Dow Jones futures tipped lower Tuesday night along with S&P 500 futures and Nasdaq futures, with the Fed falling on Wednesday. The stock market rise showed small gains on Tuesday, with all major indices hitting record highs during the day.
Bed Bath & Beyond (BBBY) announced major e-commerce news that fueled a revival not only in BBBY stocks but in “traditional” meme stocks AMC Entertainment (AMC) and GameStop (GME).
Digital turbine (APPS) and Caesar’s entertainment (CZR) was remarkable earnings after hours.
Tesla stock modestly withdrew after Tesla CEO Elon Musk tweeted that the Hertz order for 100,000 Model 3 EVs has not been signed. Meanwhile, Hertz car rental rival Opinion (AVIS) skyrocketed on Tuesday as strong earnings sent a brief squeeze into overdrive. But CAR shares parked well from heights during the day.
Bed Bath & Beyond
BBBY shares soared as the household store really wants to go “beyond” with an e-commerce pact with the grocery giant Kroger (KR). Bed Bath & Beyond said after the closing that it will launch a digital marketplace that will sell third-party goods, including from Kroger. Bed Bath & Beyond also said their BBBY share buyback was ahead of schedule.
BBBY shares outperformed 67% in expanded trading, driven by likely heavy card coverage. Bed Bath & Beyond was one of the original meme stocks earlier this year, and Reddit investors buzzed about BBBY shares late Tuesday. The Kroger stock rose slightly.
Meanwhile, AMC shares rose 6% and GameStop 5% in expanded trading as Bed Bath & Beyond spurred a broader revival of meme shares. AMC and GME stocks could no doubt flash aggressive items from different trend lines.
APPS warehouse, Caesars, SolarEdge technologies (SEDG), Spire Social (SPT) and new listing Freshworks (FRSH) reported earnings after closing.
Digital Turbine, CZR shares, Sprout Social and FRSH shares all closed ahead of earnings, close to buying areas.
The SPT stock jumped 9% during the night, signaling an aggressive entry from a trend line and 50 days. Sprout Social hit impressions and announced an integration with WhatsApp, the messaging app owned by Meta platforms (FB).
Caesars fell modestly in the middle of a earnings miss, after only falling late. The CZR stock is trying to hold its 50-day line and an older buy point.
APPS stock fell sharply after Digital Turbine hit impressions, but only provided in-line EPS guidance. The FRSH stock fell despite striking prospects as Freshworks pointed to a larger-than-expected loss in Q4. The SEDG stock retreated as the solar cell company lost revenue.
Several other shares were sold off earnings.
House Speaker Nancy Pelosi said she hoped the text of the Reconciliation Act would be finalized Tuesday night. The latest word is that the package will include a five-year, retroactive increase in SALT deductions, which actually provides a large tax cut to affluent, blue state voters. The legislation will also include price controls on prescription drugs, a possible battle for drug and biotech names. The goal is at least to get Parliament to vote on the bill on reconciliation between parties and the two-party infrastructure package this week, but it could slip if Pelosi cannot find the necessary 218 votes.
In the Senate, it is unclear whether all 50 Democrats will join. Late. Bernie Sanders said he was against the five-year SALT break.
The Tesla stock is on the IBD Leaderboard. The video embedded in this article covered CAR shares, Goldman Sachs (GS) and Akademisport (ASO).
Fed Taper Decision
The Federal Reserve concludes its two-day political meeting on Wednesday afternoon. The Fed’s policy makers are widely expected to announce a decision to downsize asset purchases. The actual Fed cut would begin at the end of the year. Analysts expect the central bank to reduce the $ 120 billion in monthly purchases – $ 80 billion in monthly purchases by the Treasury and $ 40 billion in government-backed mortgage securities – to zero by mid-2022. Then Fed rate hikes may be on the table.
In addition to the announcement of the Fed meeting at 14.00 ET, Fed Chairman Jerome Powell will hold a press conference at. 14.30 ET.
Although a “conical tantrum” in the market is possible, this Fed decision will certainly not be a surprise. With inflation expected to remain warm for some time, investors can look forward to a shift away from light monetary policies.
The 10-year government interest rate fell by three basis points to 1.55% on Tuesday, and the trend is lower since the end of October. The two-year interest rate, which is more closely linked to Fed policy, fell 7 basis points to 0.45% after staying close to its 19-month high.
Dow Jones Futures today
Dow Jones futures fell slightly relative to fair value. S&P 500 futures and Nasdaq 100 futures fell 0.1 percent.
Keep in mind that overnight trading in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
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Stock market rally
The stock market rise continued its steady rise. The Dow Jones Industrial Average rose 0.4% in Tuesday’s trading session. The S&P 500 index rose 0.4% and the Nasdaq index rose 0.3%. Small-cap Russell 2000 rose 0.2%
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) fell 0.1%, while the Innovator IBD Breakout Opportunities ETF (BOUT) rose 0.3%. iShares Expanded Tech-Software Sector ETF (IGV) rose 0.2 percent. VanEck Vectors Semiconductor ETF (SMH) rose 1.1%.
The SPDR S&P Metals & Mining ETF (XME) retreated 1.15% and the Global X US Infrastructure Development ETF (PAVE) rose 0.9%. US Global Jets ETF (JETS) fell 0.5 pct. SPDR S&P Homebuilders ETF (XHB) pulled 0.45 pct. Energy Select SPDR ETF (XLE) yielded 0.9%. Financial Select SPDR ETF (XLF) rose 0.25%.
As a result of more speculative history stocks, the ARK Innovation ETF (ARKK) fell 1.6% and the ARK Genomics ETF (ARKG) 0.8%. The Tesla share is number 1 across ARK Invest’s ETFs.
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The CAR share rose 108% to 357.17 on Tuesday, although the shares came far from the intraday highs of 545. Before opening, Avis reported that earnings rose 850% as revenue rose 96%, reflecting easy comparisons with a year earlier and sky-high rental rates. In the conference call, Avis promised to buy more electric vehicles that came on the heels of the Tesla-Hertz news.
This news triggered a massive short squeeze, one that had been going on for some time. The CAR stock nearly doubled from the previous month heading into Tuesday. Newspaper shares became a top focus among Reddit traders.
But meme stocks, although they can quickly get massive gains, often end soon. The CAR stock closed in the lower half of its range. All investors who owned CAR shares on Tuesday should have locked in at least partial profits.
Tesla shares fell 3% to 1,172 on Tuesday, after Musk tweeted late Monday that there is no signed Hertz contract. He said it was strange that Tesla stock had risen so much on the Hertz announcement, saying Tesla does not have a demand problem but is focusing on increasing production.
Tesla also unveiled a safety recall for FSD Beta vehicles, related to the recent problem of sudden emergency braking. Tesla sent an over-the-air fix to the issue several days ago.
While the Tesla stock retreated, it was an inside day. The decline follows a 33% increase since the Hertz deal was announced on October 25th. Moreover, TSLA had been greatly expanded from moving averages. At the close on Monday, Tesla shares were 21% above their 10-day line and 49% above the 50-day line. The shares are less expanded now.
Analysis of market rally
The stock market rise continues to hoot. The Dow Jones, S&P 500, Nasdaq and even Russell 2000 hit record highs during the day.
Nasdaq has gathered for seven sessions in a row. Several of these gains were thin. But it would not be surprising to see the market upswing stop or retreat.
Despite the gradual progress of the major indices, there was uneven action among leading stocks, as well as some ups and downs during the day.
On Tuesday, Microsoft (MSFT), Apple (AAPL) and Google parent Alphabet (GOOGL) rose after retiring on Monday.
Financial accounts are doing well on the way to a likely Fed cut. Energy stocks remain stable. The steel stocks bend but do not break, after showing strength in late October.
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What should I do now
The stock market rise continues to trend higher, does not take a break but does not run higher. At least that is the case with the large indices. Your portfolio may be completely different. Some stocks may rise higher while others have faltered. You may need to reduce some losses while taking partial profits in some extended shares.
If you have seen solid gains, you can look for new purchases or additions to increase or maintain your exposure. But do not get too concentrated in a particular sector.
If you do not make progress, you are out of sync with the market. Reduce your exposure, even if it is only by reducing losers and not making new purchases. Evaluate your trades, and stocks you have passed on that went on to better and brighter things. The point is not to buy the missed opportunities now that they have expanded, but to figure out which stocks, sectors and strategies you need to focus on next time.
Read The Big Picture every day to stay in line with market trends and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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