Dow Jones futures rose overnight, along with S&P 500 futures and Nasdaq futures, with a focus on Cisco gains and BBBY stock news.
The stock market rally pulled back on Wednesday amid significant resistance. Major indices initially reduced losses after the release of the Fed minutes from its July 27-28 meeting, but faded again towards the end.
Apple (AAPL) cleared a trendline entry, with megacap stocks technically doable ahead of an official break.
Lithium giant Sociedad Quimica y Minera de Chile (SQM), chip design company Synopsys (SNPS) and Dow Jones’ lagging tech giant Cisco Systems (CSCO) reported late Wednesday. SNPS shares rose modestly and Cisco shares jumped into extended action based on strong gains and guidance. SQM earnings are still on tap.
BJ’s Wholesale (BJ), a rival of Costco Wholesale (COST), reports for Thursday’s opening. BJ’s stock is not far from a buying point, while Costco is right at a buying point.
BBBY shares fall late
Meanwhile revived meme stock Bed Bath & More (BBBY) fell sharply in late trading. BBBY stock rose 12% in Wednesday’s session to 23.08, but closed close to session lows after hitting a five-month high of 30 intraday.
Shares rose 29% in massive volume on Tuesday as GameStop (GME) Chairman Ryan Cohen announced that he still owns BBY stock, along with significant out-of-the-money options.
But late Wednesday, Cohen announced his intention to exit BBBY’s stock entirely.
GME stocks, the original meme stock, retreated overnight after falling 4% on Wednesday. AMC entertainment (AMC), another meme stock, fell 14% during the regular session.
Federal Reserve policymakers agreed at its late July meeting that further rate hikes are needed, according to the Fed’s recently released minutes.
Falling commodity prices, including energy, are not enough, according to the Fed’s minutes, with policymakers stressing that inflationary pressures are broad. But they also worried about slowing the economy too much.
They seemed unconcerned about the easing of financial conditions since the June meeting, including lower government bond yields and a rally in equity markets.
All in all, the Fed minutes contained no aggressive surprises, easing expectations for rate hikes somewhat.
Still, markets now see a 63.5% chance of a 50 basis point rate hike by the Fed on Sept. 21. Earlier Wednesday, before the Fed’s minutes were released, the odds were roughly evenly split between a half-point move or a third consecutive 75-bp move.
Costco stocks are listed on IBD Leaderboard and SwingTrader. SNPS shares are listed on IBD Long-Term Leaders. Synopsys and SQM stocks are on the IBD 50.
Dow Jones Futures Today
Dow Jones futures were up 0.1% from fair value. S&P 500 futures and Nasdaq 100 futures rose 0.1%. CSCO stocks are part of the Dow Jones, S&P 500 and Nasdaq composite.
Keep in mind that an overnight action in Dow futures and elsewhere does not necessarily lead to actual trading in the next regular trading session.
Join IBD experts as they analyze actionable stocks during the stock market rally on IBD Live
Stock Market Rally Wednesday
The stock market rally saw losses in major indices after a mixed outing on Tuesday.
The Fed minutes didn’t change much in the major indices in the end.
July retail sales were flat, the Commerce Department reported ahead of Wednesday’s opening. That was slightly below the views. But sales excluding autos and gasoline rose 0.7%, reinforcing expectations that the US economy will return to growth in the third quarter.
The Dow Jones Industrial Average fell 0.5% in Wednesday’s stock market trading. The S&P 500 index lost 0.7%. The Nasdaq composite fell 1.25%. The small-cap Russell 2000 fell 1.7%.
The price of crude oil in the US rose 1.8% to $88.11 a barrel, ending a three-day loss streak. US crude oil and gasoline inventories have fallen sharply over the past week, much more than expected. Gasoline demand has peaked in 2022 over the past four weeks.
Ten-year government bond yields rose 10 basis points to 2.89%. That’s the highest point in four weeks, but still below the 50-day mark.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) fell just over 1%, while the Innovator IBD Breakout Opportunities ETF (BOUT) lost 0.5%. The iShares Expanded Tech-Software Sector ETF (IGV) fell 1.7%. The VanEck Vectors Semiconductor ETF (SMH) fell 2.15%. SNPS shares are in the IGV and SMH ETFs.
SPDR S&P Metals & Mining ETF (XME) fell 2.7% and the Global X US Infrastructure Development ETF (PAVE) fell 1.1%. US Global Jets ETF (JETS) fell 2.5%. SPDR S&P Homebuilders ETF (XHB) lost 1.7%. The Energy Select SPDR ETF (XLE) gained 0.8% and the Financial Select SPDR ETF (XLF) lost 0.5%. The Health Care Select Sector SPDR Fund (XLV) fell 0.6%.
As a result of more speculative story stocks, ARK Innovation ETF (ARKK) plunged 5.3% and ARK Genomics ETF (ARKG) 5.1%.
Five best Chinese stocks to watch
Shares of Apple, which are part of the Dow Jones, S&P 500 and Nasdaq composite, rose 0.9% on Wednesday to 174.55. AAPL stock moved above a downward trendline dating back to early January. That offers a buying opportunity.
The official buy point is 183.04, according to MarketSmith’s analysis. Investors might view the Apple stock chart as an uneasy double bottom with an entry of 179.71.
AAPL stock rose in volume that was slightly above normal. But most of its strong uptrend over the past two months has been on below-average trading. The tech titan could use a break. A handle would create a lower buying point and overtake the moving averages.
Apple stocks outperform other megacaps and the broader market: the relative strength line, the blue line in the charts shown, has been hitting record highs for a few weeks now.
SQM results were not yet known on Wednesday evening. Shares fell 1.2% to 104.42 during Wednesday’s regular session, after falling 5.1% in a downside reversal on Tuesday. SQM stock is working to a 115.86 cup base buy point after surpassing a 99.84 early entry last week from a handle too low. A good handle would be ideal for SQM stock.
Lithium rivals Albemarle (ALB) and Levent (LTHM) both reported strong gains earlier this month, with industry giant Albemarle again sharply raising its outlook.
Synopsys revenue topped the charts, while the outlook was also strong. SNPS stock rose modestly in late trading. Shares fell 1.2% to 381, with an official buy point of 377.70. Synopsys shares already cleared some early registrations at the end of July and are still well above the 50-day line. If stocks pause at the top of the base, it could create a buying opportunity.
Rival Cadence Design Systems (CDNS), also above an official buy point, rose higher late.
Cisco surpassed fiscal Q4 views and led into Q1. CSCO shares rose sharply in extended trading. Shares fell 0.2% to 46.66 on Wednesday. Cisco stock has modestly recovered from early July lows, but is well below the 200-day bullish mark.
Ahead of Thursday morning’s gains, BJ stock lost 0.2% to 69.13 on Wednesday, not far from a buy point of 71.10. COST shares rose 0.6% to 556.32 on Wednesday, with a buy point above 552.81 head-on-handle.
Market rally analysis
A day after the S&P 500 stopped just below the 200-day moving average, major indices retreated on Wednesday. The Fed minutes moved stocks, but they eventually closed roughly where they were at 2:00 p.m. ET.
Small caps and high-value growth stocks were the biggest losers, but the declines were broad-based beyond energy.
The Dow Jones held support at its 200-day line. The Russell 2000 interrupted that important level. The S&P 500 and Nasdaq have not reached it.
The market rally has come a long way since the June lows with the 200-day line forming a clear area of resistance. So this is an obvious time and place for the major indices to pause or retreat.
For the time being, the market rally seems reluctant to give up much ground. Perhaps a little more withdrawal would be constructive. It would let Apple and other stocks that have accumulated to the right of the bases take a break and form handles.
But the market is going to do what it is going to do. The indices can quickly move past the 200-day line or retreat sharply to the 50-day line, or worse.
Time the Market with IBD .’s ETF Market Strategy
What to do now
Stocks tend to follow market and industry trends. That’s why it’s so important to pay attention to the general market, add exposure to confirmed uptrends, and move mostly or completely to cash in corrections.
With the market reaching resistance on the 200-day line, investors should wait before increasing their net exposure. They might consider taking a share of the profits.
But keep working on watchlists. A market break that refreshes could create great opportunities.
Read The Big Picture every day to stay up to date on market direction and leading stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock updates and more.
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