Stock market indexes surged higher Wednesday afternoon, shaking off Taiwan jitters, mixed earnings and hawkish Fedspeak. Falling commodity prices underpinned broad-based buying interest, lifting major bench marks to two and three-month highs.
The Dow Jones Industrial Average is trading higher by 1.4% as we head into the final hour of trading. The S&P 500 is boasting a 1.6% gain while the Nasdaq composite is leading once again, rising 2.7%.
Volume has exploded on the Nasdaq, lifting 20% above Tuesday levels, but has fallen 9% on the NYSE.
Western Intermediate crude oil has fallen nearly 4% to 90.76 per barrel. The futures contract has now relinquished 100% of the rally gains since Russia invaded Ukraine in February. Bonds split the difference along maturities, with the 30-year yield falling back under 3% while the 10-year Treasury yield rose to 2.75%.
Starbucks has rallied 4.7% to a four-month high after beating EPS estimates by 8 cents. The coffee maker reported earnings of 84 cents per share on an 8.7% rise in sales to $8.15 billion.
The stock hit a two-year low in May and is now trading about five points under potential resistance at the 200-day moving average. The Relative Strength Rating has lifted to 50 while the Acc/Dis Rating has improved to a "B-".
Fed Governors Walk Back Powell Comments
Federal Reserve governors Mary Daly, Charles Evans, James Bullard and Loretta Mester have hit the airwaves and media in the last two days, warning the central bank has more work to do before achieving its policy objectives.
Most importantly, the comments may be directed at the stock market amid worries the summer rally is stoking an "all clear signal" that reignites inflationary pressures.
A push down to 2% inflation emerged as a common theme, along with their insistence that inflation may not have peaked yet. This aggressive target is a big roadblock, given current 6% to 8% levels, warning it will take more economic pain before we're out of the woods.
Big Week For Small Caps
Stock market components with less than $1 billion in quarterly sales dominate this week's earnings calendar. Investors like what they see so far, lifting the Russell 2000 small cap index to a two-month high. That benchmark has rallied 1.5% so far in Wednesday's session.
EBay reports second-quarter earnings after the closing bell, with FactSet consensus looking for a profit of 80 cents per share on $2.37 billion in sales. The stock got cut in half between October and June but is now showing signs of life, like other bear market victims.
Health care giant McKesson also reports this evening, when its expected to post earnings of $5.30 per share on $64.8 billion in sales.
The stock holds a bullish 96 Composite Rating and 91 EPS Rating but hasn't rewarded shareholders who bought the 340.04 buy point when it hit that level last week.
Wednesday Stock Market Highlights
Tuesday IBD Stock Of The Day, Onsemi, surged 5.2%, clearing two buy points after reporting strong second-quarter earnings on Monday. Shares have rallied out of a double-bottom base inside a consolidation. The RS line has been rising while the RS Rating has now reached a lofty 95.
IBD SwingTrader play iShares biotechnology ETF rallied back above the 124.98 buy point after a two-week pullback. The short-term trade setup is seeking to lock in a 5% to 10% profit.
No. 10 on the IBD 50, AdaptHealth traded within a penny of the 24.80 buy point in a cup base. The stock rallied on heavy volume Tuesday on news it will join the S&P SmallCap 600.
AHCO holds a perfect 99 Composite Rating. Annual EPS is expected to grow 90% in 2022 and 28% in 2023, following sizable losses in 2019 and 2020.
Follow Alan Farley on Twitter @msttrader.
