Dow Jones Falls Ahead of Fed Rate Hike Decision, Powell Comments; Tesla increases production in China

The Dow Jones Industrial Average briefly fell more than 225 points on Wednesday ahead of the Federal Reserve’s decision to raise interest rates in the afternoon. Social media company Snap ( SNAP ) plunged as much as 13% after falling short of earnings estimates. And Tesla ( TSLA ) shares reversed lower even after Reuters reported that the electric car giant plans to increase production at its Shanghai plant due to rising demand.

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The Fed’s two-day policy meeting concludes on Wednesday with an interest rate policy decision at 2pm ET, followed by comments from Fed Chairman Jerome Powell. The Fed is widely expected to raise the federal funds rate by 25 basis points to a range of 4.50% to 4.75%. Another quarter-point increase is expected in March, which would bring the Fed Funds rate very close to the Fed’s terminal rate of 5% to 5.25%. That’s where the Fed thinks it can pause interest rate hikes to allow earlier increases to work their way through the economy.

ADP released its employment report on Wednesday, and it showed that January payrolls came in at 106,000, below the estimate of 158,000 and down from 235,000 last month. ADP’s report is a precursor to Friday’s jobs report from the Ministry of Labour.

Key revenue drivers: AMD, Amgen

Advanced Micro Devices ( AMD ) rose 5% after the company hit fourth-quarter targets late Tuesday, while guiding lower on its current-quarter sales outlook. Dow Jones drug giant Amgen ( AMGN ) fell 2.3% after its mixed fourth-quarter earnings report.

early Wednesday, Peloton Interactive (PTON) jumped 10% after its second-quarter financial results.

Meta platforms (META) will report after the market closes, while Amazon (AMZN), apple (AAPL), Alphabet (GOOGL) is scheduled for late Thursday.

The stock market today

Electric vehicle leader Tesla was down 1.1 percent on Wednesday morning. Dow Jones technology giants Apple and Microsoft (MSFT) was mixed after today’s stock market opening.

IBD Leaderboard stock Imp (PI), Etsy (ETSY) and Wing stop (WING) — as well as the Dow Jones stock JPMorgan Chase (JPM) — is among the best stocks to buy and watch, with the ongoing strength of the market rally.

Impinj is an IBD Leaderboard stock. Etsy was a recent IBD Stock Of The Day. Impinj and Wingstop were featured in this week’s Stocks near a Buy Zone column.

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Dow Jones today: Oil prices, Treasury yields

After Wednesday’s opening bell, the Dow Jones Industrial Average fell 0.4%, and the S&P 500 was down 0.2%. The tech-heavy Nasdaq composite fell 0.2%, supported by gains in AMD shares.

Among U.S. exchange-traded funds, Nasdaq 100 tracker Invesco QQQ Trust ( QQQ ) traded down 0.3% and the SPDR S&P 500 ETF ( SPY ) fell 0.4% early Wednesday.

The 10-year US Treasury yield ticked down to 3.46% on Wednesday morning ahead of today’s Fed decision. The 10-year yield continues to trade below the 50-day line and near recent lows.

Oil prices crept higher after Tuesday’s modest advance. West Texas Intermediate futures rose less than 1% in morning trade, bouncing between $79 and $80 a barrel, as investors await Wednesday’s OPEC production decision.

Stock market rally

On Tuesday, the Dow Jones Industrial Average rose 1.1 percent, and the S&P 500 rose 1.5 percent. The tech-heavy Nasdaq composite rose 1.7%.

Tuesday’s The Big Picture column commented: “Distribution days have been virtually nonexistent since Jan. 6. The S&P 500 currently shows three, but only one had the feel of meaningful institutional selling. That was Jan. 18, when the index fell 1, 6% on higher volume. The Big Picture on Friday increased its invested percentage to a range of 60% to 80% as the Nasdaq rose above its 200-day line.”

Now is an important time to read IBD’s The Big Picture column amid the ongoing stock market rally.

Five Dow Jones Stocks to Buy and Watch Now

Dow Jones stocks to buy and watch: JPMorgan

Banking giant JPMorgan is in buy territory 5% above a flat-based 138.76 buy point after a 0.6% gain on Tuesday. The 5% buy zone tops out at 145.70. JPM shares were down 0.9% early Wednesday.

JPM stock scores a solid 94 out of a perfect 99 IBD Composite Rating, according to IBD Stock Checkup. The Composite Rating is designed to help investors easily find top growth stocks.

4 top growth stocks to buy and watch Stock market rally

Top stocks to buy and watch: Impinj, Etsy, Wingstop

IBD Leaderboard stock Impinj ended Tuesday back above 129.12 buy points in a cup base following its recent breakout move, as shares traded 3.9% higher on Tuesday. The 5% buy range goes up to 135.58. The PI share rose 1.7% on Wednesday.

Background story: Impinj’s expertise lies in radio frequency semiconductors to identify, locate and authenticate objects. While the company lost money in 2020, the company earned 25 cents per share in 2021. And annual earnings are expected to rise 284% to 96 cents per share this year.

Etsy is back above 137.01 buy points in a cup with handle after Tuesday’s 2.1% gain. With the stock regaining its entry, the 5% buy range goes up to 143.86. Etsy shares fell 0.3% Wednesday morning.

Background story: The company is a provider of an online e-commerce platform where creators of arts and crafts, vintage items and other unique goods go to sell their products. It has a unique business model that in recent years has gone from a niche e-commerce marketplace to a shopping destination across a range of categories.

Wingstop is fast approaching a 170.97 buy point in a skewed cup base, up 1.2% on Tuesday. Keep an eye out for a potential handle to offer a lower entry. WING shares fell 0.3% early Wednesday.

Background story: The Dallas-based restaurant chain has more than 1,900 locations in the US and international markets, according to Dow Jones Newswires. Its international locations include Mexico, Columbia, Panama, Singapore and the United Kingdom. The company added a net 40 stores last quarter. The income is due on 22 February.

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Shares to buy and watch in a stock market rally

These are seven top stocks to buy and watch in today’s stock market, including two Dow Jones leaders.

Source: IBD data as of February 1, 2023

Join IBD experts as they analyze leading stocks in the current stock market rally on IBD Live

Tesla shares

Tesla shares rose 3.9% on Tuesday, recovering from Monday’s plunge. Despite their strong rally since January 6, shares are still below the 200-day mark. And Tesla stock closed about 57% off its 52-week high Tuesday.

Shares looked to extend Tuesday’s gains, but reversed 1.1% lower on Wednesday. According to Reuters, the electric car giant plans to ramp up production at its Shanghai plant over the next two months to meet rising demand due to the recent price cuts.

Dow Jones Leaders: Apple, Microsoft

Among the Dow Jones stocks, Apple shares rose 0.9% on Tuesday, recovering some of Monday’s 2% selloff. Shares are still above the 50-day line after strong gains in recent sessions. The stock is still around 20% lower than its 52-week high. Apple will report its quarterly results late Thursday. AAPL shares were down 0.6 percent on Wednesday.

Microsoft shares climbed 2.1% on Tuesday, returning support at its 50-day line, which it regained last week. Shares remain 22% off their 52-week high. MSFT traded up a fraction on Wednesday.

Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.

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