Major stock market indexes bounced Tuesday while investors squared positions ahead of Wednesday’s Federal Reserve rate decision. The mandated 10-day Fed-speak blackout allowed traders to push prices higher without worrying about a governor killing buying interest with a sound bite. That all changes tomorrow afternoon. Vertex Pharmaceuticals (VRTX) traded near an all-time high.
The Cboe Volatility Index, better known as VIX, traded above 20 for the second day in a row at the opening bell. Declines into the upper teens triggered upside reversals in the index throughout 2022.
But so far, market players seem complacent about the rate decision and high odds that Fed Chair Jerome Powell will pour cold water on the emerging bullish narrative.
Dow Jones Heavyweights Report
Four Dow Jones components reported earnings ahead of the bell.
Caterpillar (CAT) took a dive after missing Q4 2022 earnings but beating on revenues, which rose a healthy 20.3% year over year. The construction giant blamed currency headwinds for the shortfall. CAT stock traded 4.5% lower.
McDonald’s (MCD) fell 2.5% despite beating Q4 top- and bottom-line estimates. Investors may have walked away because revenue fell 1.4% year over year.
Pfizer (PFE) recouped early losses after reporting in-line Q4 results but warning about fiscal year 2023 earnings and sales. It’s likely the pharma giant overestimated interest in the bivalent Covid booster shot. Just 18.2% of U.S. adults have taken the vaccine to date, according to the latest CDC guidance.
Exxon-Mobil (XOM) rallied 1.4% after beating Q4 top and bottom-line estimates. West Texas Intermediate crude oil sold off into the mid-$70s overnight and bounced into midday, now trading at $78.60 per barrel. XOM stock, also an IBD 50 member, climbed back above its 114.76 buy point.
Outside the Dow Jones, General Motors (GM) rocketed 6.8% after beating Q4 top- and bottom-line estimates and raising fiscal 2023 earnings-per-share guidance. The automaker also announced a partnership with Lithium Americas (LAC) to develop a Nevada mine that will supply electric battery components.
U.S. Stock Market Today Overview
Last Update: 11:44 AM ET 1/31/2023
How To Play This Week’s Stock Market
The S&P 500 remains above the 200-day moving average and above a downward trendline that was mounted last week. However, the Nasdaq composite reversed after just one session above its 200-day line, marking the latest in a long string of failures.
But things could change rapidly because a positive reaction to Wednesday’s Fed decision and Powell’s news conference could mount resistance levels in a New York minute.
To reiterate, it’s best to think of the 200-day as a “zone” rather than a “price” because stocks and indexes can spend weeks whipping across its boundaries, before building long-term support or resistance.
The Dow Jones Industrial Average traded higher by 0.2% in the first hour while the S&P 500 added 0.4%. The Nasdaq rose 0.6%. The Russell 2000 small-cap index outperformed tech and blue chips, up more than 1.1% at this hour.
NYSE volume fell while Nasdaq volume rose, compared with Monday’s session.
The 10-year Treasury note yield slid 1 basis point to 3.54%. In the crypto world, Bitcoin added 1% and is trading just above $23,000.
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AMD At Resistance Ahead Of Report
Advanced Micro Devices (AMD) reports Q4 2022 results after Tuesday’s closing bell, with analysts looking for a profit of 67 cents per share on $5.5 billion in revenue. If met, results would mark an 27% decline in profit compared to the same quarter in 2021. AMD stocks traded higher by 1.9% in the first half.
The chipmaker missed Q3 top- and bottom-line estimates in November, and issued downside guidance. AMD stock rose on the better-than-feared results but the chip sector is no longer oversold after the January rally.
And Dow Jones component Intel (INTC) just reported a horrible quarter and weak guidance. This geometrically raises risk for the semiconductor sector into Wednesday’s opening bell.
Nasdaq-100 Stock Vertex Leads IBD 50 Rally
The Innovator IBD 50 ETF (FFTY) shined, higher by 1.8% in Tuesday’s stock market.
Nasdaq-100 and IBD 50 component Vertex Pharmaceuticals traded within 25 cents of the 324.85 buy point of a 34-day cup base. A breakout would lift the biotech juggernaut to an all-time high.
VRTX stock has stair-stepped through a series of small bases going back to Feb. 2022. Mutual fund ownership has surged more than 15% during this period, from 2,890 to 3,431 holding shares.
The company has posted consistent double-digit earnings and sales growth in the last five quarters.
IBD 50 member Axon Enterprise (AXON), formerly known as Taser, crisscrossed the 193.95 buy point of a 41-day cup base.
The Scottsdale, Ariz.-based security company is expected to grow earnings by 33% in 2023. Mutual fund ownership rose to a new high in the December-end quarter.
AXON stock is also nearing a test of February 2021’s all-time high at 212.37.
Follow Alan Farley on Twitter at @msttrader.
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