The Dow Jones Industrial Average traded lower on Tuesday as the major indexes tested last week's sharp declines. The indexes wiped out Monday's gains ahead of Wednesday's key Fed announcement.
The Dow traded 1.1% lower in early afternoon trading, alongside the S&P 500. The tech-heavy Nasdaq fared the best, shedding just 0.7% after recouping a chunk of early losses. The Russell 2000 maintained a 1.3% loss, leading the downside.
Volume was lower on both the Nasdaq and the NYSE, compared to the same time on Monday.
Many stocks undercut last week's steep lows following Monday's pause in the downside action.
Investor's Business Daily analysts cautiously lowered their market outlook from "uptrend under pressure" at Friday's close, to a more bearish "market in correction." This means investors should now raise cash and hold off on buying stocks until technical and fundamental conditions improve.
Other Markets Today
West Texas intermediate crude oil futures extended losses, dropping the commodity over 2% to $83.95 per barrel.
Meanwhile, the yield on the 10-year Treasury note rose to an 11-year high at 3.56%. The benchmark has gone vertical ahead of Wednesday's Federal Reserve announcement, which is unusual in the traditionally slow-moving bond market.
Investors maintain expectations for a 75-basis-point hike as an inflation-fighting measure. According to the CBOE's FedWatch tracking tool, the odds now stand at 84%, versus 16% likelihood for a full percentage-point boost.
A 75-basis-point hike would bring Fed Funds to a target range of 3%-3.25%, from the current 2.25%-2.5%.
All eyes will be on Fed Chairman Jerome Powell's comments following the decision and its impact on the Dow Jones and other market averages.
Stocks To Watch: Ford, Costco
Shares of Ford are trading lower by 11% as afternoon losses steepen.
Late Monday, the company warned of an estimated $1 billion profit hit, thanks to inflation-related supplier costs running higher than expected.
The automaker now projects adjusted Q3 operating profits between $1.4 billion and $1.7 billion. This is well below analyst estimates for $3 billion.
Even so, Ford reiterated its full-year operating profit outlook of $11.5 to $12.5 billion. It also noted that further supply shortages will force it to idle up to 45,000 partially-built vehicles until they can be finished and sent to dealers.
Shares have undercut their 50-day moving average in the volatile action, a negative sign after it reclaimed this zone in July.
Elsewhere, Costco shares continued to float below their 50-day moving average. The big-box retailer lost 1.9% in Tuesday afternoon trading, ahead of Thursday's fourth-quarter earnings report.
Investors wait to see whether the warehouse club will raise membership prices, as many expect.
Analysts predict earnings will grow 7% to $4.17 per share in Q4. Wall Street also forecasts a 13% revenue increase to $70.8 billion. Projections are that same-store sales will rise a healthy 13.7%.
COST stock recently attempted to break out above a cup-with-handle pattern and proper 552.81 buy point, according to MarketSmith. But shares have struggled recently and fell below support at their 50- and 200-day moving averages.
Outside Dow Jones: Growth Stocks To Watch
The Innovator IBD 50 ETF, which reversed at 50-day moving average resistance last week, is down 1.5% in afternoon trading.
Tesla was one of the few IBD 50 stocks to trade higher in the early action, but has now given up those gains. The stock just reclaimed its 200-day line and is also above its 50-day line. The automaker shows official buy points at 402.73 and 384.35, with the latter coming from a cup base that started in April.
Oil and gas names continue to lead the downside, including Northern Oil and Gas, NRG Energy and SM Energy. The trio lost more than 2.5% each in this tough session.
Toy maker Funko is standing out on the Nasdaq composite, down more than 5%.
