Dow futures point to more losses on Fed rate hike expectations; Elon Musk sells more Tesla shares

Dow futures fell strongly early Thursday, along with S&P 500 futures and Nasdaq futures, as investors continued to ponder Fed news on Wednesday. Weak Chinese economic data and upcoming US economic reports have also been in focus, along with Elon Musk’s latest Tesla sales.




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The stock market rally reversed lower on Wednesday after the Fed posted a 5.1% gain as Fed Chair Jerome Powell called for “significantly more evidence” that inflation is under control.

But stocks pared losses in contrasting measures as investors also reflect on Powell’s other comments and hope for rate hikes to begin in 2023. Tesla (TSLACEO Elon Musk revealed late Wednesday that he sold $3.6 billion worth of TSLA stock this week, as shares plunged to new bear market lows. apple (AAPL) fell below the 50-day moving average.

But solar stocks have been strong, with the Invesco Solar ETF (tan) flashing a buying opportunity, eg Enphase energy (ENPH), SolarEdge Technologies (SEDG), First Solar (FSLR) And the Matrix techniques (I see) Everything rose.

Fed rate hike, peak rate

The central bank raised the federal funds rate by 50 basis points, to 4.25%-4.5% on Wednesday afternoon, as expected. But policy makers, in the new quarterly forecast, now, too See peak rate of 5.1%Up from 4.6% at the Federal Reserve’s September meeting. Fed Chair Powell has stated in recent weeks that the peak rate is likely to head higher. But 5.1% was higher than market expectations, especially after Tuesday’s relatively weak inflation report.

Fed President Paul Hokisch, Deutsch

The full effects of this year’s rate hike are yet to be felt, “but we have more to do,” said Powell, who was speaking shortly after the Fed’s meeting announcement and outlook. The Fed chief noted a “welcome decline” in price gains in the last two CPI reports, but said policymakers needed “significantly more evidence.” Have confidence that inflation is on a sustainable downward path.”

Powell did not rule out further stepping down in raising rates to just a quarter of a point in February. He stressed the importance of determining where the federal funds rate peaks and how long it stays high. Notably, Powell does not see any rate cuts in 2023.

But he also said, “Our policy is to get to a very good place now.”

Markets are putting a 72% chance of a quarter-point rate hike, to a range of 4.5%-4.75%, up from 60% on Tuesday. Notably, investors expect another quarter-point rally in late March, but now see a good chance of not moving at all.

The Fed continues to see a slowdown in growth in 2023, not an actual recession.

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The major indices, which all rose modestly with the Fed meeting announcement and Powell’s speech, turned lower in choppy trading. For the second consecutive session, the S&P 500 moved above the 200-day moving average but closed below that key level.

Investors should be careful about adding exposure in the current market, with indices volatile and near key levels.

China and US economic data

China’s retail sales fell 5.9% in November from a year earlier, much worse than expected and a deterioration from October’s decline of 0.5%. Industrial production rose 2.2%, with growth slowing much more than expected from 5% in October.

China Covid lockdowns have taken a huge toll on the economy. Covid laws have been easing rapidly in the past few weeks, but China is now preparing for a massive wave of infections.

Investors will get US retail sales for November, the Philadelphia Fed manufacturing index for December and weekly jobless claims, at 8:30 a.m. ET. November Industrial Production will follow at 9:15 AM ET.

Dow jones futures today

Dow futures fell 0.9% against fair value. S&P 500 futures fell 1.1% and Nasdaq 100 futures fell 1.3%.

The Bank of England, the European Central Bank and the Swiss central bank all raised interest rates by 50 basis points on Thursday, as expected.

The 10-year Treasury yield fell 1 basis point, to 3.49%.

Remember to work in overnight Dow Jones futures contracts and elsewhere that does not necessarily translate into actual trading in the next regular session Stock market session.


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Stock market rise

The stock market rallied ahead of the Fed meeting announcement, then reversed lower in a choppy move the rest of the session.

The Dow Jones Industrial Average fell 0.4% on Wednesday Stock market trading. The S&P 500 lost 0.6%. The Nasdaq Composite lost 0.8%. Small-cap Russell 2000 gave up 0.7%.

Apple stock fell 1.55% to 143.21, again below its 50-day moving average.

US crude oil prices rose 2.5 percent to $77.28 a barrel.

The 10-year Treasury yield closed flat at 3.5%.

between the The best mutual fundsThe Innovator IBD 50 ETF (fifty(down 0.4%, while the Innovator IBD Breakout Opportunities ETF)fit) decreased by 0.1%. iShares Expanded Technology and Software ETF (IGV) lost 0.2%. VanEck Vectors Semiconductor Corporation (SMH) decreased by 1.7%.

Reflecting more speculative stories, the ARK Innovation ETF (ARK)ark(gave up 1% and the ARK Genomics ETF)ARKG) 0.7%. Tesla stock is a major holding across Ark Invest’s ETFs. Cathy Wood bought more than 70,000 shares of TSLA on Wednesday in various Ark ETFs.

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SPDR S&P Metals & Mining ETF (XME) decreased by 0.9%. SPDR S&P Homebuilders ETF (XHB) sank 0.5%. Energy Defined Fund SPDR ETF (xle(Down 0.6% and Financial Select SPDR ETF)XLF) 1.25%. SPDR Health Care Sector Selection Fund (XLV) increased by 0.2%.

solar stocks

The Invesco Solar ETF rose 1.8% to 82.61 on Wednesday. The TAN ETF has 84.28 mug with handle A buy point, but investors could have taken an early entry from the 21-day moving average.

Right now, solar stocks are generally moving higher together, so TAN is a good way to play up the sector’s upside with less risk to individual stocks.

Enphase Energy, First Solar, and SEDG stocks are the three largest constituents, accounting for nearly a third of TAN’s weight.

ENPH’s inventory is now slightly extended from the point of purchase of a mug with a handle, according to MarketSmith Analysis. The SEDG stock has also been extended from the grip insert. FSLR stock is rebounding from the 10-week line, providing a new buying opportunity.

Array Technologies is also a component of TAN. ARRY stock jumped 8.3% to 23.55, just under 23.60 cups by a handle. Point purchase. But the shares are 12.7% higher than the 21-day line and 26% higher than the 50-day line, which makes buying ARRY shares riskier, especially in the current market.


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Tesla stock

TSLA stock fell 2.6% to 156.80 on Wednesday. Shares are now down 12.4% for the week, extending to two-year lows. Tesla stock peaked at 414.46 in November 2021.

TSLA stock fell 2% in pre-market trading.

Late Wednesday, Elon Musk revealed that he sold nearly 22 million shares of Tesla for about $3.6 billion in the three days ending Dec. 14. Musk has sold more than $39 billion in Tesla stock since shares peaked in November 2021.

Volume has been particularly heavy this week, with Tuesday trading the most in 13 months.

Earlier Wednesday, Goldman Sachs cut its share price target for TSLA and cut its forecast for fourth-quarter Tesla deliveries. Morgan Stanley sees Tesla stock as a top pick for 2023, but warns that “Brakes squeak on demand on electric vehicles” Inclusive.

If I covered the TSLA and just looked at the chart, it would just go away.


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Market rally analysis

The past two days are a great example of not being the news, but rather the market’s reaction to the news.

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On Tuesday, a cooler-than-expected CPI inflation report sent stocks off the open, but they quickly pared gains.

On Wednesday afternoon, the central bank raised its forecast for the Fed’s highest rate more than expected. Fed Chair Powell made it clear that inflation needs to fall much more, although he also offered more pessimistic signals. The major indices were sold off hard, but then pared losses, briefly turning positive before fading again.

The S&P 500, above its 200-day line for the second consecutive session, failed to close above that key level, this time reversing lower. But it found support at the 21-day line, which closes the gap with the 200-day mark.

Dow Jones and Nasdaq also successfully tested their 21-day lines. The Russell 2000, which has become a lagging indicator, has pulled back towards the 50-day line.

Despite the disappointment since Tuesday’s opening highs, all major indices are up about 1.6% for the week, while the Russell 2000 is up 1%.

The stock market often has a second day reaction to Fed meetings, especially with so much volatility. Dow futures indicate that this is happening.


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What are you doing now

A stock market rally gives no reason to add exposure. Previously, indices would at least have a solid session to attract investors, then cut them off with steady losses over the next several sessions.

But for now, the major indices are unable to make gains.

If you are buying aggressively, there is a good chance that you will buy outright at the highest price in the near term. If you buy at weakness, you could be jumping on a sinking ship.

It is best to wait for the major indices to show signs of a sustained rally in the market. That would include the S&P 500 crossing the 200-day line, and then all major indexes breaking above their December 1 highs. Even in this positive scenario, investors should add exposure carefully.

Read The Big Picture Every day to keep up with the market trend, stocks and leading sectors.

Please follow Ed Carson on Twitter at @employee For stock market updates and more.

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