June 5, 2023

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Dow Jones Futures: Market Heads For Fed Decision; GME Skyrockets Late, First Republic Crash

Dow Jones futures were little changed overnight, along with S&P 500 futures and Nasdaq futures. Nike (NKE) And Jim Stop (GME) reported after closing. Investors are already flocking to the Fed’s rate hike decision on Wednesday.


The stock market rally saw strong gains on Tuesday as Treasury Secretary Janet Yellen signaled more support for banks. First Republic Bank (FRC) rebounded on Tuesday, but the Fed’s stock fell sharply overnight as the California-based bank struggled to find a way forward.

Swiss sports shoe maker on hold (Onon), turn on the EV chip Aehr Test Systems (AEHR) and the parent of Google the alphabet (Google) offered buying opportunities on the news. ONON profit gap, Aehr rebounded on new orders and Google cleared a key level in its AI chatbot.

Tesla stock made an upward movement on Tuesday within an emerging bottom base, as well Tesla (TSLAChina sales continue to rise and Moody’s upgraded its credit rating.

Dow jones futures today

Dow Jones futures fell against fair value, with NKE stock as a pull factor. S&P 500 and Nasdaq 100 futures tilted higher.

Crude oil futures fell slightly.

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

Fed meeting

The Fed meeting announcement is scheduled for 2 p.m. ET Wednesday. The odds of a quarter-point rate hike rose to 87% on Tuesday.

Markets also expect a quarter-point rate hike from the Fed in May, but then will see rate cuts kick in over the summer.

Along with the Fed rate decision, the central bank will release guidance for rate hikes and the economic outlook. Fed Chairman Jerome Powell will speak at 2:30 PM ET. His comments on the risks of inflation, the economy and the banking crisis will all be key.

Main earnings

NKE stock fell 2%. Nike’s profits and revenue beat expectations but gross margins fell more than expected. Nike stock rose 3.6% on Tuesday to 125.61 moving above the 50-day line. Athletic footwear and apparel giant Dow Jones has a flat-based 131.21 buy points, according to MarketSmith analysis.

GME stock rose 48% overnight as GameStop posted a surprise profit, its first since 2021. Revenue unexpectedly rose slightly. This indicates that the video game retailer and meme stock will jump above the 50-day line and close to the 200-day lines. GameStop stock rose 4.6% on Tuesday.

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ONON share

In Tuesday’s session, ONON stock rose 26% to 27.26, surpassing the buy point of a cup with handle on huge volume. Earnings came in light, but revenue jumped 92% with the upscale sneaker maker providing strong guidance.

Google Stock, AI News

On Tuesday, Google released its AI chatbot for testing in the US and UK Google is trying to keep up Microsoft (MSFT) and the ChatGBT-4 AI tool.

nvidia (NVDA), whose chips occupy a lot of artificial intelligence functions, made a bunch of artificial intelligence announcements at its annual developer conference. This included partnerships with Google, Microsoft, and Adobe (ADBE), which enters the field of generative artificial intelligence.

Google stock rose 3.7% to 104.92, crossing the 200-day line and making an early entry into its cup-shaped base. Nvidia stock, which has jumped in 2023 on the AI ​​buzz, rose 1.15% to an 11-month high. MSFT stock rose 0.6%, just short of a buy point after surging 12% last week.

AEHR stock

Aehr Test Systems announced another large order early Tuesday. Shares rose 15% to 36.93 amid decent trading volume. AEHR stock is close to 37.67 buy points, but an early entry on Tuesday morning was probably the safer play.

This remains an attempt to go higher in the market, not a confirmed uptrend. The Federal Reserve’s decision to raise interest rates on Wednesday looms large, while banking concerns remain high.

Nvidia stock is running leaderboard. ONON stock is like a earnings options leaderboard. Shares of Microsoft and GOOGL are in IBD Long-Term Leaders.

The video embedded in this article discussed Tuesday’s market action and analyzed On Holding, AEHR, and Google stocks.

Join IBD experts as they analyze actionable shares in the bullish stock market on IBD Live

Bank stocks

The US government is willing to provide more deposit guarantees to smaller banks if there is a “contagion risk,” the Treasury said Secretary Janet Yellen said before Tuesday’s opening.

SPDR Financial Selection Fund (XLF) rebounded 2.5%. JPM stock is one of XLF’s major holdings. SPDR S&P Regional Banking ETF (KRE) rebounded 5.8%. FRC and PacWest stocks are both KRE components.

FRC stock jumped nearly 30% to 15.78 on Tuesday, but closed off the highs. Shares collapsed 47% on Monday. First Republic stock fell 87% in March.

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Meanwhile, FRC stock fell 9% after hours.

Banking giants and US officials are discussing potential government support to encourage a bailout for the First Republic, Bloomberg reported Tuesday night. This could include the government taking over First Republic assets with unrealized losses to encourage investors or a buyer. Separately, the California-based bank has hired Lazard and McKenzie as advisors, W Wall Street Journal I reported Tuesday night, joining JPMorgan Chase.

Stock market rise

An attempt to rally the stock market showed modest gains led by technology on Tuesday. Volume was light as the Federal Reserve’s rate hike decision on Wednesday looms.

The Dow Jones Industrial Average jumped 1% in stock market trading on Tuesday. The S&P 500 jumped 1.3%, with FRC stock the biggest gainer after it was Monday’s worst performer. The Nasdaq Composite jumped 1.6%. The small capital Russell 2000 rose 1.9%.

US crude oil prices rose 2.75% to $69.50 a barrel. Copper futures rebounded 1.1%.

The 10-year Treasury yield jumped 13 basis points, to 3.6%. The two-year Treasury yield rose 25 basis points to 4.175%, its biggest one-day rise in nearly 14 years.

Exchange Traded Funds

Among the ETFs, the Innovator IBD 50 ETF (fifty) by 2.1%. iShares Expanded Technology and Software ETF (IGV) jumped 1.8%. Microsoft stock and Adobe are two core components of IGV. VanEck Vectors Semiconductor Corporation (SMH) increased by 0.3%. NVDA stock is one of SMH’s most important holdings.

Reflecting more speculative stories, the ARK Innovation ETF (ARK)ark(jumped 5.55% and ARK Genomics ETFs)ARKG) rebounded 3.8%. Tesla stock is a major holding across Ark Invest’s ETFs.

SPDR S&P Metals & Mining ETFs (XME) by 1.5%. SPDR S&P Homebuilders ETF (XHB) an advance of 1.4%. Energy Defined Fund SPDR ETF (xle(jumped 3.5% and the SPDR Health Sector Selection Fund)XLV) increased by 0.6%.

Top five Chinese stocks to watch now

Tesla stock

TSLA stock jumped 7.8% to 197.58, continuing to rebound from the 50-day line and recovering the 21-day moving average. A bottom base is forming below the 200-day line, which is not ideal. But a breakout from the potential buy point of 217.75 would also mean a recovery of the 200-day line.

The aggressive investor could have seen Tuesday’s move as a place to start a TSLA stock position. However, the 200 day line looms as a major resistance. Anyway, shares are now extended from 50 days.

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Tesla stock jumped as the Chinese electric car giant’s registrations rose for the fourth straight week. Also, Moody’s Investors Service raised Tesla’s credit rating from junk.

Market rally analysis

The stock market rally saw strong price gains on Tuesday, albeit on a mild volume. The Nasdaq index, led by Tesla and Google shares, moved above March 6 levels.

The S&P 500 moved above the 21-day line after retaking the 200-day line on Monday. It topped the 4000 level and just shy of the 50 day line.

The Dow Jones moved above the 200-day line but hit resistance at the 21-day line. The Russell 2000 index, which has heavy financial and energy weights, rebounded on Tuesday but is still far from the 200-day line and especially the 50-day line.

Many chip stocks started strongly on Tuesday, despite often lacking volume. But many pared back the gains or even backed off. AEHR stock was a big exception.

ONON stock was the biggest winner on Tuesday, along with Aehr Test Systems.

Several travel-related names have shown strength while restaurants are doing well and a number of housing stocks are building. But the supply is still relatively narrow. Many stocks will need time to repair the damage of the past two weeks.

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What are you doing now

A number of stocks have issued buy signals over the past week, and many have been successful. Market rally is recovering. So investors can justify some modest exposure.

But be careful. It is still a bullish attempt in the market, not a confirmed uptrend. Fed meeting on hold while banks remain a big question mark.

Investors should be prepared to gradually increase exposure. Build your watchlists with a focus on actionable stocks or thereabouts.

Read the big picture every day to stay in sync with market trend, leading stocks and sectors.

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

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