Dow Jones futures remained higher Tuesday morning, rising around 150 points after a key inflation report as rebounding financials fortified early trade. Embattled regional bank First Republic (FRC) rallied 56% in premarket action, as federal moves to quell banking fears appeared effective following Monday’s plunge.
The SPDR S&P Regional Banking ETF (KRE) jumped more than 6%, bouncing after Monday’s 12% dive. KeyCorp (KEY) advanced nearly 15%, while Western Alliance (WAL) leaped 34%. Finally, Charles Schwab (SCHW) rebounded 12% in early morning trade.
CPI Inflation Report
Wall Street suddenly sees a solid chance that the Federal Reserve will pause its rate-hiking campaign at next week’s meeting as the failure of three banks stokes concern about broader financial-sector stress.
That could dial-down the recent importance of the CPI, which rose 0.4% in February, matching expectations. The core CPI rose 0.5% in February, higher than the 0.4% estimate. The headline CPI inflation rate hit 6.0%, in line with estimates, with the core inflation rate also meeting estimates at 5.5%.
But almost regardless of the CPI outcome, half-point moves now appear to be off the table. And that is just a week after Fed chair Jerome Powell signaled that policymakers were ready to reaccelerate rate hikes at next week’s meeting from February’s quarter-point pace.
Bank failures stirred a rush into bonds and other safe havens, triggering a sharp dive in Treasury yields and signaling rising doubts about the strength of the economy. Even if the Fed doesn’t pause next week, markets now appear to be betting that rate cuts are around the corner.
On the earnings front, GitLab (GTLB) toppled 30% in premarket trade after the company’s weaker-than-expected revenue guidance.
Earnings continue trickling out at the tail end of the season this week. Among them are Academy Sports & Outdoors (ASO), Adobe (ADBE), Dollar General (DG), FedEx (FDX), Five Below (FIVE) and Lennar (LEN).
Stock Market Today
United Airlines (UAL) declined 4.7% after the company said it expects to see a quarterly loss in the first quarter.
Electric-vehicle leader Tesla (TSLA) traded up 1% Tuesday morning after positive registrations data from China. Meanwhile, Dow Jones tech giants Apple (AAPL) and Microsoft (MSFT) were higher ahead of the stock market open.
Social media giant Meta Platforms (META), IBD Leaderboard watchlist stock Palo Alto Networks (PANW) and New Relic (NEWR) — as well as Dow Jones stocks Nike (NKE) and Salesforce (CRM) — are among the top stocks to watch in the ongoing stock market correction.
Palo Alto is an IBD Leaderboard watchlist stock. New Relic was recently an IBD Stock Of The Day. And Nike was featured in this week’s Stocks Near A Buy Zone column.
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Dow Jones Today: Oil Prices, Treasury Yields
Ahead of Tuesday market open, the Dow Jones futures rose 0.5% and S&P 500 futures were up 0.6%. The tech-heavy Nasdaq 100 futures gained 0.5% in morning action.
Among U.S. exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) rose 0.8% and the SPDR S&P 500 ETF (SPY) moved up 0.8% early Tuesday.
The 10-year U.S. Treasury yield dived to 3.51% Monday, as safe haven trade drove bonds sharply higher following the SVB collapse. Then on Tuesday, the 10-year Treasury yield rebounded to 3.62% in morning trade.
Oil prices continued lower early Tuesday following Monday’s sharp losses. West Texas Intermediate futures dropped 2%, trading just above $73 a barrel.
Stock Market Correction
On Monday, the Dow Jones Industrial Average fell 0.3%, and the S&P 500 lost 0.15%. The tech-heavy Nasdaq composite climbed 0.45% in a day of volatile trading.
Monday’s Big Picture column commented, “The S&P 500 slid more than 1% in early trading but rebounded to close less than 0.2% lower. The index found support around 3800, where buyers also showed up during December’s market swoon.”
Now is an important time to read IBD’s The Big Picture column amid the new stock market correction.
Five Dow Jones Stocks To Buy And Watch Now
Dow Jones Stocks To Watch: Nike, Salesforce
Since bottoming on Oct. 3, Nike shares have rallied as much as 59% to their recent high at 131.31. Now the stock is consolidating within a flat base that offers a 131.41 buy point, according to IBD MarketSmith pattern recognition. NKE stock moved up 0.1% early Tuesday.
Amid recent weakness, the stock is below its 50-day moving average, a key benchmark. A decisive retake would be bullish for the base-building prospects, carving the right side of the pattern. The relative strength line is also holding up well during the rapidly-developing stock market correction.
In recent weeks, Dow Jones leader Salesforce showed big upside strength after strong fourth-quarter results. But those gains have mostly disappeared amid the recent market weakness, and now the stock is back below a 178.94 cup-with-handle entry. Still, the stock’s recent strength is a reason to monitor the software leader in the coming sessions. CRM stock rose 0.7% Tuesday.
3 Top Growth Stocks To Watch In The Stock Market Correction
Top Stocks To Watch: Meta, Palo Alto, New Relic
Facebook-parent Meta Platforms is quietly building a flat base with a 197.26 buy point following an earnings-fueled price surge in February. Shares are about 8% away from the latest buy point, as they rose 0.8% Monday. Meta shares were up 0.9% Tuesday morning.
Back story: Like social media rivals, Meta is struggling due to a sharp reduction in advertising revenue as clients squirm over macroeconomic concerns, recession fears and higher interest rates. This is happening as it spends billions on a risky bet to build the “metaverse,” a virtual reality world that has yet to take hold.
IBD Leaderboard watchlist stock Palo Alto Networks continues to trade quietly in a handle after the stock’s 12.5% surge on Feb. 22. Shares remain within striking distance of a base’s 192.94 buy point. Bullishly, the stock’s relative strength line is at new highs, as the stock sharply outperforms the market averages. PANW stock traded up 0.5% Tuesday.
Back story: On Feb. 21, the cybersecurity giant announced good results for the January-ended quarter that saw earnings hit $1.05 a share, up 81% vs. a year earlier, on a 26% jump in revenue to $1.7 billion.
Recent IBD Stock Of The Day, New Relic, is working on a flat base with a 80.98 buy point in the aftermath of the Feb. 8 earnings-fueled surge. The RS line is holding up for now. NEWR stock edged lower early Tuesday.
Back story: New Relic provides a cloud-based suite of software products that enables organizations to collect, store and analyze massive amounts of data in real time. Customers gain increased visibility into their enterprise software to help make data-driven decisions.
Learn How To Time The Market With IBD’s ETF Market Strategy
Stocks To Watch In Stock Market Correction
These are four top stocks to watch in today’s stock market, including two Dow Jones leaders.
|Company Name||Symbol||Correct Buy Point||Type Of Buy Point|
|New Relic||(NEWR)||80.98||Flat base|
|Nike||(NKE)||131.41||Cup with handle|
|Palo Alto Networks||(PANW)||192.94||Cup with handle|
|Salesforce||(CRM)||178.94||Cup with handle|
Source: IBD Data As Of March 13, 2023
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Tesla stock climbed 0.6% Monday, as it continues see some support around its 50-day moving average line. Shares closed Monday around 55% off their 52-week high.
TSLA stock moved up 1% Tuesday morning, looking to add to Monday’s gains.
On Tuesday, weekly China EV insurance registration data could be an important gauge for Tesla demand in the world’s largest EV market, which is in the midst of a huge price war started by Tesla.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares rose 1.3% Monday, snapping a two-day losing streak and finding support at the long-term 200-day line. AAPL gained 0.8% Tuesday morning.
Microsoft shares bullishly regained its 200-day line during Monday’s 2.1% jump. The stock is still around 20% off its 52-week high after recent declines. MSFT stock rose 1% early Tuesday.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.
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