Futures Fall;  Powell testifies that fears of a recession are growing

Futures Fall; Powell testifies that fears of a recession are growing

Dow Jones futures fell sharply early Wednesday, along with the S&P 500 and Nasdaq futures futures, which set new stock market growth on a course to erase much of Tuesday’s strong gains. Treasury yields and crude oil prices also fell significantly. Federal Reserve Chairman Jerome Powell will testify before Congress amid growing concerns that rising Fed interest rates will bring the economy into recession.


Vertek Pharmaceuticals (VRTKS) i Bristol-Miers Squibb (BMI) regained its 50-day lines on Tuesday, while United Therapeutics (UTHR) is in the purchase range. All three pharmaceutical stocks have relative power lines at high levels.

In the meantime, Tesla (TSLA) and Google Parent Alphabet (GOOGL) remains two megacaps that have yet to undermine their lowest values ​​at the end of May. It is not market leadership, but a lump of strength.

UTHR shares are on SwingTrader. Google shares are on the IBD Long-Term Leaders list. Vertek and BMI shares are on IBD 50 and IBD Big Cap 20.

Fed chief Powell testified

Fed chief Powell will testify before the Senate Banking Committee on Wednesday, and then before the House Financial Services Committee on Thursday. The hearing begins at 9:30 a.m. Eastern Time, immediately at the introductory bell. The Federal Reserve could publish Powell’s prepared remarks earlier.

Powell is likely to reaffirm the central bank’s commitment to curbing inflation, which reached its highest level in 40 years in May according to the consumer price index. As a result of that surprising report on CPI inflation, the Fed raised rates by 75 basis points on June 15, the largest increase in 28 years. Following the announcement of the Fed meeting, Powell said policymakers could increase rates by 50 basis points or 75 at the end of July. Markets have almost completely set the price in another move of 75 basis points.

Powell said on June 15 that a soft landing was still possible, but the markets decided a day later that an aggressive remedy against Fed inflation makes at least a mild recession likely. Will Powell try to reassure investors about economic growth?

On Wednesday, Citigroup sees a 50-50 chance that the United States will sink into recession. The most likely recession would be a slight decline in the “garden variety”, but there are risks of “hard landing” and “stagflation”.

Dov Jones Futures today

Futures Dow Jones fell 1.4% to fair value. S&P 500 futures withdrew 1.5%. The Nasdaq 100 futures were down 1.4%.

US crude oil prices fell more than 6%, trading below $ 105 a barrel and sending oil to futures for their first monthly fall since November. Oil markets are increasingly concerned about a recession that is reducing oil demand. Meanwhile, President Joe Biden called on Congress to suspend the federal gas tax of 18.4 cents per gallon for three months.

Copper prices fell by more than 3%. The yield of the 10-year treasury fell to 3.16% from 3.31% on Tuesday.

Keep in mind that pre-marketing stocks in Dow futures and elsewhere do not necessarily turn into actual trading at the next regular session of the stock exchange.

Join the IBD experts as they analyze the actions that can be applied at the stock exchange meeting on IBD Live

Watching actions

Vertek shares recovered above their 50-day line on Tuesday after a strong move on Friday. The biotech giant has 292.85 points to buy, but investors could use 279.23 as an early entry. A downward trend line may offer a slightly lower entry.

BMI shares returned above their 50-day line on Tuesday, probably offering early entry. Bristol shares are technically only a few weeks in the new base, but it is also possible that they have been in consolidation since the beginning of April.

Shares of UTHR jumped 4.3% on Tuesday to 228.84, rebounding from the 21-day line and breaking a brief declining trend. Shares of United Thera are still in the range of 218.48 points for purchase.

Tesla’s shares jumped 9.3% to 711.11 on Tuesday, slightly above its 21-day moving average. But it is still below its rapidly declining 50-day line, with an average of 200 days well above that. Last week, TSLA shares fell to 626.08, but remained above the 11-month low of 620.57 on May 24. Shares fell 1% on Wednesday morning.

Google shares rose 4.1% to 2,230.88 on Tuesday, just below the 21-day line. It is not too far from its rapidly declining 50-day line, but the 200-day line is far away. Last week, GOOGL shares fell to just over 2,100, modestly above the May 24 low of 2,037.69. Shares fell 1% early Wednesday.

Market analysis

The Dov Jones Industrial Average rose 2.15% in stock trading on Tuesday. The S&P 500 rose 2.45%. Nasdac composite jumped 2.5%. Russell 2000 with small capital advanced by 1.8%.

Strong gains on Tuesday were nice, but markets have numerous one-day or short-term gatherings amid sharp declining trends. The big drop in Dow futures on Wednesday suggests that a new attempt to increase the stock market is already encountering problems.

Assuming the main indices do not undermine last week’s lows, investors could ask the next day to confirm a new attempt at growth.

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What to do now

Investors should stay aside, waiting for the confirmed market growth trend. Even then, investors need to be careful. The relative lack of good stocks in a buying position would probably be one of them.

Read the Big Picture every day to stay in line with market direction and leading stocks and sectors.

Follow Ed Carson on Twitter at @ IBD_ECarson for stock market updates and more.


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