The stock market rallied in the final hour of trading on Tuesday, with all major indexes posting gains. Investors await December’s CPI and jobless claims numbers as well as the start of earnings season as they try to predict the Fed’s next move.
In a speech in Stockholm, Powell reiterated the central bank’s commitment to restoring price stability, agreeing that raising interest rates is not a popular action. The speech contained little new information.
The S&P 500 rose 0.7%, while the Nasdaq gained 1%. The Dow Jones Industrial Average added 0.6% and the Russell 2000 outperformed the other indexes, rising 1.5%.
Volume was lower on the NYSE but higher on the Nasdaq compared to the same time on Monday.
The Dow held above its 50-day line and 21-day exponential moving average. The S&P 500 closed above its 50-day line. The Nasdaq found support at its 21-day line and resistance at its 50-day line.
The technology-intensive Nasdaq 100 that tracks the Invesco QQQ trust ETF ( QQQ ) added 0.9%.
Crude oil rose 0.4% to $74.92 a barrel. The Energy Select Sector SPDR ETF (XLE) added 0.7%. Natural gas fell 7.9% and is back below $4 per million British thermal units.
Bitcoin futures rose 1.6% to $17,505.
European stock markets fell, with Germany’s DAX down 0.1% and Paris’s CAC 40 down 0.6%. London’s FTSE 100 returned 0.4% at the end of the trading day.
The yield on 10-year Treasury bills increased by 8 basis points to 3.62%.
The odds for a 25 basis point hike at the February Fed meeting are 79.2%. This would bring the funds rate to a range of 4.5%-4.75%. Meanwhile, 20.8% of traders are looking for a 50 basis point hike, according to the CME Group FedWatch Tool.
The movers of the stock market are making their way
European drug manufacturer AstraZeneca (AZN) rose 1% and broke out of a double bottom base in heavy volume, hitting a buy point at 68.49. The stock is in a 5% buy zone, reaching 71.91.
Stocks rallied at the start of the new year, hitting a 52-week high on Tuesday. AstraZeneca has announced takeover plans CinCor Pharma ( CINC ), maker of the clinical-stage blood pressure drug baxdrostat, in a deal valued at $1.8 billion. CINC rose 0.2% on the news.
Air Pollution Control Company Ceco Ecological (CECO) rallied 13.4% on heavy volume and broke out of a newly formed flat base, hitting a buy point at 12.99. Shares extended from a 5% buy zone, reaching 13.64. Its relative strength line has reached a new high, as indicated by the blue dot.
Specialty retailer Five below ( FIVE ) gained 2% after breaking through a flat base to reach a buy point at 188.77. The shares are in the buying zone.
Economic data should be released on Thursday
December’s National Federation of Independent Business (NFIB) Small Business Optimism Index fell to 89.8 from the consensus of 91.3. The decline represents the 12th consecutive month below the historical average of 98.
The NFIB index compiles the results of surveyed companies in 10 areas, including hiring plans, capital expenditures, expectations for the economy, sales, inventory levels and earnings. The Small Business Outlook can provide insight into changes in the sector, including small-cap stocks.
Thursday 8:30 a.m. ET. could be a key point for economic data. The consensus for December’s CPI data is unchanged, while the annual rate is projected at 6.6%.
Initial weekly jobless claims for the week ended Jan. 7 are forecast to come in at 215,000, up from 204,000 in the previous week.
Fourth-quarter earnings season begins Friday, including at the big banks JPMorgan Chase (JPM), Bank of America (BAC) and Citigroup (C).
Stock Market Drivers: Crypto Stock Market Spikes
Oak Street Health ( OSH ) jumped 27.5% on Bloomberg news that it was in talks with the pharmacy retailer CVS Health (CVS) to be acquired for more than $10 billion. Chicago-based Oak Street serves Medicare-eligible patients at more than 160 centers in 21 states.
The company has a partnership with AARP and its nearly 38 million members. Shares of CVS fell 0.9% on the news.
Dow component Boeing ( BA ) fell 0.9% after Morgan Stanley downgraded the stock to equal weight from overweight, while raising its price target to 220 from 213.
Shares were extended from a buy base with a buy point of 173.95. Aerospace stocks have a relative strength score of 96, meaning they have outperformed 96% of all stocks in the IBD database. Shares are up about 68% from a low of 120.99 on September 30.
Belgian tanker company Euronav (EURN) fell 15.3% in massive volume on news that Frontline (FRO) terminated the merger agreement. FRO shares rallied 25.7% on the news.
Cryptocurrency exchange Coinbase ( COIN ) jumped 13% after announcing it will lay off about 20% of its workforce, about 950 employees, and plans to cut operating expenses by 25%.
Cosmetics manufacturer DWARF Beauty ( ELF ) sold off 8.3% on heavy volume, adding to yesterday’s 3.9% decline, also on heavy volume. The stock is now trading below its 50-day moving average.
Market recovers key levels ahead of CPI inflation report
IBD 50 Movers: Chip Stock Jumps
The Innovator IBD 50 ETF ( FFTY ) traded in line with the major stock indexes, adding 1.1%.
Circuit board test system developer Aehr test systems ( AEHR ) jumped 9.4% after better-than-expected Q2 2023 EPS and sales data on Jan. 5. Shares crossed the 28.10 buy point on higher-than-average volume.
Super micro computer ( SMCI ) fell 7.6% after Spruce Point Management issued a brief bearish report, issuing a strong sell recommendation. The report details Super Micro’s history of financial misstatements and accounting irregularities.
SMCI fell below its 50-day line after Monday’s reversal. A sell-off below the 50-day line is a warning signal.
A cloud management platform Box ( BOX ) fell 6.3% on heavy volume, sending it below its 200-day moving average. The big move puts the stock near the 7%-8% sell zone, after being in the buy zone of the cup-with-handle base with a buy point of 29.57.
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