Dow Jones Futures rise as Credit Suisse loses $54 billion from Swiss National Bank| Investor’s Business Daily

Dow Jones futures rose modestly overnight, along with S&P 500 futures and Nasdaq futures, as Credit Suisse borrowed nearly $54 billion from the Swiss National Bank, easing fears of contagion.

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The attempted stock market rally had another wild session on Wednesday, with the major indexes initially falling, but recovering well from lows, with the Nasdaq achieving a rally. Fear of the Swiss giant Swiss credit (CS) triggered another wave of selling in banking stocks, including well-capitalized global giants such as JPMorgan Chase (JPM).

Interest rates on the treasury plunged, especially the two-year interest rate, but they also came from the lowest level. Ominously, trading in government bonds, among the deepest and safest markets in the world, is seeing declining liquidity.

Crude oil plunged to a 15-month low with copper also falling, as investors fear banking and financial market problems will spill over into the wider economy.

Microsoft (MSFT), apple (AAPL), Advanced Micro Devices (AMD), Meta platforms (META), Salesforce.com (CRM) and Nvidia (NVDA) is showing strength or even increasing gains. AMD, Meta and CRM shares hover just above buy points. Microsoft and Apple shares are moving towards official buy points, with MSFT arguably tradable. Nvidia stock, among the strongest in 2023, is currently extended.

Nvidia Stocks and Meta Platforms are on the IBD Leaderboard. The META stock is on SwingTrader. The MSFT share is on IBD’s long-term leader list. The CRM stock is on the IBD 50, with Salesforce selected as Wednesday’s IBD 50 stock.

The video embedded in the article discussed Wednesday’s whipsaw market action and analyzed AMD stock, Salesforce and Duolingo (NEAR).

Key income

Software giant Adobe (ADBE) and teenager-focused low-cost company Five under (FEM) reported after closing.

ADBE shares rose 5% in late trading as Adobe slightly topped fiscal Q1 views and raised its full-year guidance. Shares closed up 0.1% at 333.61 on Wednesday, trading below the 50-day and 200-day lines.

FIVE shares fell 3% overnight as Five Below earnings were in line but guidance was weak. Shares rose 0.2% to 198.17, holding support at the 50-day line after a tidy pullback.

Dow Jones Futures today

Dow Jones futures rose 0.35% relative to fair value, turning higher after Credit Suisse took SNB funds. S&P 500 futures rose 0.5 percent. Nasdaq 100 futures rose 0.6 percent.

The 10-year Treasury yield was flat at 3.49%, paring losses on the Credit Suisse loan news.

Crude oil futures rose 1 percent.

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

Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live

Stock market rally attempt on Wednesday

Stocks suffered heavy losses to start the session, but rallied to close mixed, barely.

The Dow Jones Industrial Average retreated 0.9% in Wednesday trading. The S&P 500 index fell 0.7 percent. The Nasdaq composite rose less than 0.1 percent. The small-cap Russell 2000 fell 1.7%.

Bank shares

Credit Suisse sold off on Wednesday as its top shareholder, Saudi National Bank, ruled out investing more money in the ailing Swiss giant. It sent the banks in Europe and the world down sharply.

The CS share, which has been ailing for years, hit a record low of 1.75 intraday. The stock closed down 14% to 2.16.

The Swiss National Bank said shortly before the US markets closed that it will provide Credit Suisse with liquidity. On Wednesday night, Credit Suisse moved to borrow up to 50 billion Swiss francs ($53.7 billion) from the SNB.

In the US, the JPM share, Wells Fargo (WFC), Bank of America (BAC) and Citigroup (C) all slightly undermined last week’s lows. JPM stock fell 4.7%, nearing its 200-day line, and setting a 2023 low alongside Citigroup. WFC shares hit an eight-month low while BofA sank to its worst levels since late 2020.

Regional banks were mixed. First Republic Bank ( FRC ) fell 21% as S&P Global cut its credit rating by four notches to junk status. But some regional and super regional banks advanced, incl Western Alliance Bancorp (WAL).

The Financial Select SPDR ETF ( XLF ) fell 2.7%, with JPMorgan, Citigroup, Wells Fargo and BAC shares all major holdings. The SPDR S&P Regional Banking ETF (KRE) fell 1.6%. FRC shares and Western Alliance are among the many components.

First Republic is exploring options, including a possible sale, Bloomberg reported Wednesday evening, citing sources. FRC shares rose more than 8%.

Raw materials

US crude oil futures plunged 5.2% to $67.61 a barrel, the lowest price in 15 months. Copper prices fell 3.8% to the industry’s worst since January 5.

Treasury Yields

The 10-year government yield fell 14 basis points to 3.49%. Intraday the yield reached 3.39%, not far from the February 2 low of 3.33%. The 2-year government yield plunged 25 basis points to 3.97% after crashing to 3.72% intraday. A week ago, just before the SVB financial crisis hit, the 10-year yield was 3.97% while the 2-year yield was 5.06%.

Bank fears and changes in Fed interest rates drive government interest rates down. Weaker economic data on retail sales, producer prices and the New York Fed’s Empire State Manufacturing Index contributed to the cooling.

Despite falling government yields, the dollar jumped amid a global rush from Credit Suisse concerns. The dollar is near recent highs.

Fed interest rate hikes

A week ago, markets were betting on a rate hike of 50 basis points on March 22, followed by at least two more quarter-point rate hikes.

But after Wednesday, investors see a 50-50 chance that the Fed will stop next week. They see a fifteen-minute hike by the end of the May meeting. But the markets then expect more interest rate cuts, including a 50-point move in June.

ETFs

Among growth ETFs, the Innovator IBD 50 ETF ( FFTY ) retreated 1.8%. The iShares Expanded Tech-Software Sector ETF ( IGV ) fell 0.2%, with Microsoft and CRM stocks in large IGV holdings, along with Adobe. The VanEck Vectors Semiconductor ETF ( SMH ) gave up 1.1%. NVDA stock and AMD are major SMH holdings.

The SPDR S&P Metals & Mining ETF (XME) plunged 5.9% and the Global X US Infrastructure Development ETF (PAVE) fell 4%. The US Global Jets ETF (JETS) fell 4.3%. The SPDR S&P Homebuilders ETF ( XHB ) was down 2.2%. The Energy Select SPDR ETF (XLE) plunged 5.4%. Health Care Select Sector SPDR Fund (XLV) fell 0.1%

Reflecting more speculative history stocks, the ARK Innovation ETF ( ARKK ) rose 0.8% and the ARK Genomics ETF ( ARKG ) rose 0.1%.

Top five Chinese stocks to watch now

Tech Titans show strength

Apple shares rose 0.3% to 152.99. The iPhone giant has a buy point at 157.48 from a flat base formed above the 200-day line. The relative strength line is at a four-month high, reflecting AAPL stock’s outperformance compared to the S&P 500 index.

MSFT shares rose 1.8% to 265.44. The Dow Jones giant is building the right side of a short consolidation formed just above the 50-day and 200-day lines. Microsoft stock is on track to have a flat base with a buy point of 276.86 after Friday’s close. In a better market, MSFT shares will already be actionable, either as an early entry or as a long-term leader.

CRM stock rose 1 cent to 182.91, holding in the range from a 178.94 cup-handled buy point.

AMD shares rose 2.55% to 89.68, after jumping 6.6% on Tuesday. Shares are just below a buy point of 89.04, according to MarketSmith analysis.

META shares rose 1.9% to 197.75. The Facebook parent cleared a buy point of 197.26 with a flat base, after topping some early entries with Tuesday’s 7.25% high.

Nvidia shares rose 0.7% to 242.28. The chip giant is holding on to its best levels in 11 months, but is extended from recent buy points. Ideally, NVDA stock will consolidate for a few more weeks, forge a new base and allow the rapidly rising 50-day to catch up.

Market rally analysis

The attempt at the stock market rally had another roller-coaster session, but ended almost tops.

The Nasdaq, down as much as 1.7% intraday, managed to edge higher at the close, holding the 50-day and 200-day lines. The Nasdaq 100, which includes the 100 largest non-financial Nasdaq components such as Microsoft, Apple, Nvidia, Meta and AMD, rose 0.5%.

The S&P 500 fell below the bottom of Wednesday’s rally, but held above Tuesday’s intraday low, so the rally attempt is intact.

The Dow Jones simply undermined Monday’s low, wiping out the rally attempt and hitting its worst levels since October. The Russell 2000, filled with small bank stocks, fell to its worst levels since late 2022.

Technically, investors may start looking for a follow-up day on the Nasdaq to confirm the new rally. An FTD would almost certainly push the Nasdaq 100, and perhaps the Nasdaq Composite, above a trendline from the early February highs.

But the other indices have much more to do. How sustainable is a tech-led rally if banks, commodity stores and industries sell out?

A potential global financial crisis is, to put it mildly, far more important than whether, for example, a jobs report is too strong or weak. So even minor changes in positive or negative sentiment can trigger massive market swings. And large fluctuations in one market, such as government bonds, will ripple through shares, commodities and currencies.

Time the market with IBD’s ETF market strategy

What to do now

Investing is challenging enough in a clear bull market. Trying to play a volatile market correction in the middle of a burgeoning financial crisis increases the risk exponentially.

Yes, Meta Stock, Salesforce, AMD and Microsoft are technically actionable with Apple close behind. A number of other technologies are showing bullish action. But if this market crashes, it will bring everything down.

At least wait for a follow-up day. It is likely to trigger a series of buy signals. But investors should still be cautious even in that scenario. The risk is high that another major banking or market headline will trigger a sudden sell-off.

In the meantime, build your watchlists. Look for stocks with strong relative strength, especially those near buy points, but also leaders like Nvidia stock.

Read The Big Picture every day to stay in sync with market direction and leading stocks and sectors.

Follow Ed Carson on Twitter at @IBD_ECarson for stock exchange updates and more.

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