Dow Jones pars losses as 10-year Treasury yields rise ahead of Fed meeting

The Dow Jones Industrial Average briefly fell more than 250 points on Monday before paring losses as the 10-year Treasury yield rose to an 11-year high ahead of the Federal Reserve’s rate decision on Wednesday. The major stock indexes threatened to increase last week’s losses.


AutoZone ( AZO ) was an earnings mover on Monday morning. Shares in the parts store rose 2.5% on a better-than-expected financial result for the fourth quarter. Other key earnings reporters this week include Costco (COST), Darden Restaurants (DRI), General Mills (GIS), KB Home (KBH) and Lennar (LEN).

Elsewhere, head of electric vehicles Tesla (TSLA) traded down 1.7% on Monday. Among the Dow Jones industrials, tech titans apple (AAPL) and Microsoft (MSFT) were both sharply lower after today’s market opening.

In the current market weakness, Continental resources (CLR), DoubleVerify (DV), Vertex Pharmaceuticals (VRTX) – as well as Dow Jones stocks Chevron (CVX) and Merck (MRK) — is among the best stocks to watch. Remember, the new stock market correction is a good reason for investors to be mostly, if not completely, on the sidelines.

DoubleVerify is an IBD Leaderboard stock, but its position size was trimmed during last week’s losses. Chevron was featured in last week’s columns for stocks near a buy zone.

Dow Jones Today: Treasury Yields, Oil Prices, Fed Meeting

After Monday’s opening bell, the Dow Jones Industrial Average lost 0.4%, while the S&P 500 was down 0.35%. The tech-heavy Nasdaq Composite gave up 0.3% in morning action.

Among exchange-traded funds, Nasdaq 100 tracker Invesco QQQ Trust ( QQQ ) was down 0.85%, and the SPDR S&P 500 ETF ( SPY ) lost 0.8% in early trade.

The 10-year Treasury yield rose to 3.5% on Monday, topping the 11-year high of 3.48% set on June 14. Meanwhile, U.S. oil prices fell more than 3% early Monday, as West Texas Intermediate futures traded below $82 a barrel.

The Federal Reserve’s two-day meeting starts on Tuesday, with an interest rate decision on Wednesday. The markets show an 80% chance of the central bank raising interest rates by 75 basis points and a 20% chance of a 100 basis point increase. Investors will be looking for hints about the pace of future rate hikes, and how high the central bank will eventually go.

Stock correction

On Friday, the Nasdaq Composite fell by the largest margin of the major indexes, but closed at session highs. Still, it fell 0.9% for the day and plunged 5.5% for the week. It has now fallen in four of the last five weeks.

Friday’s The Big Picture column commented: “Since rejecting near its 200-day moving average, the Nasdaq has swan dived below all of its major moving averages. It is now down nearly 28% so far in 2022.”

During stock market correction, do not tune out. Instead, create watch lists to find emerging leadership in the stock market using the relative strength line. The RS line measures a share’s price development vs. S&P 500. If the stock outperforms the broader market, the RS line angles upward. If a stock lags the broad market, the line will point lower.

If you are new to IBD, consider taking a look at the stock trading system and CAN SLIM basics. Recognizing chart patterns is a key to investment guidelines. IBD offers a wide variety of growth stock lists, such as Leaderboard and SwingTrader.

Investors can also create watch lists, find companies nearing a buy point, or develop custom screens at IBD MarketSmith.

Five Dow Jones stocks to watch now

Dow Jones stocks to watch: Chevron, Merck

Dow Jones stock Chevron fell 2.6% on Friday, ending about 6% off its last buy point of 166.93 a cup with handles — according to IBD MarketSmith chart analysis — amid a strong run by energy stocks so far this year. The stock fell 2 percent early Monday.

CVX stock scores a strong 97 out of a perfect 99 IBD Composite Rating, according to IBD Stock Checkup. Investors can use the IBD Composite Rating to easily measure the quality of a stock’s fundamental and technical metrics.

Drug giant Merck is also fighting the stock market downturn. Shares are building a flat base that has a buy point at 95.82, but they are stuck below the 50-day mark. Merck shares lost 1% early.

3 top growth stocks to buy and watch nowra stock market rally

Top stocks to watch: Continental, DoubleVerify, Vertex

Oil explorer and producer Continental Resources is building a cup-with-handle with a buy point of 72.80, according to IBD MarketSmith chart analysis. The relative strength line hit a recent high last week, but remains slightly off its 52-week high. CLR shares fell 1.5% early Monday.

IBD Leaderboard stock DoubleVerify gave up its 28.07 buy point in a bottom base during Friday’s 4.3% drop. DV shares fell 1.5% on Monday morning.

Vertex Pharmaceuticals is just above its 50-day line after Friday’s 0.7% gain. The stock has held up well during the ongoing market weakness, as 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. The Vertex share fell 1.4 percent on Monday.

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

Tesla shares

Tesla shares fell on Friday, snapping a two-day winning streak. Shares remain above the 200-day mark, which has been a key level to watch. The electric car giant fell 1.7 percent on Monday morning.

Tesla arguably has a short base, within a much larger consolidation, that has a buy point at 314.74. Bullishly, the stock’s RS line is at its highest level since April. Shares are about 27% off their 52-week high.

Dow Jones Leaders: Apple, Microsoft

Among the Dow Jones stocks, Apple fell another 1.1% on Friday, ending the week lower and closing at its lowest level since July 18. Apple shares lost 0.95% on Monday.

Microsoft lost 0.3% on Friday, staying just above its June low. The software giant is about 30% off its 52-week high. Microsoft shares fell 0.9 percent on Monday morning.

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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