Dow Jones futures rose modestly late Wednesday, along with S&P 500 futures and Nasdaq futures. The stock market rally got a big boost from a dovish Federal Reserve policy announcement and Fed chief Jerome Powell. The Dow Jones hit a record while the Nasdaq reversed higher as Treasury yields pared sharp gains.
The Federal Reserve signaled it won’t start rate hikes before 2024, unchanged from before. Fed chief Jerome Powell said it’s not time to talk about tapering the central bank’s big asset purchases.
That’s despite more bullish economic forecasts, as coronavirus restrictions wane and stimulus checks go out from the new $1.9 trillion spending package.
The Fed now expects 6.5% GDP growth this year vs. 4.2% back in January. The Fed sees 2.4% inflation this year, but cooling to 2% in 2022. The Fed has a 2% inflation target, but says it’s OK with price increases exceeding that level for a short time.
The 10-year Treasury yield jumped to 1.69% before the Fed meeting announcement, a fresh 13-month high. The 10-year yield ended up 2 basis point to 1.64%, slightly below were it was before the 2 p.m. ET Fed announcement.
The Dow Jones, up slightly before the Fed meeting decision, added to gains. The S&P 500 and Nasdaq reversed higher, especially after Fed chief Powell began speaking at 2:30 p.m. ET. Treasury yields pulled back from 13-month highs.
Williams-Sonoma reported better-than-expected earnings and a third straight quarter of accelerating revenue growth. The upscale home furnishings and housewares retailer reported same-store growth above 20% in all its chains. Williams-Sonoma also announced a $1 billion buyback and an 11% dividend hike.
WSM stock surged 12% overnight, signaling a move above a 151.26 buy point from a seven-week cup base, according to MarketSmith chart analysis. Williams Sonoma also has a 140.24 early entry from a handle that’s too low in the base to be valid.
WSM stock is part of the IBD 50.
Upstart Holdings easily beat EPS views but revenue slightly missed. The AI lending platform guided higher. Upstart also announced it’ll buy Prodigy, a retail automotive retail software maker. UPST stock skyrocketed 48% in extended trade. That’ll send Upstart stock far above its 50-day line but still below its Feb. 11 peak of 105.58.
Technically, Lordstown Motors reported earnings, but the EV pickup startup has essentially zero revenue. Lordstown said its Endurance full-size pickup will start production in September, with the first beta vehicles ready for testing by the end of this month. An electric van should start output in late 2022. But Lordstown also disclosed an SEC probe. That comes after Hindenburg Research accused Lordstown of fraud. RIDE stock, which plunged last week on the Hindenburg report, fell 3% in overnight trade.
Finally, Translate Bio reported weak results for its cystic fibrosis treatment. TBIO stock plunged 22%. Translate Bio stock has been holding its 21-day and 50-day lines.
Dow Jones Futures Today
Dow Jones futures rose 0.4% vs. fair value. S&P 500 futures climbed 0.3% and Nasdaq 100 futures advanced 0.35%.
The 10-year Treasury yield edged higher to 1.65%.
Coronavirus cases worldwide reached 121.80 million. Covid-19 deaths topped 2.69 million.
Coronavirus cases in the U.S. have hit 30.29 million, with deaths above 550,000.
Stock Market Rally Today
U.S. Stock Market Today Overview
Last Update: 4:22 PM ET 3/17/2021
The stock market rally traded mixed to lower for much of the session before the major indexes rallied together following the Fed meeting and Powell.
The Dow Jones Industrial Average rose 0.6% in Wednesday’s stock market trading. The S&P 500 index advanced 0.3%. The Nasdaq composite climbed 0.4% after slumping nearly 1.5% intraday.
The 10-year Treasury yield, which jumped to a 13-month high of 1.69%, pared gains to 1.64%.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rallied 0.9%, while the Innovator IBD Breakout Opportunities ETF (BOUT) climbed 1.3%. The iShares Expanded Tech-Software Sector ETF (IGV) dipped 0.2%. The VanEck Vectors Semiconductor ETF (SMH) advanced 0.9%.
Reflecting more-speculative story stocks, Ark Innovation ETF rose 0.75% and Ark Genomics ETF 1.1%.
Stock Market Rally Analysis
The Fed decision and Fed chief Powell’s comments came at a key time. The Nasdaq was undercutting the 50-day line Wednesday and testing its 21-day, before rebounding on the policy statement and Powell. Some big 2020 winners such as CrowdStrike (CRWD) and Twilio (TWLO) rebounded from their 50-day tests. Meanwhile, some recent breakouts and stocks flashing early buys shored up, including MKS Instruments (MKSI), Westlake Chemical (WLK) and 5G chipmaker Qorvo (QRVO).
The stock market rally remains sensitive to Treasury yields, especially the Nasdaq and growth names. The tech sector remains a work in progress. Meanwhile, reopening plays have made big moves. Many are above pre-coronavirus levels, even though earnings are likely to be well below pre-pandemic reports. So don’t get too carried away.
Focus on stocks that are trading above their 21-day and 50-day moving averages.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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