Fed Rate Hike Looms After Market Rally Fizzles; Tesla Stock Hits New

Dow Jones futures rose slightly overnight, along with S&P 500 futures and Nasdaq futures. All eyes await the Federal Reserve meeting announcement and Fed chief Jerome Powell. Fed rate hike outlook signals will be key.

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The stock market rally closed modestly higher but after initially gapping up on a tame CPI inflation report. Promising moves by leading stocks generally fizzled or reversed lower.

Tesla (TSLA) plunged to fresh bear market lows on Tuesday as the sentiment turns decidedly bearish on the EV giant. TSLA stock has been selling off in heavy volume. CEO Elon Musk himself appeared to concede Tesla demand concerns on Wednesday.

Among Dow Jones megacap techs, Apple (AAPL) erased a strong early gain amid reports of a sweeping change to its App Store model. Microsoft (MSFT) closed higher but after hitting key resistance.

Airline stocks sold off hard as a JetBlue (JBLU) warning added to recent concerns about travel demand heading into 2023. United Airlines (UAL), which flirted with buy points in the past couple of weeks, plunged Wednesday.

Meanwhile, General Electric (GE), Goldman Sachs (GS) and Peabody Energy (BTU) all found support at key levels and are near possible buy points. Peabody was Tuesday’s IBD Stock Of The Day.

The video embedded in this article discussed Tuesday’s market action and analyzed Tesla stock, GE and Peabody Energy.

Fed Rate Hike, Outlook

The Federal Reserve will almost certainly hike rates 50 basis points at 2 p.m. ET, after four straight Fed rate hikes of 75 basis points. What investors want are signals about Fed rate policy in early 2023.

Following Tuesday’s CPI inflation report, markets are now slightly leaning toward a quarter-point rate hike on Feb. 1.

The November consumer price index came in lighter than expected, with a 0.1% monthly gain, or 0.2% excluding food and energy. The CPI inflation rate fell to 7.1%, the lowest in a year and down from October’s 7.7%. The core CPI inflation rate cooled to 6% from 6.3%.

The Fed will also release quarterly economic projections, along with policymakers’ rate hike projections. That might offer insight into where policymaker see the “terminal” or peak fed funds rate.

Fed chief Jerome Powell will speak at 2:30 p.m. ET. His comments about inflation and recession risks and peak Fed rates will be critical for stocks and Treasury yields.

Dow Jones Futures Today

Dow Jones futures advanced 0.3% vs. fair value. S&P 500 futures climbed 0.25% and Nasdaq 100 futures rose 0.25%.

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

Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live

Stock Market Rally

The stock market rally started Tuesday off strong, with the major indexes all clearing short-term highs on the CPI inflation report. But gains faded significantly.

The Dow Jones Industrial Average closed up 0.3% in Tuesday’s stock market…