The Dow Jones Industrial Average rallied 325 points Tuesday morning, as Treasury Secretary Janet Yellen said the government is prepared to provide further guarantees of deposits if the banking crisis continues. That helped First Republic Bank (FRC) surge 30%, as regional banks rebounded. Next up, investors will shift their attention to the start of the Federal Reserve’s two-day policy meeting.
In remarks prepared for a speech to the American Bankers Association, Yellen said, “The steps we took were not focused on aiding specific banks or classes of banks. Our intervention was necessary to protect the broader U.S. banking system. And similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion.”
Yellen will address the ABA’s Washington Summit gathering in Washington D.C. at 10 a.m. ET.
The SPDR S&P Regional Bank ETF (KRE) rose 4.9% in Tuesday’s action. Western Alliance (WAL) rose 9%, while PacWest Bancorp (PACW) was up 12%.
Among the big U.S. banks, JPMorgan Chase (JPM) jumped 2.6%. U.S. Bancorp (USB) rallied more than 4%. (For our latest coverage of the market’s action, go to our Stock Market Today page.)
Fed Meeting, Earnings
The Federal Reserve’s two-day meeting kicks off Tuesday, with views on the probable rate strategy vacillating. The Federal Reserve may have a hard time hiking its key interest rate on Wednesday as rescue attempts for several U.S. regional and community banks remain less than certain.
As of Monday, markets had priced in 71% odds of a quarter-point rate hike at the conclusion of Wednesday’s Federal Reserve meeting. That would lift the Fed’s key interest rate to a range of 4.75% to 5%. Odds of a Fed rate hike pause slipped to 28% from 38% on Friday.
Still, Goldman Sachs economists are sticking by their prediction that the Fed will pause rate hikes “because of stress in the banking system.”
Whatever happens this week, markets see rate cuts starting this summer and solid odds of a sub-4% federal funds rate by the end of 2023.
Canadian Solar (CSIQ), On (ONON) and Tencent Music (TME) were earnings movers Tuesday morning.
Canadian Solar shares gained nearly 5% on strong fourth-quarter results, while ONON stock soared more than 22%. TME shares dipped 3.7% in early trade.
Stock Market Today
Electric-vehicle leader Tesla (TSLA) traded 3.4% higher as investors digested China weekly registration numbers Tuesday morning. Also, Dow Jones tech giants Apple (AAPL) and Microsoft (MSFT) were also higher after today’s stock market open.
Chip leader Advanced Micro Devices (AMD), IBD SwingTrader stock Meta Platforms (META) and IBD Leaderboard Palo Alto Networks (PANW) — as well as Dow Jones stocks Nike (NKE) and Salesforce (CRM) — are among the top stocks to watch in the ongoing stock market correction.
Palo Alto is an IBD Leaderboard stock. Microsoft was featured in this week’s Stocks Near A Buy Zone column. And Meta is an IBD SwingTrader stock.
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Dow Jones Today: Oil Prices, Treasury Yields
After Tuesday’s opening bell, the Dow Jones Industrial Average rose 1%, and the S&P 500 gained 1.1%. The Nasdaq composite, which doesn’t track financials, traded up 1% in morning action.
Smallcaps outpaced the overall market in early action. The Russell 2000 ran 1.9% higher. Biotechs were particularly active, and Harmonic (HLIT) bolted 10% higher on a supply agreement with Charter Communications (CHTR).
Among U.S. exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) rose 1% and the SPDR S&P 500 ETF (SPY) moved up 1.1% early Tuesday.
The 10-year U.S. Treasury yield bounced to 3.48% Monday after last week’s sharp losses. On Tuesday, the 10-year jumped to 3.57% in early trade, recovering from its lowest levels since September 2022.
U.S. oil prices bounced after Monday’s losses pushed West Texas Intermediate below $66 a barrel. WTI futures rose above $69 a barrel in morning trade.
Stock Market Correction
On Monday, the Nasdaq composite climbed 0.4% in an unusual day of underperformance. The S&P 500 rose 0.9%, closing slightly back above its 200-day moving average. The Dow Jones Industrial Average added 1.2%, its best day since Jan. 6.
Monday’s Big Picture column commented, “Index divergences eventually resolve themselves, in one direction or another. With the stock market in correction, investors should give bears the benefit of the doubt and keep exposure light or at zero.”
Now is an important time to read IBD’s The Big Picture column amid the ongoing stock market correction.
Five Dow Jones Stocks To Buy And Watch Now
Dow Jones Stocks To Watch: Nike, Salesforce
Since bottoming on Oct. 3, Nike shares have rallied as much as 59% to their recent high at 131.31. Now the stock is consolidating within a flat base that offers a 131.41 buy point, according to IBD MarketSmith pattern recognition. NKE stock moved up 2.3% early Tuesday. Earnings are due out Tuesday after the close.
Following recent declines, the stock remains below its 50-day moving average, a key benchmark. A decisive retake would be bullish for the base-building prospects, carving the right side of the pattern. The relative strength line is also holding up well during the rapidly developing stock market correction.
In recent weeks, Dow Jones leader Salesforce showed big upside strength after strong fourth-quarter results. The stock is now above a 178.94 cup-with-handle entry after last week’s big gains. Still, the market is in a correction, so investors should avoid new purchases until the market environment improves. CRM stock moved up 1% early Tuesday.
3 Top Growth Stocks To Watch In The Stock Market Correction
Top Stocks To Watch: AMD, Meta, Palo Alto
Advanced Micro Devices broke out past an 89.04 buy point in a flat base last week and has a solid 10% cushion above the entry. The 5% buy range topped out at 93.49. AMD was featured in Wednesday’s IBD Screen Of The Day column. AMD stock rose 1.1% Tuesday morning.
Backstory: In early February, the chipmaker reported stronger-than-expected data center chip sales in the fourth quarter. But AMD tempered that news with a soft outlook for the current period.
Backstory: Like social media rivals, Meta is struggling due to a sharp reduction in advertising revenue as clients squirm over macroeconomic concerns, recession fears and higher interest rates. This is happening as it spends billions of dollars on a risky bet to build the “metaverse,” a virtual reality world that has yet to take hold.
IBD Leaderboard stock Palo Alto Networks is trading just short of a cup-with-handle’s 192.94 buy point after Monday’s 0.3% drop. PANW stock traded up 1.3% Tuesday.
Backstory: On Feb. 21, the cybersecurity giant announced good results for the January-ended quarter that saw earnings hit $1.05 a share, up 81% vs. a year earlier, on a 26% jump in revenue to $1.7 billion.
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Stocks To Watch In Stock Market Correction
These are four top stocks to watch in today’s stock market, including two Dow Jones leaders.
|Company Name||Symbol||Correct Buy Point||Type Of Buy Point|
|Meta Platforms||(META)||197.26||Flat base|
|Palo Alto Networks||(PANW)||192.94||Cup with handle|
|Salesforce||(CRM)||178.94||Cup with handle|
Source: IBD Data As Of March 20, 2023
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Tesla stock rose 1.7% Monday, trading back and forth as it continues to see some support around its key 50-day moving average. Shares closed Monday around 52% off their 52-week high.
TSLA stock gained 3.4% Tuesday morning, as it looked to extend Monday’s rise.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares rose 1.55% Monday, rebounding from Friday’s losses. Shares closed at their highest level since Sept. 12. AAPL gained 0.5% Tuesday.
Microsoft shares broke out above a flat base’s 276.86 buy point Friday. But the stock gave up that entry during Monday’s 2.6% decline. MSFT stock rose 0.9% early Tuesday.
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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