The Dow Jones Industrial Average moved higher Wednesday ahead of this afternoon’s Federal Reserve interest rate decision, followed by a news conference with Fed Chairman Jerome Powell. Best buy (BBY) fell more than 3% after Bank of America downgrade.
Fed decision, comments from Powell
The Fed’s two-day policy meeting concludes on Wednesday. An interest rate decision is expected at 2:00 p.m. ET, followed by comments from Fed Chief Powell at 2:30 p.m.
The Fed signaled it will ease the pace of rate hikes at this meeting, with widespread expectations of a half-point rate hike in a range of 4.25% to 4.5%. However, it’s unclear how much Tuesday’s softer-than-expected November CPI inflation report could potentially affect the Fed’s rate hike outlook.
It may not make much difference, but investors will be scrutinizing Jerome Powell’s comments closely, following signs that the Fed may change its stance on inflation. According to the CME’s FedWatch tool, traders have a 79% chance of a 50 basis point rate hike.
early Tuesday, REV group (REVG) e Webber (WEBR) reported its quarterly earnings results. REVG shares are up 18%, while Weber shares are up less than 1%. Other earnings reports this week include Darden Restaurants (DR) and Lennar (LEN).
Best Buy shares fell more than 3% after Bank of America downgraded the stock causing it to underperform from neutral, with a new price target at 69, down from 80. Delta Airlines (DAL) jumped more than 3% after raising its fourth-quarter guidance and publishing an optimistic outlook for fiscal 2022 and 2023.
The electric vehicle giant Tesla (TSLA) fell nearly 2% on Wednesday. Dow Jones technology leaders Apple (AAPL) e Microsoft (MSFT) were mixed following today’s stock market open.
Allegro Microsystems (ALGM), IBD chart titles Dexcom (DXCM), KLA extension (KLAC) e United Rentals (URI) — as well as Dow Jones names caterpillar (CAT), Home storage (HD) and UnitedHealth Group (UNH) – are among the best stocks to buy and watch.
Dexcom and Trane are IBD stocks. UnitedHealth was featured in this week’s Stocks Near A Buy Zone column. Allegro was a recent pick of IBD 50 Stocks To Watch. Caterpillar, United Rentals and Dexcom were recent IBD Stock Of The Day companies.
Latest IBD MarketDiem newsletter brings actionable ideas for stocks, options and cryptocurrencies straight to your inbox
Dow Jones today: oil prices, treasury yields
After Wednesday’s opening bell, the Dow Jones Industrial Average was up 0.5%, while the S&P 500 was up 0.45%. The tech-heavy Nasdaq composite gained 0.4% in the morning action, with Charter Communications (CHTR) falling more than 8% at the bottom of the index. A handful of analysts cut their price target on Charter after the company raised its 2023 capital spending guidance on Tuesday.
Among exchange-traded funds, Invesco Nasdaq 100 tracker QQQ Trust (QQQ) fell 0.1% and SPDR S&P 500 ETF (SPY) rose 0.1% early Wednesday.
The 10-year US Treasury yield was adjusted slightly to 3.51% Wednesday morning ahead of the Fed’s rate decision. The 10-year Treasury yield tumbled Tuesday on cold CPI inflation data.
Meanwhile, oil prices in the United States rose about 1% on Wednesday morning after both the International Energy Agency and the Organization for the Petroleum Exporting Countries forecast a rebound in demand in the next year. West Texas Intermediate futures settled at $75.39 a barrel on Tuesday.
Stock market rebound
The stock market closed with moderate gains on Tuesday, but the major stock indexes closed far from their intraday highs. The Nasdaq Composite was up 1%, the S&P 500 added 0.7% and the Dow Jones Industrial Average was up 0.3%.
Tuesday’s The Big Picture column commented: “But the stock market sent out a clear message on Tuesday: It’s still worried about a recession next year. Inflation is still too high for the Fed, which is still dealing with a Extremely Tight Work and Low Unemployment The Fed wants to see some slack in the labor market to help it fight inflation.
Now is an important time to read IBD’s The Big Picture column amid continued stock market volatility.
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 move further away from the point of buying 238 of a cup basis, according to model accolade IBD MarketSmith, on the back of Tuesday’s 1% increase. CAT stock shows a solid 95 out of a perfect 99 IBD Composite Rating, according to IBD stock watch. CAT shares rose 0.2% on Wednesday.
Home improvement retailer Home Depot closed Tuesday in a buy range above the 329.77 basis point buy of a cup with handle following the day’s breakout. HD stock traded a fraction higher Wednesday morning.
Healthcare giant UnitedHealth Group is plotting a flat base which features a buy point of 558.20. The shares are only 3% away from the last entry. UNH shares rose 0.4% early Wednesday.
4 growing stocks to watch in the current stock market rally
The best stocks to buy and watch: Allegro, Dexcom, KLA, United Rentals
Allegro Microsystems finished Tuesday in the buy range clearing a cup with handle’s 32.07 buy point after gaining 1.5% for the day. ALGM stock rose 0.3% Wednesday.
IBD Dexcom leaderboard stock is trying to clear a 123.46 point buy in flat base and is just short of the entry during Tuesday’s 2.4% rally. Dexcom shares rose 0.1% early Wednesday.
Chip leader KLA tops the 5% buy range following a 392.60 cup-with-handle entry following Tuesday’s 2% advance. The 5% chasing zone rises to 412.23. Bullishly, 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 looking to clear a buy point of 368.04 in a cup-and-handle pattern. Shares topped the entry on Tuesday before closing just below it. URI stock rose 0.2% on Wednesday.
Stocks to buy and watch
These are the seven best stocks to buy and watch in today’s stock market, including three leaders from the Dow Jones.
|Company Name||Symbol||Point of purchase correct||Basic Type|
|Allegro Microsystems||(ALGM)||07.32||Cup with handle|
|KLA extension||(KLAC)||392.60||Cup with handle|
|United Rentals||(URI)||368.04||Cup with handle|
|Home storage||(HD)||329.77||Cup with handle|
Source: IBD data as of 13 December 2022
Join IBD experts as they analyze the major stocks in the current stock market rally on IBD Live
Tesla stock fell 4.1% on Tuesday, falling sharply for the second day in a row and hitting a new 52-week low. Shares fell 1.8% Wednesday morning, threatening to extend the losing streak to three days. Early Wednesday, Goldman Sachs cut its price target from 305 to 235, citing weaker demand.
TSLA stock hit its lowest level since Nov. 18, 2020 on Tuesday, hitting a new 52-week low price at 156.91. Shares closed about 60% off their 52-week high.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares rose 0.7% on Tuesday, just above its key 50-day line. The 50 day line, which had been a key support level, has become a resistance area to watch. The stock is roughly 20% off its 52-week high. Apple shares fell 0.1% on Wednesday.
Microsoft jumped 1.75% on Tuesday as shares now test their long-term 200-day line. The software giant remains about 25% off its 52-week high. Microsoft shares rose 0.6% early Wednesday.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more information on growth stocks and the Dow Jones Industrial Average.
YOU MAY ALSO LIKE:
The best growth stocks to buy and watch
Learn how to time the market with IBD’s ETF Market Strategy
Find the best long-term investments with IBD’s long-term leaders
MarketSmith: Research, charts, data and coaching all in one place
How to Research Growing Stocks: Why this IBD tool makes it easy to find the best stocks