Dow Jones futures fell higher on Wednesday night, along with S&P 500 and Nasdaq futures. The stock market wound fell slightly on Wednesday, while the yield of the Ministry of Finance touched the last low levels before the key data on inflation. GME and RH stocks are in focus after completion.
GameStop (GME), the original meme stock, topped first quarter revenue forecasts and nominated a new CEO and CFO, adding to its stable formerAmazon.com (AMZN) executives. The company also said it plans to sell up to five million shares “on the market.” The GME stock fell steadily overnight.
This was followed by a generally weak session for stocks loaded with Reddit. Clover health (CLOV) turned down and AMC Entertainment (AMC), On Wendy (WEN) and Bed Bath & Beyond (BBBY) everyone is retiring. Lordstown Motors (RIDE) beats to unchanged. Some new stocks of memes have taken off, including an already hot steelmaker Cleveland Cliffs (CLF).
RH (RH) nearly fourth-quarter profit in the first quarter, with rising sales. RH’s stock jumped, flashing early purchase signals.
Printed jewelers (SIG) is expected in early Thursday. Shares of SIG closed just below their 50-day line. A strong post-profit move would offer early entry as Signet works towards a flat point of purchase.
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Touch CPI report
The Ministry of Labor will publish the May consumer price index at 8:30 a.m. ET. Economists expect 0.4% growth in consumer prices as a whole and without food and energy, after large jumps in April. Consumer inflation is expected to rise to 4.6% from 4.2% in April. Core inflation is expected to reach 3.4% from 3% in April. Both would be long-term peaks.
The Federal Reserve said it expects the jump in inflation to be temporary, with a cold snap next year. The Fed’s next meeting is June 15-16. Investors will wait for any signs that Fed politicians are starting to talk about restricting asset purchases, although in fact, restricting bond purchases may not happen until the end of the year.
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Profitability of the treasury
The ten-year treasury yield fell four basis points on Wednesday to 1.49% after hitting a three-month low of 1.47% during the day.
The hot inflation report has the potential to increase 10-year yields, albeit only as a return to the average.
Why has the treasury’s profitability fallen sharply in the last week and month? Wall Street is lowering expectations for the amount of additional spending that Congress may approve in the coming months. In addition, job growth, while improving in May, is still not roaring. Job creation is rising sharply, but employers are struggling to find workers even with significant wage increases. The generous increase in salaries, the desire to continue to stay at home and the structural changes in the available jobs are all possible factors.
Dow Jones Futures Today
Dow Jones futures rose 0.1% to fair value. S&P 500 futures rose 0.1%. Nasdaq 100 futures were slightly above profitability.
The Treasury report and Treasury yields are likely to affect Dow Jones futures just before the market opens on Thursday.
Remember that overnight action in Dow futures and elsewhere does not necessarily become real trading in the next regular session of the stock market.
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Stock market rally
The stock market rally ended on Wednesday, but the main indices are still at record highs.
The Dow Jones industrial average fell 0.4% in stock trading on Wednesday, the third consecutive moderate decline. The S&P 500 index fell 0.2%. The Nasdaq composite fell 0.1% after being slightly higher for most of the day. Russell 2000 lost 0.7%.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) fell 0.3%, while the ETF (BOUT) sank 0.8%. The IShares Expanded Tech-Software Sector ETF (IGV) was essentially flat. VanEck Vectors Semiconductor ETF (SMH) fell 0.3%.
The SPDR S&P Metals & Mining ETF (XME) lost 0.4% and the Global X US Infrastructure Development ETF (PAVE) dropped 0.8%. The Global Global Jets (JETS) ETF fell 0.6%. The SPDR S&P Homebuilders ETF (XHB) fell 1.5%, continuing to struggle despite the treasury’s sliding returns.
Reflecting more speculative historical stocks, the ARK Innovation ETF (ARKK) fell 0.25% and the ARK Genomics ETF (ARKG) rose 1.2%. ARKK remains below its 50-day and 200-day lines, while ARKG recovered both on Wednesday.
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Revenues from RH increased by 385%, while revenues jumped by 78%. While comparisons were easy – profits and sales fell in the previous quarter as the pandemic hit – RH disappeared in the past. The prestigious furniture retailer also gave upward sales forecasts for the second quarter and raised revenue and margin targets throughout the year.
RH’s stock jumped nearly 7% at the end of trading. This signals early entry above the 50-day line and above the downward trend line. RH’s stock hit resistance on the 50-day line.
Shares fell 2.8% to 611.33 on Wednesday.
GameStop Earnings Top, Elected CEO
GameStop’s earnings exceeded the readings, with less-than-expected loss and a 25 percent gain compared to the pandemic year earlier in the quarter.
GameStop has appointed Matt Furlong as CEO and Mike Recupero as CFO, both former Amazon executives, effective June 21. They join three other Amazon executives who have topped GameStop.
Earlier Wednesday, Ryan Cohen officially became chairman of GameStop’s annual shareholders’ meeting. The Chewing A co-founder (CHWY), who owns a 12% stake in GME while advertising a digital future for the longtime video game retailer based in the mall, says he has big plans but has not set out his vision.
“You won’t find us talking about a big game, making a bunch of high promises, or telegraphing our strategy for the race.”
So far, GameStop has once again not asked questions about its revenue call.
The GME stock collapsed by 7% within one night, outside the minimum hours after working hours. Shares rose 0.85% to 302.56 on Wednesday. The stock of GME has increased by 122% compared to its lowest level from 136.50 on May 11 and 1500% so far this year. He reached a record 483 on January 28.
Stocks of memes
Stocks of memes were a mixed bag on Wednesday.
Shares of CLOV fell 24% to 16.92 on Wednesday after reaching a record 28.85 during the day. This follows an 86% jump on Wednesday. Clover Health went public on January 8 through a special acquisition company or SPAC run by venture capitalist Chamath Palihapitiya.
Wendy’s shares fell 13% to 25.21. Although it did not destroy 26% of WEN’s earnings on Tuesday, it undermined the domestic day on Tuesday. So anyone who bought Wendy’s shares on Tuesday is losing money.
Shares of AMC retreated 10% to 49.34. Shares of the theater’s owner have been consolidating since AMC’s stock rose 95% on June 2nd.
Shares of Lordstown Motors rose 0.1% to 11.23 after a wild session. Lordstown has recovered from steep losses after saying it has enough capital to keep working and is in active talks to get new funding. On Wednesday, shares of RIDE jumped to 15.80, but then turned a 16% loss to 11.22, after the launch of EV pickup gave notice of “operating company”.
Investors in Reddit can be volatile, moving quickly from “old” memes, such as AMC.
Clean energy fuels (CLNE) and Geo Group (GEO), two newer meme stocks, rose 31.5% and 39%, respectively.
The Cleveland-Cliffs, which had a huge run last year, shot close to 15% to 23.22, erupting from a brief consolidation amid social media chatter. The cyclical steelmaker, which is experiencing a boom in profits and sales growth, is a departure from Reddit-fueled meme stock mania.
The incidence of coronavirus worldwide reached 175.10 million. Covid-19 deaths reached 3.77 million.
Coronavirus cases in the United States have reached 34.26 million, with more than 613,000 deaths.
Market rally analysis
The stock market rally is trading just below all-time levels. The S&P 500 could easily reach a record high, along with Russell 2000, Dow Jones and Nasdaq. It is unclear whether key indices will simply pause or record highs will serve as real resistance.
Do not fall asleep for a few quiet days. Major indices can easily move 1% or more up or down.
Growth stocks seem stronger. But is this the beginning of an expanded, growth-driven rally, or just the latest rotation in the sector? Falling treasury yields are a breeze for growth stocks, especially highly valued technologies that are trying to recover from deep sales. But if the Treasury’s 10-year yield regains much of its recent losses – through a hot inflation report or talks to cut the Fed’s spending – growth names could be put under pressure again.
So do not neglect the best stocks from other sectors. Miners are digging bases after heavy runs, along with several mall-based retailers. Finances held up relatively well as the 10-year yield gave way. Higher levels can quickly revive their condition.
Read the Big Picture every day to stay in line with 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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