jobs report last Friday. That can at least minimize the potential downsides from hot CPI inflation.
Market Timing with IBD’s ETF Market Strategy
What to do now
The S&P 500 is right at the bottom of a bear market. The number of shares set up continues to dwindle, even the last holdings like VRTX stock fail to make progress.
High risk while low reward.
Thursday’s inflation report could be the catalyst for big gains or losses. Even if stocks rebound strongly, investors should not get too excited on a good day, especially with the indexes below so many important milestones.
However, stay engaged and ready to act when the market moves more volatile. That means redoing the watchlist. Focus on stocks with relatively strong strength, even if the charts show a lot of losses.
Read Big picture every day to stay in sync with market trends and top stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
YOU MIGHT ALSO LIKE:
Why This IBD Tool Simplifies Sautéch For top stocks
Catch the next big winning stock with MarketSmith
Want to get quick profits and avoid big losses? Try SwingTrader
Best growth stocks to buy and watch
IBD Digital: Unlock IBD’s premium stock listings, tools and analysis today
