Dow Jones futures fell Wednesday morning, along with S&P 500 futures and Nasdaq futures. Goal (TGT) plunged early Wednesday on a major earnings miss, the next day Walmart (WMT) did the same. The 10-year government interest rate is back at 3%.
The new stock market rise had strong gains on Tuesday among several bullish factors. Fed Chairman Jerome Powell said politicians need to see “clear and convincing evidence” of cooling inflation before slowing down the rate hike, but said a “soft landing” for the US economy is plausible.
Broadcom (AVGO) flashed an aggressive entry on Tuesday, while Eli Lilly (LLY) remains capable of action. The disadvantage of, Dollar tree (DLTR) modestly withdrew below its 50-day line as Walmart (WMT) plunged 11% on weaker-than-expected Q1 earnings as inflationary pressures hit the discount giant on several fronts. The DLTR share fell early Wednesday on Target’s big miss.
Meanwhile, Elon Musks Twitter (TWTR) saga continued, with Tesla (TSLA) The CEO said that the agreement “can not proceed” without more clarity on bot accounts, and even urges the Securities and Exchange Commission to enter into. The social site said it is committed to the original terms. Tesla shares rose again on Tuesday. The TWTR share rose 2.5% after the fall in recent days, and fell well below the proposed takeover price of 54.20 dollars.
Early Wednesday, Target and ZIM integrated shipping (ZIM) will report earnings.
Target earnings were $ 2.19 per share, well below $ 3.07 per share. Sales increased by 4% to $ 25.17 billion, which hit something. The discount giant blamed shipping costs, higher discounts and weaker sales of TVs and other large tickets.
The stock fell 23% early Wednesday to around 167. That is after falling 1.4% on Tuesday, in sympathy with the Walmart stock. The target stock has been in a cup-with-handle base with a buy point of 254.97. The WMT share fell 2% after Tuesday’s fall of 11%.
ZIM earnings increased by 177% to $ 14.19 per share, beating the views comfortably. The sea-going container freight also increased the EBITDA targets for the whole year. The ZIM share rose by almost 4% early Wednesday to over 67. The shares are working at 79.05 buy points from a cupbase. But stocks may possibly have an early entry from near the 50-day line and short-term resistance on Wednesday. On Tuesday, ZIM turned down to a 1.7% drop while other container freight played Danaos (DAC) withdrew despite a devastating view late Monday.
The AVGO stock and Eli Lilly are on the IBD Leaderboard and SwingTrader. The LLY stock is at IBD 50. Broadcom was Today’s IBD stock.
The video built into the article discussed Tuesday’s market action and analyzed Broadcom, Eli Lilly and DLTR shares.
Fed Chief Powell
Fed chief Jerome Powell said he was still focusing on bringing down inflation. He noted that financial conditions have tightened quite a bit already, but said he wants to see “clear and convincing evidence” to curb inflationary pressures before slowing the pace of Fed rate hikes. He said there was no time for “nuanced” readings of inflation. Powell said there may be some “pain” involved in bringing down inflation. But he expects the labor markets to remain strong and says a “soft landing” is still possible. Last week, Powell said recession could be inevitable.
Ultimately, Fed Chairman Powell largely repeated previous statements and topics, and did not signal a new shift or pace in monetary policy.
Dow Jones Futures today
Dow Jones futures retreated 0.6% to fair value. S&P 500 futures fell 0.75% and Nasdaq 100 futures fell 1.1%. Futures deteriorated significantly after the large Target earnings loss.
The 10-year government interest rate rose 3 basis points to 3%.
The US crude oil price rose 2 percent.
Keep in mind that overnight trading in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.
Join IBD experts as they analyze powerful stocks in the stock market rally on IBD Live
Stock market rally
The rise in the stock market started strongly on Tuesday, retreating a couple of times, but strengthening again, including Fed Chairman Powell’s comments.
There were several bullish market drivers on Tuesday. Chinese stocks rose to ease shutdowns and solid JD.com (JD) income results. US retail sales were strong, too Home Depot (HD) results are also positive, although the large Walmart income misses the inflationary pressure dampened enthusiasm. United Airlines (UAL) raised important revenue targets, signaling strong demand for the tourism industry.
The Dow Jones Industrial Average rose 1.3% in Tuesday’s trading session. The S&P 500 index rose 2 percent. The Nasdaq index rose 2.8 percent. Small-cap Russell 2000 jumped 3.1%
The US crude oil price fell 1.6% to $ 112.40 a barrel. Gasoline futures also withdrew.
The 10-year government bond yield jumped 9 basis points to 2.97%, but did not move much on Fed chief Powell.
Among the best ETFs, Innovator IBD 50 ETF (FFTY) climbed 2.45%, while Innovator IBD Breakout Opportunities ETF (BOUT) fell 1 cent. iShares Expanded Tech-Software Sector ETF (IGV) rose 1.75%. VanEck Vectors Semiconductor ETF (SMH) rose 4.8%, with the AVGO share a remarkable SMH share.
The SPDR S&P Metals & Mining ETF (XME) rose 4.25% and the Global X US Infrastructure Development ETF (PAVE) increased by 2.7%. The US Global Jets ETF (JETS) rose 5.7%. SPDR S&P Homebuilders ETF (XHB) rose 2.7%. Energy Select SPDR ETF (XLE) rose 1.2% and Financial Select SPDR ETF (XLF) rose 2.7%. The Health Care Select Sector SPDR Fund (XLV) rose 1.4%, with the LLY share a significant stake.
ARK Innovation ETF (ARKK) reflected more speculative history stocks, 5% and ARK Genomics ETF (ARKG) 4.7%. The Tesla share is number 1 across Ark Invest’s ETFs.
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Broadcom shares rose 4.4% to 608.15, moving above the 50-day line and breaking a trend line, offering an early entry. The chip giant is working on an official buying point of 645.41 from a buying point with a cup with handles, according to MarketSmith analysis. The relative strength of the AVGO stock is already at a new high. The RS line, the blue line in the accompanying charts, tracks the performance of a stock versus the S&P 500 index.
Eli Lilly shares rose 0.7% to 301.48 after finding support on its 21-day and 10-week lines. On Monday, the LLY stock jumped from these levels when the FDA OK had a diabetes drug that is seen as a great success fighter for obesity. Shares closed highs, but Lilly was still up 2.7% on Monday. The drug manufacturer has a buying point of 314.10 from a flat base as part of a base-on-base pattern.
Dollar Tree Stock
The DLTR share fell 3.2% to 156.35 on Tuesday, and fell below the 50-day limit to a low of six weeks. The Dollar Tree stock can be actionable if it moves above its 50-day and 21-day lines, which will coincide with breaking a trend line. Shares are working on a possible new base. Dollar Tree revenue matures May 26.
But the DLTR share fell 5% early Wednesday when Target joined Walmart in a major earnings miss.
Elon Musk-Twitter Saga
Musk said the Twitter takeover cannot proceed unless management provides more clarity on how many users are fake accounts. Twitter says it has given its good estimates, and that it sticks to Musk’s takeover price of $ 54.20. Musk seems to want to get out of the deal, or at least negotiate a much lower price tag. He even asked the SEC to investigate Twitter, after years of mocking the watchdog agency.
Meanwhile, Twitter released documents showing that Musk was discussing an acquisition with the board before he too late revealed a 9.1% “passive” TWTR shareholding. Late Tuesday, Twitter’s board said they intend to “enforce” the Musk takeover.
Experts say Musk may struggle to get out of the Twitter deal, but any legal battles could theoretically last for years. Twitter may want to calm down and move on. But the Twitter saga has also been a headwind for the TSLA stock, a significant hit for Musk’s enormous wealth and for the portfolios of many of his most ardent supporters.
Tesla shares rose 5.1% on Tuesday to 761.61, back from the worst industry since the end of August. The Twitter share climbed 2.4% to 38.28, and took a seven-day sale
Tesla vs. BID: Which Booming EV Giant is the best buy?
Market Rally Analysis
The major indices gaped higher with a volume outbreak on Tuesday morning. The major indices retreated significantly in the middle of the morning and modestly during Powell’s mid-afternoon speech, but both times returned to the day’s best levels.
The large indices all showed strong price gains, especially the Nasdaq and S&P 500. The NYSE and Nasdaq volumes rose modestly compared with the previous session.
This is an important day to read The Big Picture to stay in sync with the market direction.
Energy shares continue to be market leaders. Fertilizer games are trying to regain a leadership role. Some drug manufacturers such as the LLY stock are in a good position.
Chipmakers had a good session, but the AVGO stock stands out as capable of action. Technology stocks generally need a lot of repair work.
A number of sectors can be promising with additional market gains.
Time market with IBD’s ETF market strategy
What to do now
The market rally attempt showed strength in Tuesday’s session. But the major indices have only repeated 10-day moving averages. It is still a long way to go to reach the 21-day exponential moving average, with a long way to go to reach the 50-day and 200-day lines, let alone all-time levels.
Investors can add some exposure, either through leading stocks or a broad market ETF. But do not rush in, and be ready to pull yourself out again. The current market could quickly run out of steam or run for a few weeks up to the 50-day line before retiring, as the major indices did in late March.
Investors should work on their watch lists. Look for stocks with strong relative strength, especially those that are close to potential listings.
Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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