Dow Jones Futures Rise As Market Awaits Supersize Fed Rate Hike

Dow Jones futures rose overnight, along with S&P 500 futures and Nasdaq futures. The stock market correction had a mixed session on Tuesday, as Treasury yields continue to run sharply higher. Investors are focused on Wednesday’s Federal Reserve meeting announcement, with policymakers set to approve either a big or very big Fed rate hike.

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Quanta Services (PWR), HealthEquity (HQY), Cheniere Energy (LNG), Dollar Tree (DLTR) and Li Auto (LI) are stocks to watch. All are showing strong relative strength lines, even if the share prices are struggling to hold.

LNG stock is on IBD Leaderboard. PWR stock is on the Leaderboard watchlist and on the IBD Big Cap 20. Li Auto stock is on the IBD 50. HealthEquity was Tuesday’s IBD Stock Of The Day.

The video embedded in the article discusses the market action and analyzes Cheniere Energy, Li Auto and DLTR stock.

Meanwhile, Tesla (TSLA) reversed modestly higher after moving toward its May 24 low of 620.54. Tesla stock closed up 2.4% to 662.67, but far off its November peak of 1,243.49 high. The National Highway Traffic Safety Administration is likely to release collision data involving driver-assist systems within the next few days, singling out the high number of Tesla Autopilot incidents. The NHTSA has been expanding a Tesla Autopilot probe.

Fed Meeting

A two-day Fed meeting ends Wednesday with announcement at 2 p.m. ET, followed by Fed chief Jerome Powell’s press conference. In the wake of Friday’s hot CPI report that showed inflation hitting a 40-year high of 8.6%, speculation grew that Fed policymakers would hike rates by 75 basis points on Wednesday, not just 50 basis points.

The Fed doesn’t like to surprise, and Powell said after the May Fed meeting that 75 basis points was off the table. It’s still possible that the central bank raises rates by 50 basis points, with Powell then signaling 75 basis points are on the table for July and September.

But after Fed officials apparently leaked to The Wall Street Journal on Monday that a supersize rate hike is being considered, markets see a 75-basis-point move as overwhelmingly likely.

Dow Jones Futures Today

Dow Jones futures climbed 0.5% vs. fair value. S&P 500 futures advanced 0.7%. Nasdaq 100 futures rose 0.9%.

The 10-year Treasury yield fell 5 basis points to 3.43%.

The Bitcoin price traded near $22,000, up slightly from Monday night’s 18-month low under $21,000.

Chinese economic data for May came in slightly better than expected amid still-heavy Covid restrictions. Retail sales fell 6.7% vs. a year earlier, topping views for a 7.1% decline. Industrial production rose 0.7% vs. forecasts for a 0.7% drop and April’s 2.9% decline. With Shanghai essentially ending its lockdown on June 1, economic activity should rebound this month.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

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