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Bulls Wary As Market Awaits Fed, But Ferrari Breaks Out

Bullish stock investors were selectively adding shares late Wednesday morning, as the Federal Reserve’s decision on interest rates loomed. Fed chief Jerome Powell is expected to announce a quarter point hike in rates.

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The Nasdaq popped 0.5%, while the S&P 500 and the blue chip Dow Jones industrial average each added 0.1%. Small caps were flat, as the Russell 2000 was just under the break-even line.

Volume was running modestly higher on both major exchanges vs. the previous session’s pace.

Italian carmaker Ferrari (RACE) gapped up 3% in volume 80% above average. The stock cleared a 141.66 buy point. There was no obvious catalyst, but in quarterly results reported in May, Ferrari jacked up sales 16%. The 16% revenue increase matched the best growth in 15 quarters.

Ferrari’s 22.8% pretax margin last year was its best in at least six years and the highest among 16 stocks in the automaker group. Ferrari is No. 1 in Stock Checkup at Investors.com in both the Composite and Relative Price Strength ratings. Both use a scale of 1 (poor) to 99 (excellent).

In the IBD 50, a list of the best stocks in fundamentals and technicals, winners led losers by a 2-1 ratio. Top percentage gainers included leisure-sector play Netflix (NFLX), up 2.5% to 373.20. Volume was 105% above average.

CNBC reported that Goldman Sachs analysts raised the price target on Netflix from 390 per share to 490. Goldman also confirmed its buy rating on Netflix.

Netflix is a member of IBD Leaderboard.

Among IBD’s 197 industry groups, staffing services led the upside, while homebuilders took the hardest hits.

Rate Hike

At 2 p.m. ET, the Fed will release a statement. Interest rates are likely to be nudged up a quarter point to a range of 1.75% to 2%. This would be the highest rate since September 2008. Fed chief Powell will conduct a press conference after the release.

(For updates on this story and other market coverage, check IBD’s stock market news today.)

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