Dow Jones futures tilted lower after hours, along with S&P 500 futures and Nasdaq futures.


The stock market rally was volatile as Fed chief Jerome Powell spoke Tuesday afternoon, continuing to balance hawkish and dovish comments. The major indexes ultimately closed higher, still in a recent range of the past few session

Microsoft (MSFT) held an event highlighting OpenAI’s ChatGPT, with Google and Baidu (BIDU) also pushing ahead with their own ideas. Microsoft and Google parent Alphabet (GOOGL) rose modestly Tuesday, while BIDU stock gapped higher.

After the close, Vertex Pharmaceuticals (VRTX), Chipotle Mexican Grill (CMG), Paycom Software (PAYC), Fortinet (FTNT), Enphase Energy (ENPH), Yum China (YUM) and Inspire Medical Systems (INSP) all reported.

President Joe Biden will give the State of the Union speech in prime time tonight. He’s expected to discuss debt limit talks and renew a call for quadrupling a tax on stock buybacks. But with a split Congress, such a tax is unlikely to make much headway.

The video embedded in this article reviewed Tuesday’s market action and analyzed On Holding (ONON), WillScot Mobile (WSC) and Microsoft stock.

Fed Chief Powell

Fed chief Powell, speaking at the Economic Club of Washington, D.C., said the “disinflationary process” has begun. But he did note that Friday’s strong January jobs report shows that there is a “significant road ahead” to get inflation down. He said if economic data continues to come in hot, then “we have to do more and raise rates more than is priced in.”

Investors now strongly expect two more quarter-point rate hikes, bringing the target rate to 5%-5.25%, in line with Fed forecasts from late last year.

Two other Fed policymakers this week have signaled that rates may need to go even higher.

The odds of another hike in June have risen to nearly 40% from 28.8% on Monday and just 3.6% on Jan. 31.

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Microsoft will incorporate some ChatGPT tech into its Bing search engine and Edge web browser aiming to get an edge over Google.

Microsoft significantly upped its investment in OpenAI earlier this year.

MSFT stock popped 4.2% to 267.56, clearing Thursday’s high and hitting its best levels since late August. That offers a buying opportunity for Microsoft stock, still close to the 200-day line, a bottoming base and a long-term trendline.

Meanwhile, Google on Monday introduced its ChatGPT rival “Bard.” Google will hold a Search and AI event on Wednesday afternoon. GOOGL stock jumped 4.6% to 107.64 Tuesday, reclaiming its 200-day.

China search giant Baidu on Tuesday confirmed it will launch a ChatGPT-style bot, named Ernie, opening it to the public in March. BIDU stock spiked 12.2% to 160.22, vaulting to clear key resistance to an 11-month high. But shares are far above their 50-day line.

Dow Jones Futures Today

Dow Jones futures fell 0.1% vs. fair value. S&P 500 futures declined 0.1%. Nasdaq 100 futures edged lower.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

Key Earnings

Vertex earnings topped while revenue was in line. The biotech giant guided in line with views for a big slowdown in growth in 2023. It also set a $3 billion buyback. VRTX stock edged lower after hours. Shares rose 1.2% in Tuesday’s regular session to 308.54, moving aback above the 50-day line. Vertex is working on a 324.85 buy point from a cup base.

Chipotle earnings, revenue and same-store sales fell short. CMG stock declined solidly in late trading. Chipotle stock rose 1.3% on Tuesday to 1722.86, just out of buy range from a double-bottom base.

Paycom earnings topped while guidance also was solid.  PAYC stock fell modestly in extended action. Shares popped 4.5% to 344.52 on Tuesday. Paycom stock has a 402.88 consolidation buy point, according to MarketSmith analysis. It has an early entry of 362.46.

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Fortinet earnings beat while revenue just missed. But the cybersecurity giant gave upbeat 2023 guidance. FTNT stock skyrocketed in late trade, looking to vault above the 200-day line after many failed attempts over the past nine months. Shares rose 3.4% to 53.78, right on the 200-day line.

Enphase earnings comfortably beat views with the solar inverter maker also guiding higher. ENPH stock leapt in overnight trade, signaling a move back to its 200-day line. Shares rose 2.45% to 228.46 on Tuesday.

Uber Technologies (UBER), CVS Health (CVS), Wendy’s (WEN) and Yum Brands (YUM) report Wednesday morning.

UBER stock is extended from a cup-with-handle bottoming base. WEN stock and Yum Brands are in bases, but below the 50-day line. CVS stock is near a 52-week low.

UBER stock is on the IBD Leaderboard watchlist. VRTX stock is on the IBD Big Cap 20. Fortinet, Microsoft and Google stock are on IBD Long-Term Leaders.

Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live

Stock Market Rally

The stock market rally was up and down Tuesday, especially after Fed chief Powell began speaking, but ultimately closed with solid gains, near session highs

The Dow Jones Industrial Average advanced 0.8% in Tuesday’s stock market trading. The S&P 500 index jumped 1.3%. The Nasdaq composite leapt 1.9%. The small-cap Russell 2000 rose 0.7%.

U.S. crude oil prices jumped 4.1% to $77.14 a barrel.

The 10-year Treasury yield rose 4 basis points to 3.67%, up 28 basis points in the last three sessions.


Among growth ETFs, the Innovator IBD 50 ETF (FFTY) popped 1.7%. The iShares Expanded Tech-Software Sector ETF (IGV) jumped 2.3%. Microsoft stock is a major IGV holding. The VanEck Vectors Semiconductor ETF (SMH) ran up 3%.

SPDR S&P Metals & Mining ETF (XME) rose 0.6%. U.S. Global Jets ETF (JETS) was unchanged. SPDR S&P Homebuilders ETF (XHB) maintained altitude. The Energy Select SPDR ETF (XLE) leapt 3.25% and the Financial Select SPDR ETF (XLF) advanced 1.15%. The Health Care Select Sector SPDR Fund (XLV) climbed 0.6%.

Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) climbed 1.75% and ARK Genomics ETF (ARKG) 1.7%.

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Market Rally Analysis

The stock market rally rebounded after a two-day retreat. The major indexes remain within a very recent range.

The Nasdaq and Russell 2000 are still above their late 2022 peaks. Above Thursday’s highs lie their August peaks.

The S&P 500 pulled back to its December high intraday but rebounded nicely.

The Dow Jones, now the laggard, tested its 50-day line once again before coming on. But even the Dow isn’t far from its December peak.

Google and Microsoft stock, along with Apple (AAPL), Meta Platforms (META) and Nvidia (NVDA), helped lead the Nasdaq on Tuesday. But the Direxion Nasdaq-100 Equal Weighted Index ETF (QQQE) still climbed 1.65% Tuesday, much closer to its August highs than the Nasdaq or Nasdaq 100.

After big gains in the Nasdaq and leading stocks, a pause isn’t a surprise. So far the pullback seems normal and healthy. The market rally is digesting gains while leading stocks are forging handles or pulling back to key levels.

This pullback could quickly end or last for weeks. There’s always the possibility that the pullback becomes more significant for the indexes or specific sectors.

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What To Do Now

The stock market rally still looks healthy. Investors can choose to keep adding exposure carefully. But they also may want to wait for the current pause to end.

As Tom Petty said, the waiting is the hardest part. When the market is in a confirmed uptrend, there’s a temptation to stay active. But that can lead to heartbreak. A lot of money is in the sitting.

There were some buying opportunities Tuesday, including Aecom Technology (AEM) and WSC stock. But there wasn’t a flood. Many leaders are extended. Several are working on new setups, but generally could use more time to develop, such as ONON stock.

But keep a close eye on them as you update your watchlists. If the market rally revs up again you’ll want to be ready to start or add to positions as close to buy points as possible.

Read The Big Picture every day to stay in sync with the 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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