The Dow Jones Industrial Average reversed lower in today's stock market after the Fed announced it will halt asset purchases in March in time for an expected rate hike.
Dow Jones, Stock Market Today
At the close, the Dow Jones Industrial Average lost 0. 4% after trading up over 1%. The Nasdaq composite closed at break-even after erasing gains of over 2%. Meanwhile, the S&P 500 fell 0.1% and the Russell 2000 small-cap index traded down 1.5%. Volume was up sharply on the Nasdaq and about the same on the NYSE vs. the close on Tuesday.
The growth-focused Innovator IBD 50 ETF also reversed lower and lost 0.1%. Shares remain well below key moving averages.
The Federal Reserve delivered a highly anticipated policy announcement at 2 p.m. ET Wednesday. Fed policymakers plan to hold interest rates at near zero but reiterated their commitment to reversing the easy money policies of the pandemic era amid rapidly-rising inflation.
U.S. Stock Market Today Overview |
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|---|---|---|---|---|
| Index | Symbol | Price | Gain/Loss | % Change |
| Dow Jones | (0DJIA) | 34166.84 | -130.89 | -0.38 |
| S&P 500 | (0S&P5) | 4349.78 | -6.67 | -0.15 |
| Nasdaq | (0NDQC ) | 13542.12 | +2.82 | +0.02 |
| Russell 2000 | 195.77 | -3.07 | -1.54 | |
| IBD 50 | 37.23 | -0.04 | -0.11 | |
Last Update: 4:08 PM ET 1/26/2022 |
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"With inflation well above 2% and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate," the Federal Open Market Committee said in a statement. The Fed said that a rise in the 0%-0.25% benchmark rate is in the cards.
The stock market began to show signs of increased volatility on Jan. 5, after the Fed minutes from the December meeting revealed a consensus that the Fed should begin reversing $4.5 trillion in Covid-era asset purchases sooner and faster than anticipated.
Nearly all the S&P 500 sectors reversed lower on Wednesday while technology and financial sectors remained barely positive. Real estate and the commercial services sector fared the worst with losses of over 1.5% each.
The 10-year Treasury yield ticked up to 1.84% Wednesday afternoon. The jump was spurred by the Fed announcement. Meanwhile, oil prices held up, with West Texas Intermediate up over 1% to above $86.50 a barrel.
Stocks Making Notable Moves
Energy stocks have been a key area of strength in recent weeks. On Wednesday, two oil stocks from the MarketSmith Growth 250 index scored breakouts. However, given the late-afternoon sell-off, both stocks faded from buy points.
PDC Energy, an oil and gas exploration firm, broke out from a recent 59.10 buy point off a consolidation. Shares pared gains of over 5% to a gain of around 1.7%. The stock remains just 2% below the 5% buy zone. Investors should note this is a stage four base, which has a lower chance of working than a breakout with an earlier-stage base.
Enterprise Products Partners, a natural gas and crude oil pipeline company, remained just 1% below a breakout from a double-bottom base with a 24.86 buy point. The stock's RS line has risen tremendously in recent weeks.
Elsewhere, chipmaker Texas Instruments solidly beat earnings estimates on Wednesday as shares moved up over 2.5%. The Dallas-based company said it earned $2.27 a share on sales of $4.83 billion in the December quarter. On a year-over-year basis, Texas Instruments earnings rose 26% while sales climbed 19%.
The chipmaker remains below its 50-day and 200-day lines, however, and should not be bought until it can regain these key levels of support.
Dow Jones Today
Several Dow Jones stocks still traded higher despite the market's afternoon reversal. Microsoft led the upside with a gain of nearly 3%. Shares jumped as much as 5% after Microsoft beat Wall Street's targets late Tuesday for the December quarter and guided higher for the March quarter. Microsoft is now back above its long-term 200-day moving average.
Elsewhere, credit card giants Visa and American Express rose over 1.5% each. American Express had a major jump on Tuesday as shares rose nearly 7% in heavy volume. The company announced fourth-quarter earnings estimates that beat expectations early Tuesday. Thanks to record credit card spending, the company boosted forecasts for revenue and profits in 2022.
Meanwhile, Dow tech leader Apple pared early gains of nearly 2% to a 0.2% gain in afternoon trading. Shares have narrowly avoided triggering a round-trip sell signal from a recent 153.26 buy point off a cup-with-handle base. The stock remains in the buy range, according to IBD MarketSmith chart analysis.
On the downside, Boeing and Verizon led with losses of over 3% each. Boeing reported a loss early Wednesday, while revenue fell short of expectations. The Dow Jones aerospace giant gave no financial guidance for 2022, but is ramping up 737 Max production.
Follow Rachel Fox on Twitter at @IBD_RFox for more Dow Jones and stock market commentary.
