After the Dow swings more than 800 points from high to low, traders and investors remain on edge after learning the FOMC’s hawkish intentions.  As a result, the wild price action continued in the overnight futures even after the better than expected reports from INTC and TSLA.  Today we have another big day of market-moving economic and earnings reports that could easily inspire more whipsaws and reversals.  The path forward remains very dangerous, so plan your risk carefully as the Fed attempts to fight inflation without slowing the economy.

Asian markets had a rough night reacting to the Fed as the Nikkei fell more than 3%, closing indexes in the red across the board.  European markets gyrate in a volatile session this morning with a mix of gains and losses as they try to find direction.  U.S. futures rallied off of overnight lows, suggesting a tentative open with a slew of market-moving reports ahead to keep traders on high alert.

Economic Calendar

Earnings Calendar

Thursday will be our busiest day on the earnings calendar this week.  Notable reports include AAPL, AOS, ALK, MO, TEAM, BZH, BX, BOOT, CP, CE, CNX, CMCSA, DHR, DB, DOW, EMN, HCA, IP, JBLU, JNPR, KLAC, MMC, MA, MKC, MCD, MDLZ, MSCI, NOC, NUE, OLN, HOOD, ROK, LUV, STM, SYK, TROW, TXT, TSCO, X, VLO, V, & WDC.

News & Technicals’

Tesla beat on the top and bottom lines.  CEO Elon Musk gave a “product road map” update saying the company would not release any new model vehicles in 2022.  Instead, Tesla focuses on developing autonomous vehicle tech and scaling up production at its new factories in Austin, Texas, and outside of Berlin.  Intel reported fourth-quarter earnings on Wednesday.  Intel’s largest business, its Client Computing Group, was down 7% year-over-year to $10.1 billion, though it still beat analysts’ estimates.  Gelsinger said that the company’s next-generation server chip, Sapphire Rapids, remained on schedule to start shipping this quarter and for production to ramp up in the second quarter.  According to investment bank Morgan Stanley, the economic costs of China’s zero-Covid policy are increasingly expected to outweigh its benefits.  As a result, the bank has now cut its forecast for the first-quarter GDP to 4.5%.  “At this point, we think investors are still being too bullish with their expectation about corporate earnings,” said Laura Wang, chief China equity strategist at the firm.  Germany has provoked outrage in some quarters after it offered to supply 5,000 military helmets to Ukraine to help it defend itself against a possible Russian invasion.  The U.S. and U.K. have sent military hardware to Ukraine, as 100,000 Russian troops are believed to be located along the border with Ukraine.  However, Germany has been conspicuously reluctant to send equipment to the country.  Apple hit a record 23% market share in China in the fourth quarter of 2021, with the iPhone maker reclaiming the number one player for the first time in six years, Counterpoint Research said.  That was driven by the “relatively lower starting price” of its iPhone 13, which had a strong camera and 5G features.  Meanwhile, China’s smartphone market declined in 2021 due to component shortages and sluggish consumer spending, Counterpoint Research said.  Treasury yields traded mixed early Thursday, with the 10-year rising to 1.8495% and the 30-year declining to 2.1413%.

I guess it’s no surprise the FOMC decision to raise rates beginning in March created wild price gyrations that first shot the Dow up more than 500 but faded, selling off over 800 points in just over an hour.  The volatility continued in the overnight futures, dropping some 300 additional points to rally back near falt this morning.  Internals still indicate a short-term oversold condition, but another day of market-moving economic and earnings reports includes the behemoth APPL after the bell.  Both INTC and TSLA beat earnings estimates after the bell on Wednesday; however, the stocks are indicated slightly lower at the open today.  We should not rule out the possibility of testing the overnight futures lows, but we should also prepare for a relief rally should the day’s data inspire the bulls.  That said, we will have to keep a close eye on overhead resistance levels and expect price volatility to remain very challenging in the weeks ahead. 

Trade Wisely,

Doug