The Dow Jones Industrial Average rallied out of the red after the latest Fed minutes were released. EV stock Rivian (RIVN) soared on guidance even as Tesla (TSLA) fell. Microsoft (MSFT) and Apple (AAPL) were among the top blue chips.
Volume was lower on both the Nasdaq and the New York Stock Exchange compared to the same time Tuesday. This is not ideal on an up day.
The yield on the benchmark 10-year Treasury note rose 10 basis points to 2.91%. West Texas Intermediate crude oil slipped just over 1% to trade at just over $98 per barrel.
Fed Minutes Show Gloves Are Off Amid Inflation
The Federal Reserve, led by Chairman Jerome Powell, decided to make a larger than expected interest rate hike last month as the inflation outlook had deteriorated, the newly released minutes from the meeting showed.
They ultimately decided to raise the benchmark rate by 0.75% despite previously taking such a large hike off the table.
“The near-term inflation outlook had deteriorated since the time of the May meeting,” the minutes said. “Participants were concerned that the May CPI release indicated that inflation pressures had yet to show signs of abating, and a number of them saw it as solidifying the view that inflation would be more persistent than they had previously anticipated.”
U.S. Stock Market Today Overview
Last Update: 3:02 PM ET 7/6/2022
They also decided that an “increase of 50 or 75 basis points would likely be appropriate at the next meeting.”
Central bankers seem to have taken the gloves off as they try to tackle the issue. They believed the economic outlook “warranted moving to a restrictive stance of policy.” In addition, they thought an “even more restrictive stance” could be appropriate if inflation pressures persist.
Nasdaq Rallies As Tech Stocks Flex
The Nasdaq turned in the best gain as it rose nearly 0.8%. Lucid Motors (LCID) was a standout here as it rose nearly 7%.
The S&P 500 was also shining, and was up about 0.7%. Leaderboard stock Northrop Grumman (NOC) impressed here as it rose nearly 4%.
The S&P 500 sectors were mostly positive. Technology and utilities were making the best gains while energy and financials were lagging.
Small caps also pared losses, though the Russell 2000 remained down 0.4%.
Growth stocks also surged back, with the Innovator IBD 50 ETF (FFTY), a bellwether for growth stocks, trading virtually flat.
Dow Jones Today: Microsoft, Apple Stock Pop
The Dow Jones Industrial Average impressed by rallying out of the red to gain more than 150 points, or 0.5%.
Old rivals Apple and Microsoft were two of the best performers on the blue chip index. AAPL rose, but is continuing to trade below its 50-day moving average. The relative strength line is showing signs of improvement though.
MSFT managed to retake its 50-day line after it rose about 1.5%. Microsoft stock remains down around 20% so far for the year.
Both were outshone by Leaderboard stock UnitedHealth (UNH) though after it popped more than 2%.
Tesla Stock Slips As Rival EV Play Explodes
Tesla stock was struggling despite sunny guidance from EV rival Rivian. TSLA was down more than 1% heading into the close. It remains down about 42% since the start of the year.
In contrast, electric vehicle maker Rivian exploded, rising more than 10%. It was given a boost after it said it is on track to deliver 25,000 vehicles in 2022. The firm also reported it produced 4,401 vehicles in its most recent quarter. Although it delivered 4,467, which was in line with internal expectations.
Despite the bullish spike, RIVN stock remains down an eye-watering 71% since the start of the year.
Outside Dow Jones: 3 Stocks Test Buy Points
Evolent Health is in a buy zone after clearing a new handle entry of 32.55. The relative strength has spiked to fresh heights, a positive. It is breaking out after it struggled to clear a prior cup-with-handle base. It has been moving higher in strong volume, which is a sign of institutional accumulation.
The bullish move saw the medical software stock added to the prestigious Leaderboard list of leading stocks.
A couple of other names also managed to pass buy points of their own.
Dollar Tree is actionable after clearing a cup-with-handle entry of 165.45. Overall performance at the bargain retailer is excellent, which is reflected in an IBD Composite Rating of 96.
The relative strength line is hitting new heights, a positive. Big Money has been buying up stock of late, MarketSmith data shows.
Funko is also in a buy zone after rising past a cup-with-handle buy point of 25.18. This is an early, second stage pattern. The RS line is also spiking here. The stock holds a best possible Composite Rating of 99. In total, 93% of shares are currently held by funds.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more analysis of growth stocks.
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