As Jerome Powell took the notion of a 75 basis point increase off the table, the bull triggered a massive short squeeze rally as indexes surged to test price and technical resistance levels.  However, I would be careful not to count the bear out if the overall downtrend remains intact.  Unfortunately, the significant factors in the calculation of inflation, food, housing, and energy also surge higher on Wednesday.  With a massive day of earnings, expect price volatility to remain challenging in the days ahead.

Asian markets closed mixed overnight in a choppy session after the Fed rate increase.  However, European markets see only bullishness in reaction to the FOMC decision, and now the focus turns to the pending Bank of England decision.  Ahead of a busy earning day, the U.S. futures point to a slightly bearish open as bond yields bounce higher in early trading.

Economic Calendar

Earnings Calendar

Thursday will be the busiest day of the week on the earnings calendar as we near 400 companies expected to report.  Notable reports include ACIW, AL, APD, AMCX, BUD, APO, MT, AAWW, BLL, BDX, SQ, CAH, CHUY, CLNE, NET, COP, ED, CRSR, CROX, DDOG, DVA, D, DASH, DBX, EGLE, EOG, FND, FNKO, GCI, GOGO, GFI, GPRO, HAIN, HBI, HUBS, HII, ILMN, ICE, K, KTOS, TREE, LYV, LCID, MMP, MAIN, VAC, MCK, NWS, NKLA, NOG, NLOK, ZEUS, PZZA, PH, PENN, PBR, PBPB, PBYI, PWR, RSG, RCL, RPRX, SAIL, SEAS, SHAK, SHEL, SHOP, SWI, STLA, SPWR, SKT, TXRH, OLED, UNM, VRTX, SPCE, W, WPM, WWE, WW, YELP, Z & ZTS.

News & Technicals’

Shell’s results follow soaring profits seen across the oil and gas industry, even as many energy majors incur costly write-downs from exiting Russia.  U.K. rival BP on Tuesday announced plans to boost share buybacks after first-quarter net profit jumped to its highest level in more than a decade.  Shell reported a sharp upswing in full-year profit in 2021 on rebounding oil and gas prices, with CEO Ben van Beurden hailing it as a “momentous year” for the company.  The Microsoft co-founder said at the Wall Street Journal’s CEO Summit Wednesday that it’s unclear how Elon Musk will change Twitter if he takes ownership.  The tech billionaire’s comments come after Musk accused him of shorting Tesla stock last month.  Musk also tweeted a crude joke about Gates.  Facebook’s parent company sees challenges ahead because of Apple’s privacy changes, the war in Ukraine, and broad macroeconomic shifts.  As a result, the company plans to stop or slow the pace of adding mid-level and senior people.  CNBC’s Jim Cramer said Wednesday he’s still “drawn to owning stocks” despite concerns of a Fed-induced recession.  The “Mad Money” host’s comments came after Wall Street rallied in response to Fed Chair Jerome Powell’s news conference.  Cramer likes banks stocks and profitable tech companies like Advanced Micro Devices, given his economic outlook.  Treasury yields are rising again this morning, with the 10-year rising five basis points to 2.97% and the 30- rising to 3.04%.

The bulls triggered a massive short squeeze after Jerome Powell suggested a 75 basis point increase is off the table for the next couple of months.  The surge upward neared price resistance levels and tested 50-day moving averages as resistance but the overall downtrend in the indexes remains intact.  Unfortuntually, the significant factors that affect inflation calculation also rose sharply after the rate increase.  Higher rates and rising inflation may raise the concern of stagflation as more and more analysts suggest a recession is on the way.  So, the big question for today can the bulls follow through with Wednesday’s rally facing a massive day of earnings events?  Only time will tell, but I would not count out the bears yet while the overall downtrend still exists.  Prepare for another day of wild volatility.

Trade Wisely,

Doug