Futures, Yields, Oil Tumble After Market Rally; Powell On Tap

Dow Jones Lower Ahead Of Fed Minutes; Retail Sales Miss Expectations; Apple Upgraded, Costco Nears Buy Point

The Dow Jones Industrial Average traded lower in the first half of Wednesday’s session, reversing a five-day winning streak that cut across its 200-day moving average. Meanwhile, market players awaited the 2 p.m. Fed minutes release.




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The blue chip index opened 0.6% lower and fell another 0.1% by the noon hour. The S&P 500, which slipped 0.8% in early trading, lost another 0.2%. The Nasdaq composite led the downside, dropping 1.7% under the weight of struggling small caps. The Russell 2000 small cap index traded lower by more than 2%.

The yield on the benchmark 10-year Treasury note added 78 basis points to 2.90%. Crude oil stabilized after its recent steep fall , settling at $87.18 per barrel.

Volume was slightly lighter on the Nasdaq and the NYSE, compared to the same period on Tuesday.

Retail Sales Lag

July retail sales missed expectations, unchanged from June. Even so, LPL Financial Chief Economist Jeffery Roach noted that consumers had more money for discretionary spending in July. The firm also noted that July retail sales and Walmart’s upbeat quarter show that consumer spending continues, supported by a strong labor market.

Investors are now focused on the 2 p.m. release of the Fed Minutes from the July meeting, when central bankers raised rates a decisive 75 basis points to combat inflation. Signs of cooling inflation have now given hope the Fed’s aggressive tightening will ease in September’s meeting.

Stimulus to EV and Health Care

The Inflation Reduction Act was signed by President Joe Biden on Tuesday. There is now a $7,500 tax credit for qualifying EV purchases and health care benefits for qualifying persons. EV pure plays like Tesla (TSLA) and Rivian (RIVN), health care companies such as UnitedHealth Group (UNH), and renewable energy stocks like Enphase Energy (ENPH) and SolarEdge (SEDG) will likely benefit.

UNH is an IBD Leaderboard stock while Enphase is a Sector Leader.

Lithium producer and IBD Leaderboard stock, Albemarle (ALB) is also poised to gain from the Act, which requires a certain level of minerals for EV batteries to be extracted locally or from the U.S.’s FTA partners to qualify for a tax credit.

Dow Jones Stocks On Watch

Shares of Apple (AAPL) are on watch as the iPhone 14 launch nears. The release date should be in September when Apple usually announces new phones and watches. The stock just got an upgrade to “Outperform” from “Neutral” by Credit Suisse analyst Shannon Cross.

The stock was also one of Warren Buffet’s largest Q2 purchases for his Berkshire Hathaway portfolio. Shares are building a double-bottom base within a longer consolidation and show a 179.70 buy point.

Another Dow Jones leader, Disney (DIS) is hitting its 200-day moving line after a strong quarter. The media and entertainment giant recently overtook Netflix in subscriptions at the same time that revenue from its iconic parks has surged.

Long time tech leader and Dow stock Cisco (CSCO) reports Q2 earnings after the market close. In the previous quarter, the networking giant reported revenue of $12.8 billion, flat year-over-year, although earnings rose 7%. The company expects slightly lower revenue this time around, with earnings of 60 to 70 cents per share.

U.S. Stock Market Today Overview

Index Symbol Price Gain/Loss % Change
Dow Jones (0DJIA) 33898.42 -253.59 -0.74
S&P 500 (0S&P5) 4262.68 -42.52 -0.99
Nasdaq (0NDQC ) 12879.56 -222.99 -1.70
Russell 2000 (IWM) 196.45 -4.5 -2.2
IBD 50 (FFTY) 28.95 -0.49 -1.66
Last Update: 12:00 PM ET 7/27/2022

Outside the Dow Jones

Retail giants Target (TGT) and Lowe’s (LOW) missed Q2 expectations.  Lowes booked lower-than-expected same store sales but profits came in above estimates. Shares rose in early trading.

Target posted a 39 cent per-share profit, missing 79-cent expectations by a wide margin. The company maintained its outlook for the full year. Target’s shares, which rose yesterday after Walmart’s earnings beat, have fallen but are off today’s lows.

Retailers Kohl’s (KSS) and Foot Locker (FL) also report this week, with KSS due tomorrow and Foot Locker on Friday. Kohl broke above its 50-day line yesterday. Shares of FL have also been rising.

Analog Devices (ADI) scored double-digit growth, with revenue of $3.1 billion and earnings of $2.52 per share.  Even so, shares are down more than 4%.

A Perfect Meme Move

Bed, Bath and Beyond (BBBY) is on a tear after news that GameStop (GME) CEO Ryan Cohen bought out-of-the-money call options worth $1.6 million, allowing him to buy the stock between $60 and $80. The shares are currently trading at 20.65. In a perfect meme move, the news comes as BBBY struggles to keep doors open after a dismal first quarter.

Elsewhere, Elon Musk scored a small win after one Twitter (TWTR) employee was asked to provide documents that may reveal the number of fake accounts on the social media platform.

Shares of Twitter and Tesla (TSLA) fell after the news.

IBD Leaderboard stock, Costco Wholesale (COST) continues to be on watch. The stock is at a buy point of 552.81 in a cup-with-handle base.

Be sure to follow Vidya on Twitter at @IBD_Vidya for more on growth stocks and the Dow Jones Industrial Average.

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