The Dow Jones Industrial Average rallied 250 points Wednesday after Fed Chief Jerome Powell's prepared comments indicated the Federal Reserve is still set to raise interest rates despite the Russian invasion of Ukraine. Treasury yields rebounded after two days of sharp losses. Energy stocks traded briskly as oil prices, prodded by the Russia/Ukraine conflict, briefly surged above $112 a barrel.
After the close Tuesday, Dutch Bros and Salesforce.com were among the companies reporting their quarterly results. BROS shares slid 3% early Wednesday, while Salesforce stock jumped nearly 4% in morning trade. Meanwhile, discount chain Dollar Tree reported mixed results early Wednesday, as shares skidded 4% after the open.
Among the Dow Jones leaders, Apple rose 0.7% and Microsoft traded up 0.6% in today's stock market. UnitedHealth, a Dow Jones stock to watch, is nearing a new buy point.
Electric-vehicle leader Tesla climbed around 1% Wednesday, looking to rebound from Tuesday's 0.75% fall.
Amid the volatile, headline-driven market, Commercial Metals, Northern Oil & Gas, Palo Alto Networks and Ryan Specialty are among Wednesday's top stocks to watch. Keep in mind that current stock market conditions should keep investors in cash and on the sidelines.
Microsoft and Tesla are IBD Leaderboard stocks. Commercial Metals was featured in this week's Stocks Near A Buy Zone column. Ryan Specialty is an IPO Leader.
Dow Jones Today: Fed Chief Powell, Russian Invasion
After Wednesday's market open, the Dow Jones Industrial Average traded up 0.8%, while the S&P 500 rose 0.9%. The Nasdaq ascended 0.65% in morning trade. Among exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust rose 0.5%, and the SPDR S&P 500 ETF advanced 0.6% after Wednesday's open.
The 10-year Treasury yield ticked up to 1.78% Wednesday morning. On Tuesday, the 10-year Treasury yield closed at 1.71%, after diving for a second straight session. On Feb. 15, the 10-year Treasury yield peaked above 2.06% — its highest level since August 2019. Meanwhile, U.S. oil prices advanced more than 7% Wednesday, reacting to a reluctance among global oil traders to purchase Russian oil. West Texas Intermediate crude briefly traded above $112 a barrel.
Federal Reserve chief Jerome Powell is set to testify before Congress on Wednesday and Thursday at 10 a.m. ET. With inflation already running hot and the Fed so far behind the curve, there's concern on Wall Street that policymakers may feel little choice to not only plow ahead with rapid tightening, but potentially step up the pace of interest-rate hikes. Fed chief Powell may use his testimony to assuage that concern.
In prepared comments, Powell said, "We will use our policy tools as appropriate to prevent higher inflation from becoming entrenched while promoting a sustainable expansion and a strong labor market. We have phased out our net asset purchases. With inflation well above 2% and a strong labor market, we expect it will be appropriate to raise the target range for the federal funds rate at our meeting later this month."
In Ukraine, Russian forces continued to heavily bombard the country's second-largest city, Kharkiv, in a bid to demoralize the defenders in an apparent shift in military strategy.
Meanwhile, ADP said companies added 475,000 jobs in February, better than the Econoday estimate for 320,000 new positions. The ADP Employment report is calculated monthly as a precursor to the nonfarm payrolls from the Labor Department. That report is due out Friday.
Stock Market Correction
The stock market posted weak action Tuesday, as the major stock indexes sold off with heavy losses. Despite the weakness, Wednesday will be Day 5 of the ongoing rally attempt, which means a follow-through day — signaling the start of a new uptrend — is possible anytime now. Amid the current volatility, it's an important time to read and follow IBD's The Big Picture column.
Tuesday's The Big Picture commented, "With more stocks still falling than rising, to be a successful stock picker in the stock market today likely means you're laser-focused on the handful of sectors that are actually rising amid the broad decline."
If you're new to IBD, consider taking a look at its stock trading system and CAN SLIM basics. Recognizing chart patterns is one key to the investment guidelines. IBD offers a broad range of growth stock lists, such as Leaderboard and SwingTrader.
Investors also can create watchlists, find companies nearing a buy point, or develop custom screens at IBD MarketSmith.
Four Dow Jones Stocks To Watch Now
Dow Jones Earnings: Salesforce
Salesforce stock rallied nearly 4% early Wednesday after the company beat Wall Street's quarterly earnings and sales estimates. The enterprise software maker's revenue guidance came in above expectations, but its profit outlook missed.
CRM shares closed Tuesday more than 30% off their 52-week high. The stock is far below its 50- and 200-day moving averages.
Dow Jones Stocks To Watch: UnitedHealth
UnitedHealth is building a double-bottom base that offers a 501.03 buy point. Shares ended Tuesday just below their 50-day moving average after a 0.1% gain. UNH stock traded 0.5% higher Wednesday.
Bullishly, the stock's relative strength line is right at new highs, indicating significant stock market outperformance.
Four Top Growth Stocks To Watch In The Current Stock Market Correction
Stocks To Watch: Commercial Metals, Northern Oil, Palo Alto, Ryan Specialty
Texas-based Commercial Metals — a manufacturer of metal products for the construction industry — is trying to break out past a 38.82 buy point in a consolidation. Shares are about 3% below the entry, as the stock briefly broke out Tuesday. The 5% buy area goes up to 40.76. CMC stock shows a 98 out of a perfect 99 IBD Composite Rating, per IBD Stock Checkup. CMC shares were up 2.5% Wednesday morning.
Northern Oil & Gas is breaking out past a cup-with-handle's 25.57 buy point, according to IBD MarketSmith chart analysis. NOG shares moved up 3% Wednesday.
Cybersecurity leader Palo Alto Networks is holding above a consolidation's 572.77 buy point after Tuesday's nearly 3% decline. The 5% buy area goes up to 601.41. The RS line hit a new high on the breakout day. Last week, the company reported strong earnings and sales. Palo Alto shares were flat early Wednesday.
IPO Leader Ryan Specialty is trying to break out past a 40.65 buy point in a double bottom with handle, but reversed sharply lower Tuesday. Last week, the IPO stock found strong support around its 50-day line. RYAN shares were up 1% Wednesday morning.
Join IBD experts as they analyze leading stocks in the current stock market correction on IBD Live
Tesla Stock
Tesla stock rose about 1% Wednesday morning, looking to rebound from Tuesday's losses. Shares decisively regained their long-term 200-day line during Monday's surge. Now look for the stock to continue its move up the right side of a new base. The next key test for the stock could be the 50-day line, which sits about 10% above its current price. A retake of that line would be bullish for the stock's base-building process, while heavy resistance could signal a longer-term consolidation period.
The stock traded as high as 1,243.49 on Nov. 4, but ended Tuesday about 31% off that all-time high.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple is building a double-bottom base with a 176.75 buy point, according to IBD MarketSmith chart analysis. Shares are about 7% away from the new buy point. AAPL stock found support at its long-term 200-day line last week, but remains below its 50-day moving average. Apple shares rose 0.7% Wednesday.
How the Dow Jones stock handles potential resistance at the 50-day line will be key to the likelihood of a breakout. If the stock finds stout resistance, then a more lengthy consolidation period would be likely. However, if the stock decisively regains that level, then a breakout could be on the near horizon. For now, Apple stock is about 5% below the 50-day line, so there is some time before a potential test.
The stock's relative strength line remains near recent highs in the face of the stock market weakness, signifying that institutions are hesitant to sell their Apple shares.
Software leader Microsoft fell 1.3% Tuesday, snapping a three-day win streak. The Dow Jones software leader is just under the long-term 200-day line, as it continues to build a base. MSFT stock rose 0.6% Wednesday.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.
