The Dow Jones futures contract fell slightly lower early Thursday as S&P 500 futures fell sharply and Nasdaq futures tumbled as 10-year treasury returns above 1.7% for the first time since January 2020 moved. This comes amid concerns that the Federal Reserve and other central banks will cause inflation to pick up too quickly.
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This is a reversal from Wednesday, when a policy statement from the Fed meeting and comments from Jerome Powell, head of the Fed, sparked a boom in the stock market. The Dow Jones set a record while the Nasdaq reversed higher as treasury yields rose sharply.
Williams-Sonoma (WSM), Five below (FIVE) and Upstart Holdings (UPST) achieved headline earnings after closing. Meanwhile, it Translate Bio (TBIO) and Lordstown Motors (RIDE) also carried news.
Treasury Spike Yields Spike
The 10-year Treasury yield rose 10 basis points to 1.74% as the day two response to the Fed meeting was quite different from Wednesday. The Federal Reserve indicated on Wednesday that it will not start raising interest rates before 2024, unchanged from before. Fed Chairman Jerome Powell said it was not time to talk about reducing the central bank’s large asset purchases.
This is despite more bullish economic forecasts, as coronavirus restrictions decrease and stimulus controls emerge from the new $ 1.9 billion spending package.
The Fed sees 2.4% inflation this year, but cools to 2% in 2022. The Fed has an inflation target of 2%, but says it’s OK with price increases soon to exceed the level.
The ten-year treasury yield reached 1.69% before the announcement of the Fed meeting. The 10-year return ends at 2 basis points to 1.64%, slightly lower than before the ET announcement at 14:00.
But while the Fed’s calm over inflation calmed investors on Wednesday, it did not last long.
If the Fed is not worried about inflation, bond traders will do it. As trade prices are high and US retail prices for gasoline are now 46 straight days higher, some underlying inflationary pressures are bubbling.
Dow Jones Futures Today
Dow Jones futures were slightly below fair value after being higher for most of the morning. S&P 500 futures fell 0.7%. Nasdaq 100 futures fell 1.7%. This indicates that the Nasdaq Composition will once again test its 50-day moving average.
Remember that overnight actions in Dow futures and elsewhere do not necessarily translate into stocks in the next regular session.
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Coronavirus News
Coronavirus cases worldwide reached 121.93 million. The deaths from Covid-19 were 2.69 million.
Coronavirus cases in the US hit 30.29 million, with deaths above 550,000.
Stock market rally today
US stock market overview today |
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|---|---|---|---|---|
| Index | Symbol | Price | Profit / loss | % Change |
| Dow jones | (0DJIA) | 33016.16 | + 190.21 | +0.58 |
| S&P 500 | (0S & P5) | 3974.16 | +11.45 | +0.29 |
| Nasdaq | (0NDQC) | 13525.20 | +53.63 | +0.40 |
| Russell 2000 | (IWM) | 232,37 | +1.87 | +0.81 |
| IBD 50 | (FFTY) | 47.63 | +0.42 | +0.89 |
Last updated: 16:22 ET 17/03/2021 |
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The rise in the stock market traded for much of the session mixed to lower before the major indices merged after the Fed meeting and Powell.
The Dow Jones industrial average rose 0.6% in stock market trading on Wednesday. The S&P 500 index rose 0.3%. The Nasdaq composite climbed 0.4% after falling nearly 1.5% intraday.
The ten-year treasury yield, which jumped to a 13-month high of 1.69%, reduced profits by 1.64%.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 0.9%, while the Innovator IBD Breakout Opportunities ETF (BOUT) rose 1.3%. The iShares Expanded Tech-Software Sector ETF (IGV) fell 0.2%. The VanEck Vectors Semiconductor ETF (SMH) was up 0.9%.
As a result of more speculative equities, Ark Innovation ETF rose 0.75% and Ark Genomics ETF up 1.1%. But both ARK ETFs declined by almost 2% in the pre-sale trade Tesla (TSLA) and many other valued stocks retreated with rising Treasury returns.
Important earnings
Williams-Sonoma reported better-than-expected revenue and a third consecutive quarter of accelerated revenue growth. The luxury retailer for household furniture and household goods has shown the same growth as 20% in all its chains. Williams-Sonoma also announced a $ 1 billion buyback and an 11% dividend increase.
The WSM share rose 11% in the pre-traded trade, which according to a chart analysis by MarketSmith shows a rise of more than a buy point of 151.26 from a seven-week cup basis. Williams Sonoma also has an early access of 140.24 from a handle that is too low in the base to be valid.
WSM stock is part of the IBD 50.
Five among the earnings also beat while the lead was far above the view. FIVE shares gained 5% early Thursday, past a flat buying point of 198.20 in a base-on-base pattern.
Upstart Holdings easily beats the EPS views, but revenue is slightly missed. The AI lending platform led higher. Upstart has also announced that it will acquire Prodigy, a retailer of retail software. The UPST share shot up 41% early Thursday. This will send Upstart shares well above the 50-day line, but still below the February 11 high of 105.58.
Technically, Lordstown Motors reported earnings, but the EV pickup had virtually no revenue. Lordstown said the Endurance-sized pickup will begin production in September, with the first beta vehicles ready for testing by the end of this month. An electric bus will start at the end of 2022. But Lordstown also released an SEC investigation. This comes after Hindenburg Research accused Lordstown of fraud. RIDE shares, which plunged on the Hindenburg report last week, fell 5% ahead of the revelation.
Finally, Translate Bio reported poor results for the treatment of cystic fibrosis. The TBIO share fell by 28% in the pre-trading market. Translate Bio Stock kept its 21- and 50-day lines.
Analysis of stock market marches
The Fed decision and the remarks of the Fed chief of Powell initially gave a much-needed boost. The Nasdaq was underperforming the 50-day line on Wednesday and testing its 21-day test, before jumping back on the policy statement and Powell. Some big 2020 winners like CrowdStrike (CRWD) and Twilio (TWLO) have recovered from their 50-day Tests. Meanwhile, some recent eruptions and stocks that bought quickly have suspended, including FMD instruments (MKSI), Westlake Chemical (WLK) and 5G Disk Maker Qorvo (QRVO).
But as the Nasdaq future shows today, the rise in the stock market remains sensitive to Treasury returns, especially growth. All of Wednesday’s profits, and then some, can be undone. The technology sector remains an ongoing work. If the Nasdaq composition falls below the 50-day line and continues to sell, technological stocks will come under great pressure.
Meanwhile, the reopening of plays has made big moves. Many are higher than pre-coronavirus levels, although revenue is likely to be lower than pre-pandemic reports. So do not get too carried away.
Focus on stocks that are trading above their 21-day and 50-day moving averages.
Read the big picture every day to keep up with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter @IBD_ECarson for stock market updates and more.
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