Stock market lower after oversold jump; Fed Decision Looms – Investor’s Business Daily | Jewelry Dukan

Stock market indexes pared early losses in the first half of Tuesday’s session as discouraged buyers kept their powder dry ahead of Wednesday’s Federal Reserve interest rate decision. Ford engine (F) is having a terrible day, down more than 9% after being warned that the cost is going up and no parts can be found.


The Dow Industrial Average is trading 0.8% lower at this hour, worse than the S&P 500 Index’s 0.7% loss. The Nasdaq Composite is down just 0.6%, while the Russell 2000 small-cap index led the decline, posting a 1.0% loss.

Volume on the NYSE and Nasdaq is slightly lower compared to this time Monday afternoon.

US Treasury yields continued to fall, taking the 10-year bond above the psychological 3.5% level. The two-year rate is approaching 4% and could reach that milestone before tomorrow’s Fed event. Hot overnight inflation numbers from Japan and Germany are fueling the latest rise in yields.

Asian markets rose overnight while most European bourses closed about 1% lower.

West Texas Intermediate crude is down more than 2% to $83.34 a barrel, abandoning yesterday’s uptrend.

Bitcoin holds above $19,000 after trading within $700 of June’s 21-month low on Monday.

What to expect from the Fed

Odds for a 75 basis point hike have risen to 84% in the CME FedWatch tool, while 16% expect a full percentage point hike.

Overview of today’s US stock market

index symbol Price loss of gain % change
Dow Jones (0DJIA) 30585.94 -433.74 -1.40
S&P500 (0S&P5) 3846.19 -53.70 -1.38
Nasdaq (0NDQC) 11410.82 -124.20 -1.08
Russell 2000 (IWM) 177.39 -3.13 -1.73
IBD 50 (FFTY) 26.56 -0.50 -1.85
Last Updated: 10:42am ET 9/20/2022

All eyes will be on the Fed’s dot plot post-release, looking for policy changes along the course of expected rate hikes through 2023. This tool compares individual governors’ rate forecasts rather than providing a broad consensus.

Most Fed watchers expect an initial commitment to a 50 basis point hike in November. Anything above or below this level could increase volatility and have an immediate impact on share prices.

Chairman Jerome Powell must state his 100 percent commitment to the inflation fight after his Volcker-like hawkishness at the Jackson Hole conference in August. However, he may be concerned about the pace of stock market losses since that time, and no Fed banker wants to be burdened with a market crash.

As a result, he was able to offer some conciliatory remarks about the need for stable and balanced markets without reducing the gas on rate hikes. Of course, he’s walking a fine line following the mid-summer stock rally fueled by poorly worded comments at the July press conference.

Ford is suffering from supply bottlenecks and higher costs

Ford warned after Monday’s closing bell that inflation-related supplier costs were about $1 billion higher than expected. Additionally, the automaker noted that ongoing supply shortages will force up to 45,000 partially built vehicles to sit idle until they can be completed and sent to dealerships.

Shares are trading 9.8% lower at the hour General Motors (GM) is selling off in sympathy and is now down 4.3%.

According to IBD MarketSmith, Ford shares broke through the 200-day moving average in March and reversed at this resistance level in mid-August. Shares fell below the 50-day moving average today.

Despite this, the healthy Relative Strength Rating of 89 underscores solid performance compared to the struggling S&P 500 Index.

Additionally, Ford is expected to post an impressive 30% annualized earnings per share growth in 2022. The company reported August sales growth of 27% year over year, compared to the auto industry’s meager 4.8% rise.

Stock market winners and losers

Dow component Nike (NKE) is down almost 3.5% after Barclays downgraded the sports and clothing giant from overweight to equal weight. This former stock market leader is struggling to hold July’s two-year low of 99.53.

Las Vegas sand (LVS) defied the bearish move, rising more than 3.7% after it was revealed that China is taking steps to ease entry for foreigners.

LVS stock is back above the 40.08 buy point from a flat 38 day basis. Fundamentals are brutally weak, but the RS rating has risen to 90 in response to a rally that has taken shares just below a six-month high.

Oil explorer and producer Continental Resources (CLR) builds a mug with a handle with a buy point of 72.80. The relative strength line made an interim high last week but remains off its 52-week high. CLR shares are trading down 0.7% at midday.

Follow Alan Farley on Twitter at @msttrader.


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