Stocks Diverge Ahead of Fed Rate Hike, Powell Comments
The Dow Jones Industrial Average rose on Wednesday ahead of the Federal Reserve’s interest rate decision this afternoon, followed by a news conference with Federal Reserve Chairman Jerome Powell. best buy (BBY) fell more than 3% after the downgrade of Bank of America.
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Fed Decision, Powell Comments
The Federal Reserve’s two-day policy meeting concludes on Wednesday. A rate decision is due at 2 p.m. ET followed by comments from Fed Chair Powell at 2:30 p.m.
The Fed has indicated that it will concede the pace of rate hikes this meeting, with widespread expectations for a half-point hike to a range of 4.25% to 4.5%. However, it is not clear to what extent the milder-than-expected November CPI report on Tuesday could influence expectations of a Fed rate hike.
This may not make much difference, but investors will carefully analyze Jerome Powell’s comments, following signs that the Fed may change its stance on inflation. According to CME’s FedWatch tool, traders put a 79% chance of a 50 basis point rate hike.
early tuesday, REV group (REVG) f Weber (WEBR) announced its quarterly earnings results. Shares of REVG rose 18%, while shares of Weber rose less than 1%. Other earnings reports this week include: Darden Restaurants (DRI) f Linar (flexible).
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 Airlines (DAL) jumped more than 3% after raising fourth-quarter guidance and issuing upbeat forecasts for fiscal years 2022 and 2023.
electric car giant Tesla (TSLA) fell nearly 2% on Wednesday. Technology pioneers at Dow Jones apple (AAPL) and Microsoft (MSFT) was mixed after the stock market opened today.
Allegro Microsystems (ALGM), IBD stock leaderboard dexcom (DXCM), Kosovo Liberation Army (KLAC) and United Rentals (URI) – So are the Dow Jones names Larva (cat), Home Depot (HD) f United Health Group (United Nations) – Among the top stocks to buy and watch.
Dexcom and Trane are IBD Leaderboard stocks. UnitedHealth featured in the Stocks Close to Buy Zone column for the week. Allegro has been among the recent batch of stocks to watch from the Class of 50 IBD. Caterpillar, United Rentals and Dexcom were among the most recent IDB companies.
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Dow jones today: oil prices and treasury yields
After the opening bell on Wednesday, the Dow Jones Industrial Average rose 0.5%, while the S&P 500 rose 0.45%. The tech-heavy Nasdaq Composite rose 0.4% in the morning move, with Communication charter (CHTR) Diving more than 8% to the bottom of the index. A handful of analysts lowered their price target for Charter after the company increased its capital spending guidance for 2023 on Tuesday.
Among exchange-traded funds, the Nasdaq 100 Tracking 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% Wednesday morning ahead of the Fed’s interest rate decision. The 10-year Treasury yield fell on Tuesday amid soft CPI inflation data.
Meanwhile, US oil prices rose by about 1% on Wednesday morning, after both the International Energy Agency and the Organization of the Petroleum Exporting Countries expected a recovery in demand over the next year. WTI futures closed Tuesday at $75.39 a barrel.
Stock market rise
The stock market ended with moderate gains on Tuesday, but major stock indexes closed off their highs for the day. The Nasdaq Composite was up 1%, the S&P 500 was up 0.7%, and the Dow Jones Industrial Average was up 0.3%.
The Big Picture column commented on Tuesday, “But the stock market delivered a clear message on Tuesday: Still worried about a recession next year. Inflation is still too high for the Fed, which is still dealing with a very tight job market and low unemployment it wants.” The Fed is seeing some softness in the labor market to help it fight inflation.”
Now is an important time to read IBD’s Big Picture column amid the ongoing volatility in the stock market.
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 238 cup bottom buy points, According to IBD MarketSmith pattern recognition, on the heels of Tuesday’s 1% rally. CAT stock shows a Strong 95 out of 99 IBD compound rating, according to an examination of IBD stock. CAT stock rose 0.2% on Wednesday.
Home Depot, the home improvement retailer, ended Tuesday in a range buy above the 329.77 buy point of a cup base with a handle following the day’s breakout. HD stock was trading slightly higher on Wednesday morning.
Healthcare giant UnitedHealth Group is tracking a flat base with 558.20 buy points. The stock is only 3% off the most recent entry. United Nations shares were up 0.4% early Wednesday.
4 growth stocks to watch in Cursstock market rally
Top stocks to buy and watch: Allegro, Dexcom, KLA, and United Rentals
Allegro Microsystems ended Tuesday in a long range crossing a buy point of 32.07 cups by a handle following the day’s gain of 1.5%. ALGM stock rose 0.3% on Wednesday.
IBD Leaderboard Dexcom is attempting to break through a buy point of 123.46 in a flat base just below the entry point amid Tuesday’s 2.4% rally. Dexcom shares rose 0.1 percent early on Wednesday.
Chip leader KLA is in the top 5% buy range after entering 392.60 cups with a handle after Tuesday’s 2% advance. Chasing zone rises 5% to 412.23. On the upside, the RSI line continues to make new highs in light of the constant fluctuations in the market. KLA shares fell 0.3% on Wednesday.
United Rentals is attempting to break out at 368.04 buy points in a cup with handle pattern, according to IBD MarketSmith analysis. The stock 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 biggest stocks to buy and watch in the stock market today, including three Dow leaders.
| The Company’s name | Code | The right point of purchase | base type |
|---|---|---|---|
| Allegro Microsystems | (ALGM) | 32.07 | mug with handle |
| dexcom | (DXCM) | 123.46 | Flat base |
| Kosovo Liberation Army | (cling on) | 392.60 | mug with handle |
| United Rentals | (URI) | 368.04 | mug with handle |
| Larva | (cat) | 238.00 | Glass |
| Home Depot | (HD) | 329.77 | mug with handle |
| United Health | (United nations) | 558.20 | Flat base |
Source: IBD data as of December 13, 2022
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Tesla stock
Tesla stock fell 4.1% on Tuesday, falling sharply for the second day in a row and reaching a new 52-week low. Shares traded 1.8% lower on Wednesday morning, threatening to extend the losing streak to three days. Early Wednesday, Goldman Sachs cut its price target from 305 to 235, citing weak demand.
On Tuesday, TSLA stock hit its lowest level since November 18, 2020, and reached a new 52-week low of 156.91. The shares closed about 60% off their 52-week high.
Dow Jones leaders: Apple and Microsoft
Among Dow Jones stocks, Apple shares rose 0.7% on Tuesday, just above its 50-day benchmark. The 50 day line, which was a key support level, has turned into a resistance area to watch. The stock is down about 20% from its 52-week high. Apple stock was trading down 0.1% on Wednesday.
Microsoft stock jumped 1.75% on Tuesday, as shares are now testing the long-term 200-day line. The software giant is still about 25% off its 52-week high. Shares of Microsoft rose 0.6% early Wednesday.
Be sure to follow Scott Lehtonen on Twitter at @employee Learn more about developing stocks and the Dow Jones Industrial Average.
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