NEW YORK, NY – Dow Jones futures saw a slight uptick overnight along with S&P 500 futures and Nasdaq futures, following a market sell-off after Federal Reserve chief Jerome Powell indicated that a Fed rate cut in March was unlikely.
The stock market rally took a hit on Wednesday, with tech stocks leading the decline following earnings reports from Microsoft, Google parent Alphabet, and Advanced Micro Devices. The major indexes still appear healthy, but investors are advised to exercise caution with new buys in the short term and consider taking some profits.
Several companies reported their earnings on Wednesday night, with Qualcomm, Nextracker, former NXT parent Flex, and Align Technology making headlines. Qualcomm saw a dip in stock price despite strong earnings and in-line guidance, while Nextracker’s stock skyrocketed, signaling a buying opportunity. Royal Caribbean is expected to report before the open, with an emerging base and key support.
Additionally, Amazon.com, Apple, and Meta Platforms are set to report Thursday night, after modest falls in the previous session. These companies are all included in various stock lists, such as IBD Leaderboard, IBD Long-Term Leaders, and IBD 50.
Dow Jones futures were above fair value, with S&P 500 futures and Nasdaq 100 futures also posting gains. The 10-year Treasury yield dipped to 3.94%, while crude oil futures ticked higher. However, overnight action does not always translate into actual trading in the next regular stock market session.
As expected, the Federal Reserve held off on any rate cut at its two-day meeting and officially shifted monetary policy away from a tightening bias, signaling that they are not yet ready to cut rates. Fed chief Powell stated that he does not believe it is likely for policymakers to feel confident enough for a rate cut by the March meeting, despite good inflation figures in recent months.
Following the Fed announcement and Powell’s comments, the stock market extended losses, with the Dow Jones Industrial Average falling 0.8%, the S&P 500 index slumping 1.6%, and the Nasdaq composite tumbling 2.2%. Tech giants such as Microsoft, Google, and Meta saw declines, while the Russell 2000 also took a hit.
The market is now awaiting the jobs report on Friday, which could provide a catalyst for a market bounce or continued selling. For now, investors are advised to wait until after the jobs report before considering new buys, as well as to be prepared with exit plans for current holdings.
As the current action could generate new setups in the coming days and weeks, investors are encouraged to keep watchlists updated and to follow The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.