Dow Jones Futures Fall Solidly As Fed Ready For ‘Everything’; Tesla

Dow Jones futures fell solidly early Thursday, along with S&P 500 futures and Nasdaq futures, with weak JPMorgan earnings weighing on the market.

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The stock market rally retreated Wednesday, but closed off lows as investors tried to weigh the implications of a hot inflation report and the Federal Reserve being even more aggressive with rate hikes. Treasury yields sent louder recession signals.

Taiwan Semiconductor (TSM) slightly beat second-quarter views overnight, with the chip foundry guiding higher on Q3 revenue. TSM stock rose 1.5% before the open but is in a long downtrend.

JPMorgan Chase (JPM) reported weaker-than-expected Q2 EPS and revenue and suspended buybacks. JPMorgan stock fell 2.5% before the open. Morgan Stanley (MS), also due before the open, edged lower. JPM stock and Morgan Stanley also have been sliding for months.

Li Auto (LI) rebounded bullishly Wednesday, while EV giants Tesla (TSLA) and BYD (BYDDF) try to find support at key levels. Shockwave Medical (SWAV), AstraZeneca (AZN) and McKesson (MCK) showed constructive action near buy points. Olaplex (OLPX) flashed positive signals after the 2021 IPO sold off for much of this year.

In other Tesla news, AI chief Andrej Karpathy said he’s stepping down, confirming long-held speculation.

BYD said it expects to report booming first-half profit.

LI stock was added to SwingTrader on Wednesday. Li Auto, AstraZeneca and MCK stock are on the IBD 50. Li Auto also was Wednesday’s IBD Stock Of The Day.

Dow Jones Futures Today

Dow Jones futures fell 1.2% vs. fair value, with JPM stock a Dow component. S&P 500 futures retreated 1.2%, as bank stocks retreated on JPMorgan results. Nasdaq 100 futures declined 0.75%.

The 10-year Treasury yield rose 6 basis points to 2.96%. The two-year yield climbed 6 basis points to 3.2%.

Crude oil futures fell nearly 3%. Copper prices lost 2%.

At 8:30 a.m. ET, the Labor Department will release the June producer price index and weekly jobless claims. Will the PPI show any cooling in wholesale inflation? Jobless claims will remain low, but should continue to show a trend of slowly easing labor markets.

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

Inflation Report

The headline CPI inflation rate spiked to 9.1% in June from May’s 8.6%, a fresh 40-year high and above views for 8.8%. Core inflation, which strips out food and energy, edged down to 5.9% from 6%.

With crude oil and gasoline prices falling significantly from mid-June, headline CPI inflation might finally cool somewhat in July. But June’s broad-based price gains are an ominous sign for inflation longer term.

Core prices rose 0.7% vs. May, the third straight month of accelerating gains, on a sequential, unrounded basis. Services prices excluding energy picked up to 5.5% vs. a year earlier.

Fed Rate Hike Outlook

As a result, the CME FedWatch Tool now sees an 86% chance of a…