Dow Jones Futures: Stock Market Rally Awaits Fed Chief Powell, Key Economic Data

Dow Jones futures rose slightly overnight, along with S&P 500 futures and Nasdaq futures, with Fed chief Jerome Powell and the start of key economic data on tap.

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The stock market rally closed mixed Tuesday with Apple (AAPL) once again a drag on the major indexes, along with Amazon.com (AMZN) and Tesla (TSLA). Meanwhile, Apple’s fellow Dow giants Boeing (BA), Chevron (CVX) and Goldman Sachs (GS) are near buy points.

Hewlett Packard Enterprise (HPE) and NetApp (NTAP) headlined earnings reports late Tuesday, with CrowdStrike (CRWD) and Workday (WDAY) kicking off big software reports this week.

HPE stock rose modestly in premarket trade after HPE earnings topped views. HP Enterprise stock, above its 200-day line, is working on a long cup base. NTAP stock plunged in extended action on weak NetApp revenue and guidance. WDAY stock jumped overnight on a Q3 beat and a $500 million buyback. CRWD stock dived despite beating Q3 views as subscriptions came in light and the cybersecurity firm implied a Q4 revenue miss.

On Wednesday morning, ADP will release its November employment estimate of private payrolls. The Labor Department will release job openings in the October JOLTS report. Job openings are watched closely by Fed chief Jerome Powell, who will speak Wednesday afternoon.

All that foreshadows the Fed’s favorite inflation gauge, the PCE price index, on Thursday morning, along with the November jobs report on Friday, as well as several other notable economic releases.

Investors should be cautious about opening new positions until there’s more clarity on the economy and Fed rate hike outlook. If anything they may want to be lightening positions in the very short term.

CVX stock is on IBD Leaderboard. BA stock is on SwingTrader.

Fed Chief Powell Speech

Fed Chief Jerome Powell will speak at the Brookings Institution at 1:30 p.m. ET on Wednesday. He’s expected to reinforce expectations that the central bank will shift to a 50-basis-point rate hike on Dec. 14. Markets see a 67.5% chance of a half-point move, but still a decent chance of a fifth straight Fed rate hike of 75 basis points. But he’ll also likely indicate that rate hikes will continue into 2023.

Whatever Powell says will quickly be overtaken by economic data. If inflation starts to show significant cooling and labor markets ease, even the most-hawkish Fed policymakers will favor slowing the pace of rate hikes and ending earlier than markets may expect. Hot price and employment data will stiffen the resolve of many Fed doves. Of course, the economic data in the coming days may show mixed results, or marginal improvement.

Dow Jones Futures Today

Dow Jones futures climbed a fraction vs. fair value. S&P 500 futures advanced 0.2%. Nasdaq 100 futures rose 0.4%.

The 10-year Treasury yield fell 2 basis points to 3.73%. Crude oil futures rose 2%.

China’s official manufacturing index fell 1.2 points to 48 in November, falling further below the neutral 50 level and views for 49. The services index sank to 46.7 vs. forecasts for 48. China’s Covid lockdowns have taken a serious toll on the economy.

Still, Hong Kong’s Hang Seng index rose 2.2% after jumping 5.2% Tuesday on hopes for easier Covid restrictions ahead.

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

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Stock Market Rally

After Monday’s sharp selling, the stock market rally closed mixed Tuesday.

The Dow Jones Industrial Average closed just above break-even in Tuesday’s stock market trading. The S&P 500 index fell about 0.2%. The Nasdaq composite declined 0.6%. The small-cap Russell 2000 rose 0.3%.

Apple stock fell 2.1%, its third straight significant decline, as China Covid cases, lockdowns and protests weigh on the tech giant. On Tuesday, shares fell 2.6%, below their 50-day moving average. Above the 50-day line looms 200-day resistance for AAPL stock. Apple has seen unrest at a massive Foxconn iPhone assembly factory in China.

Amazon stock declined 1.6% and Tesla stock fell 1.1%, both retreating from near their 21-day lines. Both are relatively close to bear market lows.

U.S. crude oil prices climbed 2.4% to $79.62 a barrel. Intraday Monday, crude oil futures hit their lowest levels of the year.

The 10-year Treasury yield rose 5 basis points to 3.75%.

ETFs

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) dipped 0.2%, while the Innovator IBD Breakout Opportunities ETF (BOUT) rose 0.5%. The iShares Expanded Tech-Software Sector ETF (IGV) sank 0.8%. The VanEck Vectors Semiconductor ETF (SMH) fell 0.3%.

SPDR S&P Metals & Mining ETF (XME) gained 2.3% and the Global X U.S. Infrastructure Development ETF (PAVE) 0.1%. U.S. Global Jets ETF (JETS) ascended 1.8%. The Financial Select SPDR ETF (XLF) climbed 0.6%. The Health Care Select Sector SPDR Fund (XLV) fell 0.25%.

Reflecting more-speculative…