One day ahead of a decision on U.S. interest rates, the Dow Jones Industrial Average nursed mild losses all day before finishing with a 0.3% drop in the stock market today. That loss was only a touch bigger than a 0.2% decline by the tech-heavy Nasdaq composite.
The S&P 500 edged down 0.2% as it also trimmed losses.
There is no change in the current outlook for stocks. Investors should continue to adopt a very cautious approach to taking on new buys.
Volume was mixed ahead of an announcement due Wednesday at 2 p.m. ET by the Federal Reserve on interest rates. Fed chief Jerome Powell is slated to speak to the media at 2:30 p.m. ET.
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Fed Meeting Looms
CME's FedWatch survey shows only 1% probability that the U.S. central bank will boost the fed funds rate — what is charged to Wall Street banks for overnight loans — by at least a quarter point to a 5.5%-5.75% target range.
However, that probability rises to 29.2% at the next meeting slated for Oct. 31-Nov. 1 and 40.1% at the final meeting of the year on Dec. 12-13.
The yield on the benchmark U.S. 10-year government bond rose 4 basis points to 4.36%. That's the highest close since late October 2007. The 10-year yield began 2023 at 3.79%.
Turnover ran sharply higher vs. the same time Monday on the NYSE, early data showed. But volume cooled on the Nasdaq.
Meanwhile, transportation stocks continued to suffer steep losses in the near term amid rising energy costs. Yet crude oil gave back morning gains and reversed lower.
The Dow industrials, at around 34,513, have pulled back less than 4% from the July peak of 35,679.
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Dow Jones Today
The Dow Jones transportation average slipped 0.6%. This sector index has made a round trip of its gains in Q3 and more. At 15,171, the Dow transports threaten to give back all of their gains since they broke out past the 15,000 level on June 27.
Transportation stocks are sensitive to oil prices. On the Nymex, light sweet crude oil futures hit as high as $92.43 a barrel, reaching levels last seen in November. However, futures cooled off to $91.20, down 0.3%.
Looking at IBD's 197 industry groups, one of the top performers was a group that has done horribly in 2023 so far: solar stocks.
The Energy-Solar industry group rose 2.7% on a price-weighted basis. Still, the group has suffered a nearly 19% loss for the third quarter. It's also down more than 25% since Jan. 1.
By day's end, dairy products rallied even more, up 4.3%. However, the group contains just two stocks, including recent IPO Oatly. The stock edged down 2 cents to 99 cents. Shares in the dairy-alternative products firm have crashed more than 96% below their June 2021 peak at 29. OTLY debuted on the Nasdaq at 17 a share.
Other top industry groups on Tuesday: steel, up 2.2%; computer hardware, up 1.7%; wireless telecom, up 1.4%; and department store and consumer electronics retailers, up 1.2% each.
Among these industries, only computer hardware ranks within the top 40 among 197 industries for six-month price performance.
Beyond Dow Jones: Instacart IPO Rises 12%
Instacart's IPO stated off hot, with shares of parent Maplebear, better known as Instacart up 40% to 42 when trading opened. But the stock closed at 33.70, up 12% from the IPO price of 30 per share.
On the downside, Duolingo reversed from mild early gains to lose 1.5%. Volume fell 11% below average. The language-learning app is trying to clear a 162.20 buy point in a three-month double bottom.
Duolingo has a mediocre 74 EPS Rating, but Q2 profit of 8 cents a share reversed a 38-cent loss a year earlier. Sales grew 44% to $126.8 million. Duolingo is the IBD Stock Of The Day.
Array Stock Analysis
That said, "IBD Live" on Tuesday noted a few leaders, including Array Technologies.
The maker of ground-mounting systems for utility-scale solar projects rose 3.7% in slightly above-average turnover. The small cap is treading near the top of a trio of bases with resistance around 24 to 25.
The latest base, more or less a consolidation pattern, shows a 24.99 proper buy point. The correction of 31% from the base's high of 24.99 to a low of 17.27 is normal for most bases.
As the daily chart shows, the stock has struggled to make real headway since it cleared 24.99 in heavy volume on Aug. 29.
Array, a small cap with a $3.8 billion market value and 151.1 million shares outstanding, has posted excellent earnings in the past four quarters. Earnings vaulted 422% in the second quarter to 47 cents a share on a 21% jump in sales to $507.7 million.
Wall Street sees full-year profit soaring 172% to $1.03 a share this year and up an additional 37% to $1.42 in 2024. Annual earnings can be volatile.
Array's earnings collapsed from 89 cents a share in 2020 to 7 cents in 2021 before a fivefold rebound in 2022 to 38 cents. As a result of these big swings, the IBD Earnings Per Share Rating comes out at 81 out of 99.
In the same solar energy group, former market leader Enphase Energy gained 4.2% for the biggest rally within the Nasdaq 100 on Tuesday. But ENPH stock has been struggling ever since it took out the 50-day moving average near 297 in late December. Enphase has fallen more than 55% year to date. The Relative Strength Rating is a lowly 7 on a scale of 1 to 99.
Stellantis Outperforms Most Carmakers
Other stocks that advanced on Tuesday and got airtime on the "IBD Live" daily show include Stellantis, Fluor and Honda Motor.
Stellantis — which owns the Jeep, Ram, Dodge, Alfa Romeo and Maserati vehicle brands — gained 2% and is forging a new base on base. The entry point for now is 20.71. Fluor, up 4% in strong turnover, is rolling past a 37.20 buy point and remains in the 5% buy zone. Honda gapped up 4% and is extended.
There are no pure-play car stocks in the Dow Jones Industrial Average.
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