The Dow Jones Industrial Average rose on Wednesday ahead of this afternoon’s rate decision from the Federal Reserve, followed by a press conference with Fed Chairman Jerome Powell. Best buy (BBY) fell more than 3% after a downgrade by Bank of America.
Fed decision, Powell comments
The Fed’s two-day policy meeting ends on Wednesday. A rate decision is due at 2pm ET followed by comments from Fed Chair Powell at 2:30pm
The Fed has signaled that it will slow the pace of rate hikes this meeting, with widespread expectations of a half-point rate hike to a range of 4.25% to 4.5%. However, it is unclear how much Tuesday’s more moderate than expected November CPI inflation report could potentially affect the Fed’s outlook for rate hikes.
It may not make much of a difference, but investors will closely analyze Jerome Powell’s comments, for signs that the Fed may be changing its stance on inflation. According to CME’s FedWatch tool, traders have a 79% chance of a 50 basis point rate hike.
Early Tuesday, REV Group (REVG) and Weber (WEBR) reported its quarterly results. REVG shares rose 18%, while Weber shares rose less than 1%. Other earnings reports this week include Darden restaurants (DRI) and Lennar (LEN).
Best Buy shares fell more than 3% after Bank of America downgraded the stock to underperform from neutral, with a new price target of 69, down from 80. Delta Air Lines ( DAL ) jumped more than 3% after raising its fourth-quarter guidance and issuing a positive outlook for fiscal 2022 and 2023.
Electric vehicle giant Tesla ( TSLA ) traded down nearly 2% Wednesday. Dow Jones Technology Leaders apple (AAPL) and Microsoft (MSFT) was mixed after today’s stock market opening.
Allegro Microsystems (ALGM), IBD Leaderboard stock Dexcom (DXCM), CLOTHES (KLAC) and United Rentals (URI) – as well as Dow Jones names larva (CAT), Home Depot (HD) and UnitedHealth Group (UNH) — is among the best stocks to buy and watch.
Dexcom and Trane are IBD Leaderboard stocks. UnitedHealth was featured in this week’s Stocks Near a Buy Zone column. Allegro was a recent IBD 50 Stocks to Watch pick. Caterpillar, United Rentals and Dexcom were recent IBD Stock Of The Day companies.
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Dow Jones today: Oil prices, Treasury yields
After Wednesday’s opening bell, the Dow Jones Industrial Average rose 0.5%, while the S&P 500 gained 0.45%. The tech-heavy Nasdaq composite gained 0.4% in morning action, with Charter communication ( CHTR ) plunges more than 8% to the bottom of the index. A handful of analysts cut their price target on Charter after the company raised guidance for 2023 investments on Tuesday.
Among exchange-traded funds, Nasdaq 100 tracker Invesco QQQ Trust (QQQ) fell 0.1% and the SPDR S&P 500 ETF (SPY) rose 0.1% early Wednesday.
The 10-year US Treasury yield was little changed at 3.51% on Wednesday morning ahead of the Fed rate decision. The 10-year Treasury yield fell on Tuesday on cool CPI inflation data.
Meanwhile, US oil prices rose around 1% on Wednesday morning, after both the International Energy Agency and the Organization of the Petroleum Exporting Countries forecast a pick-up in demand in the coming year. West Texas Intermediate futures settled Tuesday at $75.39 a barrel.
Stock market rally
The stock market ended with moderate gains on Tuesday, but the major stock indices closed far from their intraday highs. The Nasdaq Composite rose 1%, the S&P 500 gained 0.7%, and the Dow Jones Industrial Average rose 0.3%.
Tuesday’s The Big Picture column commented: “But the stock market sent a clear message Tuesday: It remains worried about a recession next year. Inflation remains far too high for the Fed, which still has an extremely tight labor market and low unemployment. . The Fed wants to see some softness in the labor market to help it fight inflation.”
Now is an important time to read IBD’s The Big Picture column amid ongoing 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 drift further away from a cupbase’s 238 buy point, according to IBD MarketSmith pattern recognition, in the wake of Tuesday’s 1% gain. CAT stock scores a solid 95 out of a perfect 99 IBD Composite Rating, according to IBD Stock Checkup. The CAT share rose 0.2 percent on Wednesday.
Home improvement store Home Depot ended Tuesday in buy territory above a cup-with-handle base’s 329.77 buy point after today’s breakout. The HD share traded a fraction higher on Wednesday morning.
Healthcare UnitedHealth Group is tracking a flat base that has a buy point at 558.20. Shares are only 3% off their last entry. The UNH share rose 0.4% early Wednesday.
4 top growth stocks to watch right nowra stock market rally
Top Stocks to Buy and Watch: Allegro, Dexcom, KLA, United Rentals
Allegro Microsystems ended Tuesday in buy territory past a cup-with-handle buy point of 32.07 after today’s 1.5% gain. The ALGM share rose 0.3 percent on Wednesday.
IBD Leaderboard stock Dexcom is trying to break out past a 123.46 buy point in a flat base and is just below the entry midway through Tuesday’s 2.4% rally. Dexcom shares rose 0.1% early Wednesday.
Chip leader KLA is atop the 5% buy range past a cup-with-handle entry at 392.60 after Tuesday’s 2% exit. The 5% hunting zone goes up to 412.23. Bullishly, the relative strength line continues to make new highs in the ongoing market volatility. The KLA share fell 0.3 percent on Wednesday.
United Rentals is trying to break out past a buy point at 368.04 in a cup-with-handles pattern, according to IBD MarketSmith analysis. Shares topped the session on Tuesday before closing just below it. URI shares rose 0.2% on Wednesday.
Stocks to buy and watch
These are seven top stocks to buy and watch in today’s stock market, including three Dow Jones leaders.
|company name||Symbol||Right point of purchase||Type of base|
|Allegro Microsystems||(ALGM)||32.07||Cup with handle|
|CLOTHES||(CLICK)||392.60||Cup with handle|
|United Rentals||(URI)||368.04||Cup with handle|
|Home Depot||(HD)||329.77||Cup with handle|
Source: IBD data as of December 13, 2022
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Tesla shares fell 4.1% on Tuesday, falling sharply for the second day in a row and hitting a new 52-week low. Shares traded 1.8% lower on Wednesday morning, threatening to extend a losing streak to three days. Early Wednesday, Goldman Sachs cut its price target from 305 to 235, citing weaker demand.
On Tuesday, TSLA stock hit its lowest level since November 18, 2020, hitting a new 52-week low of 156.91. Shares closed about 60% off their 52-week high.
Dow Jones Leaders: Apple, Microsoft
Among the Dow Jones stocks, Apple shares rose 0.7% on Tuesday, just above the key 50-day mark. The 50-day line, which had been a key support level, has switched to an area of resistance to monitor. The stock is about 20% off its 52-week high. Apple shares fell 0.1 percent on Wednesday.
Microsoft rose 1.75% on Tuesday, as shares are now testing their long-term 200-day line. The software giant is still about 25% off its 52-week high. Microsoft shares rose 0.6 percent early 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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