The Dow Jones Industrial Average reversed slightly lower Tuesday, kicking off January's final session. The Federal Reserve's policy meeting starts today, followed by an interest rate policy decision on Wednesday. Meanwhile, Dow Jones stocks Caterpillar and McDonald's were among the many names reporting quarterly earnings results.
Looking toward Wednesday's rate policy announcement, the Fed is widely expected to raise the target federal funds rate by 25 basis points, to a range of 4.5% to 4.75%. Investors place a 99% probability of that size hike, according to the CME's FedWatch tool.
On Tuesday morning, the Labor Department's Employment Cost Index showed compensation costs rose 1% in Q4 vs. the 1.1% expected. However, compensation rose 5.1% from a year ago, a slight uptick from
the 5% growth in Q3. The ECI report has elevated importance with the Fed emphasizing the need for lower wage growth to return inflation to the 2% target. Fed chief Jerome Powell has said that wage growth easing to 3.5% would be sufficient.
Key Earnings Movers
Early Tuesday, Apple supplier NXP Semiconductors rose 0.5% after reporting its fourth-quarter earnings results late Monday.
Allegro MicroSystems, General Motors, Spotify and United Parcel Service all reported their quarterly results early Tuesday. Allegro rallied 4%, while Spotify jumped 9% and UPS stock traded up 1.1%.
General Motors raced 8% higher, after revenue and earnings easily topped views. The company also announced it would invest $650 million in a Nevada lithium mining operation. The news sent shares of Lithium Americas up more than 9%.
Among the Dow Jones companies, Caterpillar and McDonald's were both lower after earnings. CAT stock dropped 2.5% in early trade, while McDonald's shares fell more than 1.5%.
Finally, Pfizer and Exxon Mobil were also both lower after their quarterly earnings results. Pfizer shares lost more than 1%. And Exxon stock traded down 1.6% after its fourth-quarter report.
This week features big earnings results from Amazon, Apple, Alphabet and Meta Platforms. Meta's earnings are due out late Wednesday, while Alphabet, Amazon and Apple earnings are set for Thursday after the close.
Stock Market Today
Electric-vehicle leader Tesla rose 1.8% Tuesday morning, after a pullback of more than 6% on Monday. Dow Jones tech giants Apple and Microsoft were up and down after today's stock market open.
IBD Leaderboard stock Impinj, Etsy and Wingstop — as well as Dow Jones stocks Chevron and JPMorgan Chase — are among the top stocks to buy and watch, with the ongoing strength of the market rally.
Impinj is an IBD Leaderboard stock. Etsy was a recent IBD Stock Of The Day. Impinj and Wingstop were featured in this week's Stocks Near A Buy Zone column.
Dow Jones Today: Oil Prices, Treasury Yields
After Tuesday's opening bell, the Dow Jones Industrial Average turned down less than 0.1%, and the S&P 500 moved up 0.3%. The tech-heavy Nasdaq composite rose 0.5% in morning action.
Among U.S. exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust rose 0.25% and the SPDR S&P 500 ETF traded up 0.2% early Tuesday.
The 10-year U.S. Treasury yield ticked lower to 3.5% Tuesday morning, threatening to snap a three-day win streak. Last week, the 10-year yield barely ended a three-week losing skid.
Oil prices extended Monday's losses, falling more than 1% in morning trade, as investors look toward Wednesday's OPEC meeting. West Texas Intermediate futures held just above $77 a barrel. Ministers from the Organization of Petroleum Exporting Countries and its allies, including Russia, known as OPEC+, will meet on Wednesday. OPEC is widely expected to maintain current oil production levels, but may discuss possible policy tweaks and expectations for demand from China.
Stock Market Rally
On Monday, the Dow Jones Industrial Average snapped a six-day win streak, falling 0.8%. The S&P 500 dropped 1.3%, while the Nasdaq composite sold off 2%.
Monday's The Big Picture column cautioned, "IBD has raised its recommended exposure as resistance levels have broken, now lifting to the current 60%-80%. But indexes don't have much room above support levels and must now hold their newly conquered beachheads. This week is fraught with risk that could push stocks back into the water. But if the stock market can pass those tests, investors should prepare to raise exposure."
Now is an important time to read IBD's The Big Picture column amid the ongoing stock market rally.
Five Dow Jones Stocks To Buy And Watch Now
Dow Jones Stocks To Buy And Watch: Chevron, JPMorgan
Energy giant Chevron declined another 2.9% Monday, breaking down below its key 50-day line. Shares are adding a handle to a cup base, lowering the entry from 189.78 to 187.91, according to IBD MarketSmith chart analysis. CVX stock fell another 0.7% Tuesday morning.
Banking giant JPMorgan remains in buy range above a 138.76 flat-base buy point despite a 0.9% loss Monday. JPM shares traded a fraction higher early Tuesday.
JPM stock shows a solid 94 out of a perfect 99 IBD Composite Rating, per the IBD Stock Checkup. The Composite Rating is designed to help investors easily find top growth stocks.
4 Top Growth Stocks To Buy And Watch In The Stock Market Rally
Top Stocks To Buy And Watch: Impinj, Etsy, Wingstop
IBD Leaderboard stock Impinj ended Monday below a 129.12 buy point in a cup base following its recent breakout move, as shares dropped 2.9% Monday. Look for a decisive retake of the buy point to signal another chance to buy shares. PI stock was up 0.6% Tuesday.
Backstory: Impinj's expertise lies in radio frequency semiconductors to identify, locate and authenticate items. While losing money in 2020, the company earned 25 cents per share in 2021. And annual earnings are expected to surge 284% to 96 cents per share this year.
Etsy is back below a 137.01 buy point in a cup with handle after Monday's 2.25% drop. If the stock regains the entry, the 5% buy area goes up to 143.86. Etsy shares rose 1% Tuesday morning.
Backstory: The company is a provider of an online e-commerce platform where creators of arts and crafts, vintage items and other unique goods go to sell their products. It has a unique business model that, in the last few years, has gone from a niche e-commerce marketplace to a top-of-mind shopping destination across numerous categories.
Wingstop is rapidly approaching a 170.97 buy point in a lopsided cup base. Keep an eye out for a potential handle to offer a lower entry. WING stock was up 0.7% early Tuesday.
Backstory: The Dallas-based restaurant chain has more than 1,900 locations in the U.S. and international markets, according to Dow Jones Newswires. Its international locations include Mexico, Columbia, Panama, Singapore and the U.K. The company added a net 40 stores in the prior quarter. Earnings are due out Feb 22.
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Stocks To Buy And Watch In Stock Market Rally
These are seven top stocks to buy and watch in today's stock market, including two Dow Jones leaders.
| Company Name | Symbol | Correct Buy Point | Type Of Base |
|---|---|---|---|
| Monster | 104.75 | Flat base | |
| Vertex | 324.85 | Cup base | |
| Axon | 189.72 | Cup with handle | |
| Etsy | 137.01 | Cup with handle | |
| JPMorgan | 138.76 | Flat base | |
| Chevron | 187.91 | Cup with handle | |
| Wingstop | 170.97 | Cup base |
Source: IBD Data As Of Jan. 31, 2023
Join IBD experts as they analyze leading stocks in the current stock market rally on IBD Live
Tesla Stock
Tesla stock dived 6.3% Monday, snapping a six-day win streak and giving up a part of last week's 33% surge. Despite their strong rebound since Jan. 6, shares are still below the 200-day line. Tesla stock closed about 56% off its 52-week high.
Shares threatened to extend Monday's losses, but reversed from an early drop to rise 1.8% in early morning trade.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares stumbled 2% Monday, ending a two-day win streak. But they are still holding above their 50-day line following strong gains in recent sessions. The stock remains around 20% off its 52-week high. Apple will report its quarterly earnings on Thursday. AAPL stock moved down 0.1% Tuesday.
Microsoft stock slid 2.2% Monday, finishing just above its 50-day line, which it regained last week. Shares remain 23% off the 52-week high. MSFT traded up 0.3% Tuesday.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.
