The Dow Jones Industrial Average rose 225 points on Wednesday morning ahead of the Federal Reserve’s interest rate decision, which is scheduled for 2:00 p.m. ET, followed by Fed Chair Jerome Powell’s press conference.
General Mills (GIS) was on the move on Wednesday, with shares rising more than 3% in morning trade after strong earnings results, though selling missed estimates. house builder KB Home (KBH) and lennar (LEN) will report after close of trading.
Micron technology (MU) fell more than 1% after Mizuho downgraded the stock from Buy to Neutral.
Elsewhere market leader in electric vehicles Tesla (TSLA) traded down 0.2% on Wednesday. Among the Dow Jones Industrials are tech titans Apple (AAPL) and Microsoft (MSFT) were higher after the market open today.
Some of the top stocks to watch given the market’s recent weakness include: Continental Resources (CLR) DoubleVerify (DV) and Apex Pharma (VRTX) – as well as Dow Jones stocks rafters (CVX) and note (MRK). Keep in mind that the new stock market correction is good reason for investors to stay on the sidelines for most, if not all.
DoubleVerify is an IBD leaderboard stock, but its position size has been trimmed during last week’s losses. Tesla 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 was up 0.75%, while the S&P 500 was up 0.7%. The tech-heavy Nasdaq Composite gained 0.5% in morning action.
Among exchange-traded funds, Nasdaq 100-tracker Invesco QQQ Trust (QQQ) is up 0.2% and SPDR S&P 500 ETF (SPY) is up 0.5% in early trade.
The 10-year Treasury yield fell to 3.54% on Wednesday, falling from this week’s new high. Meanwhile, US oil and natural gas prices rose. Oil prices rose more than 2%, taking West Texas Intermediate futures above $86 a barrel.
The two-day Federal Reserve meeting will end on Wednesday with a rate decision at 2 p.m. ET and comments from Fed Chair Jerome Powell at 2:30 p.m. Markets show 82% expecting the central bank to hike rates by 75 basis points with a 18% chance of a 100 basis point hike. Investors will be on the lookout for clues as to the pace of future rate hikes and how high the central bank will ultimately go.
All in all, markets expect the Federal Reserve’s interest rate to end this year with a target range of either 4% to 4.25% or a little more likely 4.25% to 4.5%. And maybe that’s not all. According to CME Group’s FedWatch page, the odds of another quarter-point rise to over 50% next March or May have risen to a range of 4.5% to 4.75%.
stock market correction
On Tuesday, the stock market again posted a disappointing performance. The Dow Jones Industrial Average lost 1%, while the S&P 500 fell 1.1%, both undercutting Friday’s lows.
Tuesday’s The Big Picture column commented: “Amid anticipation 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, so a trip to the June lows could also be on the cards.”
To prepare for a new stock market rally, investors should wait for a following day. When the market is in a correction, look for at least one major index to bottom.
The first day the index closes higher counts as day 1 of its attempted rally. Day 2 and Day 3 action is irrelevant as long as the index fails to undercut its recent low. Breaking below that low means the rally attempt is over and the market has to try again.
On Day 4 and beyond, expect the Nasdaq or S&P 500 to rise sharply with more volume than the previous session. This is a following day. It gives investors the green light to start buying leading stocks that break out past the correct buy points. It should align your portfolio and mindset with the stock market by gradually investing capital in leading stocks.
Don’t switch off during the stock market correction. Instead, create watch lists to use the relative strength line to find leadership in emerging markets. The RS line measures a stock’s price performance against the S&P 500. When the stock is outperforming the broader market, the RS line moves up. When a stock underperforms the broad market, the line points down.
Five Dow Jones stocks to watch right now
Keep an Eye on Dow Jones Stocks: Chevron, Merck
Dow Jones stock Chevron fell 0.4% Tuesday, still holding above key support around its 50-day moving average. Shares are trading about 6% off their last buy point at 166.93 from a cup with handle – according to IBD MarketSmith chart analysis – amid a strong performance for energy stocks so far this year. The stock was up 1.4% early Wednesday.
CVX stock is showing a strong 97 out of 99 perfect IBD Composite Ratings, according to the IBD Stock Checkup. Investors can use the IBD Composite Rating to easily gauge the quality of a stock’s fundamental and technical metrics.
The drug giant Merck is also trying to combat the downward trend on the stock markets. Stocks are building a flat base with a buy point of 95.82, but are stuck below their 50-day moving average and near their recent lows. Merck shares were up 0.3% early Wednesday.
3 top growth stocks to buy and watchrightent stock market correction
Top stocks to watch: Continental, DoubleVerify, Vertex
Oil explorer and producer Continental Resources is building a mug with a buy point of 72.80, according to chart analysis by IBD MarketSmith. The relative strength line made a new high last week but remains slightly off its 52-week high. CLR shares were up 1.7% early Wednesday.
IBD leaderboard stock DoubleVerify remains below its 28.07 buy point in a bottoming base after shedding 1.35% on Tuesday. DV shares fell 0.4% on Wednesday morning.
Vertex Pharmaceuticals remains below its 50-day moving average despite gaining 0.6% on Tuesday. The stock has held up well throughout the ongoing market weakness, indicated by an RS line approaching new highs. There’s no new base yet, but the stock’s resilience makes it a top idea to watch. Vertex shares were up 0.1% on Wednesday.
Join IBD experts as they analyze leading stocks in the latest stock market correction on IBD Live
Tesla shares traded a fraction lower on Tuesday as it nears the buy point from a short basis of 314.74. In the meantime, keep an eye out for additional buy points if the stock can continue to climb higher on the right side of its larger consolidation that dates back to January. Shares fell 0.2% on Wednesday morning.
Upbeat, the stock’s RS line is at its highest level since April. Shares are about 25% off their 52-week high.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares rose 1.6% on Tuesday, contributing to Monday’s gain. Last week, the stock closed at its lowest level since July 18. Apple shares rose 0.5% on Wednesday morning.
Microsoft shed 0.85% on Tuesday, hitting another 52-week low. The software giant is down about 30% from its 52-week high. Microsoft shares were up 0.7% early Wednesday.
Follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.
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