The Dow Jones Industrial Average rose 230 points before paring gains Wednesday morning before the The Federal Reserve’s decision on interest rates set for 2 p.m. ET, followed by Fed Chairman Jerome Powell’s press conference.
General Mills (GIS) was a driver on Wednesday, with shares up more than 6% in morning trade after strong results, although sales missed estimates. house builders Knowledge base home (KBH) and Lennar (LEN) will report after the close.
Micron Technology (MU) rose more than 1% even after Mizuho downgraded the stock to neutral long.
Elsewhere, leader in electric vehicles You’re here (TSLA) was trading down 0.4% on Wednesday. From Dow Jones Industrialiststech titans Apple (AAPL) and Microsoft (MSFT) were shuffled after today’s stock market open.
Top stocks to watch amid recent market weakness include Continental Resources (CLR), DoubleVerify (DV) and Vertex Pharmaceuticals (VRTX) — as well as Dow Jones stocks Chevron (CLC) and Merck (M.K.R.). Keep in mind that the new stock market correction is a good reason for investors to be mostly, if not entirely, on the sidelines.
DoubleVerify is a IBD classification stock, but its position size was reduced during last week’s losses. You’re here was featured in this week’s Stocks Near A Buy Zone column.
Dow Jones Today: Treasury Yields, Oil Prices, Fed Meeting
After Wednesday’s opening bell, the Dow Jones Industrial Average rose 0.6%, while the S&P 500 rose 0.65%. The tech-heavy Nasdaq Composite gained 0.35% in morning action.
The 10-year Treasury yield fell to 3.54% on Wednesday, after this week’s new high. Meanwhile, U.S. oil and natural gas prices have surged. Oil prices rose more than 2%, putting West Texas Intermediate futures above $86 a barrel.
The Federal Reserve’s two-day meeting ends Wednesday, with an interest rate decision at 2 p.m. ET and comments from Fed Chairman Jerome Powell at 2:30 p.m. The markets show 82% expectations that the central bank will raise rates by 75 basis points and an 18% probability of a 100 basis point hike. Investors will be looking for clues about the pace of future rate hikes and how high the central bank will eventually reach.
Adding it all up, markets expect the Federal Reserve’s key rate to end this year with a target range of 4% to 4.25% or, somewhat more likely, 4.25% to 4. .5%. And that may not be all. The odds have topped 50% for another quarter-point rise in the 4.5% to 4.75% range in March or May next year, according to CME Group. FedWatch page.
Stock market correction
On Tuesday, the stock market posted another disappointing performance. The Dow Jones Industrial Average lost 1%, while the S&P 500 fell 1.1%, both undercutting their lows on Friday.
Tuesday’s The Big Picture column commented: “Amid expectations of a hawkish statement, the stock market may not like what the Fed has to say on Wednesday. A tradable rally could eventually take the Nasdaq back to the 12,000 level. But it’s still a market under distribution, so a trip to the June lows could also be in the cards.”
To prepare for another stock market rally, investors should wait for a tracking day. When the market is in a correction, look for at least one major clue to attempt a bottom.
On the first day, the index closes higher as day 1 of its attempted rally. Day 2 and Day 3 action is irrelevant until the index breaks above its last low. If this low is undercut, the rally test is over and the market must try again.
On day 4 and later, you are looking for a strong rise in the Nasdaq or S&P 500 in higher volume than the previous session. This is a follow-up day. This gives investors the green light to start buying top-tier stocks overshooting the fair buy points. It should synchronize your portfolio and mindset with the stock market action by gradually committing capital to leading stocks.
During the stock market correction, do not log out. Instead, create watchlists to find emerging stock market leadership using the relative force line. The RS line measures a stock’s price performance relative to the S&P 500. If the stock is outperforming the broader market, the RS line slopes up. If a stock is lagging the general market, the line will point down.
Dow Jones stocks to watch: Chevron, Merck
Dow Jones Chevron stock fell 0.4% on Tuesday, still holding above crucial support around its 50-day line. Shares are trading around 6% from their last buy point at 166.93 on a cup with handle – according to IBD MarketSmith chart analysis – amid strong performance by energy stocks so far this year. The stock rose 1.4% on Wednesday morning.
CLC action shows a solid 97 over a perfect 99 IBD Composite Assessment, speak IBD inventory check. Investors can use the IBD Composite Rating to easily assess the quality of a stock’s fundamental and technical metrics.
The pharmaceutical giant Merck is also trying to fight against the bearish trend in the stock market. Stocks are building a flat base that has a buy point of 95.82, but they are stuck below their 50-day line and near their recent lows. Merck shares rose 0.3% on Wednesday morning.
Top stocks to watch: Continental, DoubleVerify, Vertex
Oil explorer and producer Continental Resources is building a mug with a handle with a buy point of 72.80, according to IBD MarketSmith graphical analysis. The relative strength line hit a recent high last week, but remains a bit off its 52-week high. CLR shares traded up 1.7% early Wednesday.
IBD Ranking Stock DoubleVerify remains below its buy point of 28.07 in a bottom basis after Tuesday’s 1.35% loss. Shares of DV were down 0.4% on Wednesday morning.
Vertex Pharmaceuticals remains below its 50-day line despite Tuesday’s 0.6% gain. The stock has held up well during the current market weakness, as indicated by an RS line approaching new highs. There’s no new base yet, but the title’s resilience makes it a great one to watch. Vertex shares rose 0.1% on Wednesday.
Tesla Stock fell a fraction on Tuesday as it nears the buy point of 314.74 from a short base. Meanwhile, keep an eye out for additional buying points if the stock is able to climb further on the right side of its broader consolidation, which dates back to January. Shares were down 0.4% on Wednesday morning.
On the upside, the stock’s RS line is at its highest level since April. The shares are down about 25% from their 52-week high.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones Stocks, Apple shares climbed 1.6% on Tuesday, adding to Monday’s gain. Last week, the stock closed at its lowest level since July 18. Apple stock was trading down 0.1% on Wednesday morning.
Microsoft lost 0.85% on Tuesday, hitting another 52-week low. The software giant is around 30% off its 52-week high. Microsoft shares gained 0.9% early Wednesday.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen to learn more about growth stocks and the Dow Jones Industrial Average.
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