The Dow Jones Industrial Average rose Wednesday ahead of the Federal Reserve’s interest rate decision this afternoon, followed by a press conference with Fed Chairman Jerome Powell. Best Buy (BBY) fell more than 3% after Bank of America downgraded.
Fed decision, Powell comments
The Fed’s two-day policy meeting concludes on Wednesday. A rate decision is scheduled for 2pm ET, followed by commentary from Fed Chief Powell at 2:30pm
The Fed has indicated it will taper the pace of rate hikes this meeting, with widespread expectations of a rate hike of half a point to a range of 4.25% to 4.5%. However, it’s unclear to what extent Tuesday’s more moderate-than-expected CPI inflation report could affect the Fed’s rate hike outlook.
It may not matter much, but investors will carefully analyze Jerome Powell’s comments following signs that the Fed may change its stance on inflation. According to the CME’s FedWatch tool, traders are placing a 79% chance of a rate hike of 50 basis points.
early tuesday, REV group (REVG) and Weber (WEBR) reported their quarterly results. REVG shares were up 18%, while Weber shares were up less than 1%. Other earnings reports this week include Darden Restaurants (DRI) and lennar (LEN).
Best Buy shares fell more than 3% after Bank of America downgraded the stock from neutral to underperform, with a new price target of 80 to 69. Delta Airlines (DAL) rose more than 3% after raising expectations for the fourth quarter and releasing optimistic guidance for fiscal years 2022 and 2023.
Giant of electric vehicles Tesla (TSLA) fell nearly 2% on Wednesday. Dow Jones Technology Leaders Apple (AAPL) and Microsoft (MSFT) were mixed after today’s market open.
Allegro Microsystems (ALGM), IBD Leaderboard Share Dexcom (DXCM), KL (KLAC) and United Rental (URI) — as well as Dow Jones names Caterpillar (CAT), DIY store (HD) and UnitedHealth group (UNH) — are among the top stocks to buy and watch.
Dexcom and Trane are IBD Leaderboard stocks. UnitedHealth was featured in this week’s Stocks section near a buy zone. Allegro was a recent IBD 50 Stocks To Watch pick. Caterpillar, United Rentals, and Dexcom were recent IBD Stock Of The Day companies.
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Dow Jones Today: Oil Prices, Treasury Yields
After Wednesday’s opening bell, the Dow Jones Industrial Average rose 0.5%, while the S&P 500 rose 0.45%. The tech-heavy Nasdaq composite gained 0.4% in the morning action, with Charter communication (CHTR) plunges more than 8% to the bottom of the index. A handful of analysts lowered their price target on Charter after the company raised its 2023 capital spending outlook on Tuesday.
Among exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) fell 0.1% and the SPDR S&P 500 ETF (SPY) rose 0.1% early Wednesday.
The 10-year US Treasury yield was unchanged at 3.51% on Wednesday morning ahead of the Fed’s interest rate decision. Yields on 10-year Treasuries tumbled on cool CPI inflation data on Tuesday.
Meanwhile, oil prices in the US rose about 1% on Wednesday morning after both the International Energy Agency and the Organization for the Petroleum Exporting Countries forecast a recovery in demand for the coming year. West Texas Intermediate futures were trading at $75.39 a barrel on Tuesday.
Stock market rally
The stock market ended Tuesday with moderate gains, but major stock indices closed well off their intraday highs. The Nasdaq composite rose 1%, the S&P 500 rose 0.7% and the Dow Jones Industrial Average climbed 0.3%.
Tuesday’s The Big Picture column noted, “But the stock market flashed a clear message on Tuesday: They’re still worried about a recession next year. Inflation is still far too high for the Fed, which is still facing with an extremely tight labor market and low unemployment. The Fed wants to see some softness in the labor market to help fight inflation.”
This is an important time to read IBD’s The Big Picture column amid the continued volatility in the stock market.
Five Dow Jones stocks to buy and watch now
Dow Jones Stocks to Buy and Watch: Caterpillar, Home Depot, UnitedHealth
Dow Jones member Caterpillar continues to drift further away from a cup base’s 238 buy point, according to IBD MarketSmith pattern recognition, in the wake of Tuesday’s 1% increase. CAT stocks show a solid 95 out of a perfect 99 IBD Composite Rating, according to the IBD Stock Checkup. CAT shares rose 0.2% on Wednesday.
Retailer Home Depot ended Tuesday in buy range above the 329.77 buy point of a cup-with-handle base following the day’s breakout. HD shares were trading marginally higher Wednesday morning.
Healthcare giant UnitedHealth Group traces a flat base with a buy point of 558.20. Stocks are just 3% off the latest entry. UNH shares rose 0.4% on Wednesday morning.
4 Top Growth Stocks to Watch in the Current Stock Market Rally
Top Stocks to Buy and Watch: Allegro, Dexcom, KLA, United Rentals
Allegro Microsystems finished in buy range Tuesday past the 32.07 buy point of a handle cup after the day’s gains of 1.5%. ALGM shares were up 0.3% on Wednesday.
IBD Leaderboard stock Dexcom is attempting to break past a buy point of 123.46 in a flat base and is just below entry amid Tuesday’s 2.4% rally. Shares of Dexcom rose 0.1% on Wednesday.
Chip leader KLA is at the top of the 5% buy range past a handle cup’s 392.60 after Tuesday’s 2% increase. The 5% chase zone goes up to 412.23. Bullish, the relative strength line continues to make new highs in ongoing market volatility. KLA shares fell 0.3% on Wednesday.
According to IBD MarketSmith’s analysis, United Rentals is attempting to break past a buy point of 368.04 in a cup-with-handle pattern. Stocks topped the entry on Tuesday before closing just below it. URI shares rose 0.2% on Wednesday.
Stocks to buy and view
Here are seven top stocks to buy and watch in the current stock market, including three Dow Jones leaders.
|Company Name||Symbol||Correct point of sale||Base type|
|Allegro Microsystems||(ALGM)||32.07||Cup with handle|
|KL||(KLAC)||392.60||Cup with handle|
|United Rental||(URI)||368.04||Cup with handle|
|DIY store||(HD)||329.77||Cup with handle|
Source: IBD data as of December 13, 2022
Join IBD experts as they analyze leading stocks in the current stock market rally on IBD Live
Tesla shares fell 4.1% on Tuesday, falling sharply for the second day in a row and hitting a new 52-week low. Shares traded 1.8% lower Wednesday morning, threatening to extend a losing streak to three days. Early Wednesday, Goldman Sachs lowered its price target from 305 to 235, citing weaker demand.
On Tuesday, TSLA stock reached its lowest level since November 18, 2020, hitting a new 52-week low of 156.91. Shares closed about 60% from their 52-week high.
Dow Jones leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares rose 0.7% on Tuesday, just above the key 50-day line. The 50-day line, which was a key support level, has moved into an area of resistance to control. The stock is about 20% lower than its 52-week high. Apple shares traded 0.1% lower on Wednesday.
Microsoft rose 1.75% on Tuesday as stocks now test their long-term 200-day line. The software giant remains about 25% from its 52-week high. Microsoft shares rose 0.6% Wednesday morning.
Follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more information on growth stocks and the Dow Jones Industrial Average.
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