End to Fed Rate Hikes Observed by Investors After Techs Lead Stock Market Rebound because of Dow Jones Futures Fall
Robert L. Ohlson Robert L. Ohlson 
The Dow Jones futures, Despite increasing recession risks and the prospect of significantly lower inflation over the coming months, the Fed is expected to raise rates by 75 base points at the July meeting and 50 base points at the September meetings. The markets have not seen any rate increases at the February 2023 Fed meeting, as they saw only a quarter-point increase in the two previous Fed meetings.
The Dow Jones closed Tuesday lower but not far from its lows. However, the S&P 500 managed a modest gain. The Nasdaq saw a strong rise, with some of the most aggressive growth names Roblox and Datadog (RBLX), regaining above their 50-day levels. The tech giants like apple, google all recovered a key short-term level.
The prices of crude oil fell below $100. Loss in the copper, and gasoline has been observed in the past week’s futures.
A notable recession signal was the inversion of Treasury yield curves between the 10-year and two-year notes. Markets expect rate increases to end this year, but they still see an aggressive Federal Reserve tightening. Tree Halozyme Therapeutics HLO and the stocks of PRVA were observed as bullish actions Tuesday. Northrop Grumman, NOC, and UnitedHealth, both declined but received key support.
NOC stock is on IDB Leaderboard. SWINGTRADER DLTR stock. Google stock appears on IBD Long-Term Leadership. UNH stock is in the. Priva Health was Tuesday’s Stock of the Day.
Other Type News
Wednesday’s announcement by Amazon stated that it will acquire a 2% share in Grubhub food-delivery app Grubhub. This stake could increase to 15% over time. Amazon Prime customers will receive a year of Grubhub Plus for free. Doordash (DASH), plunged 8%, while Uber(UBER), which owns Uber Eats, dropped 3.
U.K. competition regulators are currently investigating whether Amazon’s marketplace practices are “anticompetitive” and could lead to a worse deal.
Amazon stock lost a fraction.
The U.K. Competition regulators will also investigate the planned Microsoft takeover of Activision Blizzard (ATVI). Activision shares fell 1%, while MSFT stock was tilted lower.
Today’s Dow Jones Futures
Dow Jones futures declined 0.4% vs. their fair value. They fluctuated in the losses and big gains. The futures S&P 500 dropped to 0.4% while Nasdaq 100 lost 0.6%.
U.S. crude oil futures rose slightly to just above $100 per barrel. Copper futures dropped slightly.
Stock Market’s Climb
The stock market rally ended mixed Tuesday morning. However, it sold off Tuesday morning.
The Dow Jones Industrial Average declined 0.4% Tuesday’s stock trading. S&P 500 rose 0.2%. The Nasdaq Composite jumped by 1.75%. The Russell 2000 small-cap bounced 0.8%
Apple stock, a Dow Jones index, S&P 500 giant, and Nasdaq great rose 1.9%, exceeding its 21-day moving average. Google stock shot up 4.2% and Amazon 3.6%. These stocks also retook 21-day lines and close in on their long-sliding fifty-day lines. Each of these mega-cap techs is far from being actionable.
Recession fears are flooding financial markets, especially commodities as well as bonds. Crude oil prices dropped 8.2% to $99.50/barrel, after already seeing a significant decline from the June peaks. Oil futures plunged by 9% continuing the rapid decline. The trend of falling prices at the pump has continued for 20 days straight and should continue.
Copper futures dropped more than 4% in the latest extension of a long selling slump. Crop futures have fallen sharply.
The 10-year Treasury yield plunged 16 basis points to 2.81%. The yield curve for the two-year Treasury yield is slightly inverted, as it fell 2 basis points to 2.82%.
The 10-year Treasury yield dropped 1 basis point to 2.8%. The 2-year yield was flat at 2.2% with a slight inversion of the 2-to-10 yield curve.
Do not assume that overnight actions in Dow Futures and other places will translate into trading in the next Stock Market session.
Yardeni Research’s Ed Yardeni has increased his chances of a recession to 55%, from 45%.
The new indicators of the economy suggested there will be very weak future indicators. It is now predicted that a short-term, shallow recession in the US economy at 55% instead of 45%. This makes a recession our baseline scenario for forecasting earnings and stock market performance.
Despite rising recession risk and the possibility of lower inflation in the next months, the Fed will likely raise rates by 75 basis points at its July meeting and 50 at its September meetings. Markets have seen only quarter-point increases in rates at the Fed’s last two meetings, and no change at the Fed’s February 2023 meeting.
