Dow Jones futures dropped slightly overnight, along with S&P 500 and Nasdaq futures. The stock market rally showed strong growth on Wednesday, closing at session highs on the back of important news from China, the Russian-Ukrainian war and the aggressive actions of the Federal Reserve.
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JB Hunt Transport Services (ZhBHT), Costco wholesale (COST) and Bioscience Harmony (HRMY) broke out on Wednesday, at least intraday, while Rambus (RMBS) flirted with the buy point.
Nvidia shares, although far from the highs, made a strong move towards a very aggressive entry.
Fed rate hike
The Fed raised interest rates by a quarter of a point on Wednesday as the central bank seeks to rein in rising inflation while tackling a slew of economic uncertainties. Politicians have also signaled that they will raise rates six more times in 2022 and also plan to cut the Fed’s huge balance sheet soon.
The Fed’s policy statement notes that Russia’s invasion of Ukraine “is likely to create further upward pressure on inflation and dampen economic activity.”
Fed chief Jerome Powell said in a press conference after the meeting that the central bank plans to steadily raise rates throughout 2022. But he reiterated that politicians will be “nimble”, signaling faster or slower action depending on conditions.
10-year Treasuries jumped to 2.24% intraday, the highest level since May 2019, but slowed down during comments by Fed Chairman Powell. The yield on 10-year bonds increased by 3 basis points to 2.19%. The two-year yield jumped 7 basis points to 1.93%. Meanwhile, the 30-year Treasury yield fell 6 basis points to 2.45%.
The flattening of the yield curve signals concerns about future economic growth. Fed chief Powell said the risk of a recession next year is “not particularly high.”
Russian invasion of Ukraine
President Volodymyr Zelenskyy addressed the U.S. Congress virtually on Wednesday, calling for more support. President Joe Biden signed into law a $13.6 billion military and humanitarian aid bill to Ukraine, with the US and its allies reportedly sending better anti-aircraft systems.
Earlier, Zelensky called the peace talks between Russia and Ukraine “more realistic.” Russia has signaled that a neutral Ukraine with an army might be acceptable.
But Russian President Vladimir Putin delivered a televised address Wednesday in which he repeated many of his dubious claims about a Russian “special operation” in Ukraine. He also called for “self-cleaning”, which could be a signal to clean the house.
Biden, referring to Russia’s invasion of Ukraine, called Putin a “war criminal.”
Amid heavy losses in the invasion of Ukraine, Russia is withdrawing more troops and equipment from various places, including the Far East and occupied parts of Georgia.
Chinese stocks rise on upbeat comments
On March 16, Beijing signaled support for US-listed Chinese companies, suggesting it was working with US regulators to resolve audit issues, easing delisting concerns. He also announced that the crackdown on internet giants would end “as soon as possible.” U.S.-listed Chinese equities rose on Wednesday but only recouped some of the huge losses of the past couple of weeks, not to mention the long declines over the past year.
KraneShares CSI China Internet ETF (KWEB), which includes many large Internet resources such as Alibaba (BABA) soared 39% to 30.92. But KWEB is still down 7.6% this month and well below its February 17, 2021 peak of 104.94.
China’s quarantine in Shenzhen and elsewhere remains a major concern.
Meanwhile, South Korea reported 621,328 new coronavirus cases, more than 1% of its total population in one day. Infections in Vietnam are also on the rise.
Nvidia (NVDA) and JBHT shares are on the IBD leaderboard. JB Hunt and COST shares are traded on SwingTrader and IBD 50. JB Hunt was also the IBD stock of the day on Wednesday.
The video embedded in this article covered Wednesday’s bull market action and highlighted HRMY, Nvidia, and JB Hunt stocks.
Dow Jones futures today
Dow Jones futures fell 0.15% from fair value. S&P 500 futures fell 0.2% and Nasdaq 100 futures fell 0.2%.
The 10-year Treasury yield fell 4 basis points to 2.15%.
Crude oil prices rose 1% overnight.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze valuable stocks in the stock market rally in IBD Live.
stock market rally
Wednesday’s stock market rally began with strong, largely wiped out Fed rate hike gains and hawkish signals before recovering again.
The Dow Jones Industrial Average rose 1.55% in stock trading on Wednesday. The S&P 500 rose 2.2%. The Nasdaq Composite Index rose 3.8%, its best percentage gain since November 2020. The small-cap Russell 2000 index jumped 3.1%.
U.S. crude oil futures fell 1.5% to $95.04 a barrel. On March 5, crude oil prices topped $130.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) was up 2.3%, while the Innovator IBD Breakout Opportunities (BOUT) ETF was up 0.4%. The iShares Advanced Technology & Software (IGV) ETF jumped 4.2%. The VanEck Vectors Semiconductor (SMH) ETF was up 5.3%. NVDA stock is the main component of SMH.
The SPDR S&P Metals & Mining ETF (XME) added 0.5% and the Global X US Infrastructure Development ETF (PAVE) added 1.8%. The US Global Jets ETF (JETS) is up 5%. The SPDR S&P Homebuilders ETF (XHB) rose 2.1%. The Energy Select SPDR (XLE) ETF was down 0.5%, while the Financial Select SPDR (XLF) ETF was up 2.8%. The Health Care Select Sector SPDR Fund (XLV) added 1.2%.
Reflecting more speculative stocks, the ARK Innovation (ARKK) ETF was up 10.4% and the ARK Genomics (ARKG) ETF was up 8%.
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JB Hunt Stock
Shares of JBHT rose 9.6% to 218.06, breaking out of a flat buy base at 208.97, according to MarketSmith analysis. The volume was well above average. JBHT stock’s relative strength line reached new highs even before Wednesday’s breakout.
JB Hunt merges with Warren Buffett’s BNSF Railway. Berkshire Hathaway (BRKB) to increase intermodal transport.
Meanwhile, other shipping companies showed strong activity on Wednesday. Old Dominion Freight Line (ODFL) edged up 4.7%, right on the early entry trend line. UPS (UPS) jumped 3.5%, suggesting an early entry as it jumped above its 50-day line and trend line. Union Pacific (UNP) rose in the buy zone. As well as Danaos (DAC) officially rose 7.6% as shipping stocks continue to rise.
Costco shares
Costco shares rose 0.2% to 543.39. During the day, COST shares rose to 551.62, briefly breaking the 545.39 buy point off the cup-and-handle level.
Harmony Stock
Shares of HRMY jumped 8.9% to 47.72, surpassing a basic buy point of 45.99 to hit a 52-week high. Harmony stock recently pulled back from a buy point after rising. The pen-like pause makes the HRMY stock less stretched.
Rambus Stock
Shares of RMBS rose 4.9% to 29.01, surpassing the cup-and-handle buy point of 28.32, which is technically no longer valid after Friday’s stock plunge. Shares of the chip technology company hit a short-term high on March 3, which marks the top of a new pen. Now investors can use 29.11 as a buying point.
Shares Nvidia
Shares of Nvidia rose 6.6% to 244.96, retracing its 21-day line to close just below its 50-day line. Breaking the 50-day line, which roughly corresponds to the trend line, can serve as an aggressive entry into the chipmaker’s market.
Shares of rival Nvidia Advanced Micro Devices jumped 5.5%, just above their 200-day milestone. But it is still below its rapidly falling 50-day line.
Market Rally Analysis
The stock market rally attempt was another crazy day but ended strong gains at session highs. The S&P 500, Dow Jones Industrial Average and Nasdaq Composite jumped above their 21-day exponential moving averages, closing above that key level for the first time since Feb. 9.
Small-cap Russell 2000 shares also rebounded to their 21-day high.
Volume is up on both the Nasdaq and the NYSE compared to the previous session, which is another positive signal.
This is an important day to read The Big Picture.
But is it a short-term bounce or something more meaningful?
The 21-day line is a key move, but the major indexes have risen above this level several times in 2022 only to reverse immediately. There are still many hurdles ahead for the major indices, including early March highs, as well as the 50-day and 200-day lines.
This market remains at the mercy of the latest news, raising or lowering the major indexes.
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Who will lead?
Assume for the moment that the market is about to have a sustained uptrend for a few weeks or months. Which industries will lead?
Commodities were the clear market leaders during the correction, but is the trend over?
Defense stocks continued to lose profits from Russia’s invasion of Ukraine.
The health insurers tried to break out, but then retreated. Will defensive growth stocks lead in a high-risk environment?
Shipping companies still look strong. Marine shippers have long been the leaders, and DAC shares rose after earlier giving buy signals. Meanwhile, dry-shippers such as JB Hunt, Old Dominion, Union Pacific and UPS are stepping up.
Travel promotions are trying to bounce back again. However, charts for expedition (EXPE) and Marriott (MAR), the two stronger names, still look damaged.
The underdog high-valued growth stocks turned out to be gainers on Wednesday. But will aggressive growth really take the lead if interest rates continue to rise?
Market Time with IBD ETF Market Strategy
What to do now
Market action on Wednesday was positive. But don’t worry too much.
It is still unclear whether the market is changing its character or if this is a bull trap. And it is not clear which stocks and sectors will be the leaders in any sustained uptrend. For this reason, investors wishing to increase risk can do so by purchasing a broad market ETF such as SPY or QQQ.
Now is not the time to quickly build up exposure. If this market is strong, you will have many profit opportunities. If that last bounce turns around quickly, you’ll be glad your exposure is low.
Be sure to work on your watchlists. You must be ready to take the opportunity to buy.
Please follow Ed Carson on Twitter at @IBD_ECarson to update the stock market and much more.
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