Dow Jones futures fell slightly after hours along with S&P 500 futures and Nasdaq futures. Nike (OR) and GameStop (GME) reported after the close. Investors are already focusing on Wednesday’s decision on the Federal Reserve’s rate hike.
The stock market rally saw strong gains on Tuesday as Treasury Secretary Janet Yellen signaled more support for banks. Bank of the First Republic (FRC) led an uptick on Tuesday, but FRC shares fell sharply overnight as the California-based bank struggled to find a way forward
Swiss athletic shoemaker Holding on (ONON), play EV chip Aehr test systems (AEHR) and Google parent Alphabet (GOOGL) provided buying opportunities on news. ONON was behind on revenue, Aehr rallied on new orders, and Google managed to free up a key level on its AI chatbot.
Tesla shares made a bullish move Tuesday inside an emerging bottom base such as Tesla (TSLA) Sales in China continue to pick up and Moody’s upgraded its credit rating.
Dow Jones Futures Today
Dow Jones futures fell 0.1% from fair value, with NKE stock acting as a drag. S&P 500 futures fell lower and Nasdaq 100 futures fell 0.1%.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.
The announcement of the Fed’s meeting is scheduled for Wednesday at 2 p.m. ET. The odds of a quarter-point rate hike rose to 87% on Tuesday.
Markets also expect a quarter point rate hike by the Fed in May, but then rate cuts will begin during the summer.
Together with the Fed’s interest rate decision, the central bank will publish guidelines for rate hikes and economic projections. Fed Chief Jerome Powell speaks at 2:30 p.m. ET. His comments on inflation risks, the economy and the banking crisis will all be central.
The share of NKE fell by 2%. Nike’s profits and sales beat forecasts, but gross margins fell more than expected. Nike shares rose 3.6% on Tuesday to 125.61 and crossed the 50-day mark. The Dow Jones athletic footwear and apparel giant is targeting a 131.21 flat-base buy point, according to MarketSmith’s analysis.
GME shares rose nearly 50% overnight as GameStop turned in a surprise profit, its first since 2021. Revenue unexpectedly rose slightly. That suggests that the video game seller and meme stock would jump above the 50-day line and close to the 200-day lines. GameStop shares rose 4.6% on Tuesday.
During Tuesday’s session, ONON stock rose 26% to 27.26, shooting past a buy point of a handle cup in massive amounts. Revenues came in slightly, but sales were up 92%, with the luxury athletic shoemaker providing strong guidance.
Google Stock, AI News
Google released its AI chatbot Bard on Tuesday for testing in the US and UK. Google is trying to keep up Microsoft (MSFT) and its ChatGBT-4 AI tool.
Nvidia (NVDA), whose chips power many AI functions, made a slew of AI announcements at its annual developer conference. That included partnerships with Google, Microsoft and Adobe (ADBE), which is entering the generative AI space.
Google shares rose 3.7% to 104.92, surpassing the 200-day line and offering an early entry into its bowl-shaped low. Nvidia shares, which have soared in 2023 on AI buzz, rose 1.15% to an 11-month high. MSFT shares rose 0.6%, just below a buy point after rising 12% last week.
Aehr Test Systems announced another large order early Tuesday. Shares were up 15% to 36.93 on decent volume. AEHR shares are close to a buy point of 37.67, but an early Tuesday morning entry was probably the safer game.
This remains a market rally attempt, not a confirmed uptrend. The decision on a rate hike by the Fed on Wednesday looms, while concerns about banks remain high.
Nvidia stock is on Leaderboard. ONON shares are played as a Leaderboard income option. Shares of Microsoft and GOOGL are on IBD Long-Term Leaders.
The video embedded in this article discussed Tuesday’s market action and analyzed On Holding, AEHR shares and Google.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
US government ready to provide further deposit guarantees to smaller banks if there is “risk of contagion”, treasury That’s what secretary Janet Yellen said ahead of Tuesday’s opening.
The Financial Select SPDR ETF (XLF) rallied 2.5%. JPM stock is a large XLF holding company. The SPDR S&P Regional Banking ETF (KRE) rebounded 5.8%. FRC stock and PacWest are both KRE components.
FRC shares jumped nearly 30% to 15.78 on Tuesday, but closed well from highs. Shares crashed 47% on Monday. Shares of First Republic are down 87% in March.
Meanwhile, FRC shares fell more than 10% after hours. Banking giants and U.S. officials are discussing possible government bailouts to encourage a bailout for First Republic, Bloomberg reported Tuesday night. That could mean the government taking over First Republic assets with unrealized losses to encourage investors or a buyer. Separately, California-based bank has hired Lazard and McKinsey as advisers, the Wall Street Journal reported Tuesday night, along with JPMorgan Chase.
Stock market rally
The attempted stock market rally showed modest tech-led gains on Tuesday. Volume was light on Wednesday’s decision on a rate hike by the Fed.
The Dow Jones Industrial Average soared 1% during Tuesday’s stock trading. The S&P 500 index rose 1.3%, with FRC stocks the biggest gainer after Monday’s worst performance. The Nasdaq composite jumped 1.6%. The small-cap Russell 2000 popped 1.9%.
US crude oil prices rose 2.75% to $69.50 a barrel. Copper futures rose 1.1%.
The yield on 10-year Treasury bills rose 13 basis points to 3.6%. The 2-year Treasury yield rose 25 basis points to 4.175%, the largest one-day increase in nearly 14 years.
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) was up 2.1%. The iShares Expanded Tech-Software Sector ETF (IGV) climbed 1.8%. Microsoft stock and Adobe are major IGV components. The VanEck Vectors Semiconductor ETF (SMH) rose 0.3%. NVDA stock is a major SMH holding company.
Reflecting more speculative story stocks, ARK Innovation ETF (ARKK) rose 5.55% and ARK Genomics ETF (ARKG) bounced 3.8%. Tesla stock is a major stock in Ark Invest’s ETFs.
SPDR S&P Metals & Mining ETF (XME) rose 1.5%. SPDR S&P Homebuilders ETF (XHB) rose 1.4%. The Energy Select SPDR ETF (XLE) was up 3.5% and the Health Care Select Sector SPDR Fund (XLV) was up 0.6%.
Five best Chinese stocks to watch right now
TSLA shares rose 7.8% to 197.58, continuing to bounce off the 50-day line and retaking the 21-day moving average. A low point forms below the 200-day limit, which is not ideal. But a breach of the potential buy point of 217.75 would also mean reclaiming the 200-day line.
An aggressive investor could have seen Tuesday’s move as a place to start a TSLA stock position. However, the 200-day line looms as the main resistance. In any case, shares are now extended from their 50 day.
Tesla shares jumped as the EV giant’s Chinese registrations rose for the fourth week in a row. Moody’s Investors Service also boosted Tesla’s credit rating out of junk.
Analysis of the market rally
The stock market rally recorded strong price gains on Tuesday, albeit in light volume. The Nasdaq, led by Tesla stock and Google, rose above its March 6 level.
The S&P 500 rose above its 21-day line after reclaiming its 200-day line on Monday. It has surpassed the 4,000 level and is just shy of the 50 day mark.
The Dow Jones rose above its 200-day line but encountered resistance at the 21-day line. The Russell 2000, which weighs heavily on the financial and energy fronts, bounced Tuesday but is still far from its 200-day and especially 50-day line.
Several chip stocks started strong on Tuesday, although volume was often lacking. But many made gains or even returned lower. AEHR shares were a major exception.
ONON stock was Tuesday’s big winner along with Aehr Test Systems.
Several travel-related names showed strength while restaurants were doing well and some housing stock was building. But the width remains relatively narrow. Many stocks would need time to recover from the damage of recent weeks.
Time the market with IBD’s ETF market strategy
What to do now
A number of stocks have issued buy signals over the past week, many of which have worked. The market rally is picking up. Thus, investors may warrant modest exposure.
But stay careful. It is still an attempted market rally, not a confirmed uptrend. The Fed meeting is scheduled while banks are still a big question mark.
Investors should be ready to gradually increase exposure. Build your watchlists with a focus on stocks that are usable or close to.
Read The Big Picture every day to stay in sync with market direction and leading stocks and sectors.
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