The stock market indexes trimmed early losses in the first half of Tuesday's session, as beaten-down buyers kept their powder dry ahead of Wednesday's Federal Reserve rate decision. Ford Motor is having a terrible day, down more than 9% after warning that costs are surging and it can't find parts.
The Dow Industrial Average is trading lower by 0.8% at this hour, worse than the S&P 500 index's 0.7% loss. The Nasdaq composite is down just 0.6% while the Russell 2000 small-cap index is leading the downside, posting a 1.0% loss.
Volume on the NYSE and the Nasdaq is slightly lower compared to this time on Monday afternoon.
U.S. Treasury yields continued to slide, lifting the 10-year note above the psychological 3.5% level. The two-year is nearing 4% and could reach that milestone ahead of tomorrow's Fed event. Hot inflation numbers overnight from Japan and Germany are driving the latest uptick in yields.
Asian markets rose overnight while most European bourses closed lower by around 1%.
West Texas Intermediate crude oil has tumbled more than 2% to $83.34 per barrel, giving up yesterday's upside gain.
Bitcoin is holding above $19,000 after trading within $700 of June's 21-month low on Monday.
What To Expect From The Fed
Odds for a 75 basis-point hike have risen to 84% on the CME FedWatch Tool, while 16% are looking for a full percentage-point hike.
U.S. Stock Market Today Overview |
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|---|---|---|---|---|
| Index | Symbol | Price | Gain/Loss | % Change |
| Dow Jones | (0DJIA) | 30585.94 | -433.74 | -1.40 |
| S&P 500 | (0S&P5) | 3846.19 | -53.70 | -1.38 |
| Nasdaq | (0NDQC ) | 11410.82 | -124.20 | -1.08 |
| Russell 2000 | 177.39 | -3.13 | -1.73 | |
| IBD 50 | 26.56 | -0.50 | -1.85 | |
Last Update: 10:42 AM ET 9/20/2022 |
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All eyes will focus squarely on the Fed's "dot plot" after the release, looking for policy shifts in the trajectory of expected rate hikes into 2023. This tool collates the interest rate forecasts of individual governors rather than providing a broad consensus.
Most Fed watchers expect an initial commitment to a 50 basis-point hike in November. Anything above or below that level could spike volatility and have an immediate impact on equity prices.
Chairman Jerome Powell has to express 100% commitment to the inflation fight after his Volcker-like hawkishness at August's Jackson Hole conference. However, he may be concerned about the velocity of stock market losses since that time, and no Fed banker wants to be saddled with a market crash.
As a result, he could inject some conciliatory comments about the need for stable and balanced markets, without easing off the rate hike throttle. Of course, he walks a thin line after the midsummer equity rebound, which was fueled by poorly worded comments at the July news conference.
Ford Stung By Supply Shortages And Higher Costs
Ford warned after Monday's closing bell that inflation-related supplier costs are running about $1 billion higher than expected. In addition, the automaker noted that continued supply shortages will force up to 45,000 partially-built vehicles to be idled until they can be finished and sent to dealers.
Shares are trading lower by 9.8% at this hour while General Motors is selling off in sympathy, now down 4.3%.
Ford stock broke the 200-day moving average in March and reversed at that resistance level in mid-August, according to IBD MarketSmith. Shares fell below the 50-day line today.
Even so, the healthy 89 Relative Strength Rating highlights solid performance compared to the struggling S&P 500 index.
In addition, Ford is expected to post impressive 30% annual earnings-per-share growth in 2022. The company reported 27% year-over-year sales growth in August, compared to the auto industry's meager 4.8% increase.
Market Sells Off Into Fed Decision; What To Look For
Stock Market Winners And Losers
Dow component Nike has fallen nearly 3.5% after Barclays downgraded the sports and apparel giant from overweight to equal weight. This former stock market leader is struggling to hold July's two-year low at 99.53.
Las Vegas Sands is bucking the downward tide, rising more than 3.7% on news that China is taking steps to ease foreigner entry.
LVS stock has lifted back above the 40.08 buy point of a 38-day flat base. Fundamentals are brutally weak but the RS Rating has lifted to 90, in reaction to a rally that's brought its shares just shy of a six-month high.
Oil explorer and producer Continental Resources is building a cup with handle with a 72.80 buy point. The relative strength line hit an intermediate high last week, but remains off its 52-week high. CLR shares are trading lower by 0.7% at the noon hour.
Follow Alan Farley on Twitter at @msttrader.
