Dow Jones Sells Off As Powell Says Interest Rates Are 'Likely To Be Higher' Than Expected

The Dow Jones Industrial Average sold off nearly 300 points Tuesday, as Federal Reserve Chair Jerome Powell said "the ultimate level of rates is likely to be higher than previously anticipated." Facebook-parent Meta Platforms (META) rallied 2% after Bloomberg reported that the social media giant plans another round of layoffs that could affect thousands of workers.

Fed chief Powell began his two days of congressional testimony Tuesday, where he'll have the chance to explain the central bank's planned response to inflation. Last month, the Fed raised rates by a quarter-percentage-point, and investors will be looking clues for the amount of the hike at this month's March 21-22 meeting.

After Powell's comments, traders now place a 50% chance of a quarter-percentage-point rate hike at the next meeting, according to the CME's FedWatch Tool.

Guidewire (GWRE) reported mixed fiscal-Q2 results late Monday. Shares climbed around 4% in early trade. The stock is building a bottoming base with a 78.76 buy point.

Meanwhile, Dick's Sporting Goods (DKS), Sea Limited (SE) and Thor Industries (THO) also reported their earnings results and were on the move.

On strong results, Dick's Sporting Goods shares rose 7% while SE stock surged 7.1% during morning trade. Thor Industries plunged 6% following the RV manufacturer's reduction in full-year earnings.

Stock Market Today

IBD Leaderboard stock Alteryx (AYX), Palo Alto Networks (PANW), Arista Networks (ANET) and Salesforce (CRM) — as well as Dow Jones stocks American Express (AXP) and JPMorgan Chase (JPM) — are among the top stocks to buy and watch, amid the recent stock market strength .

Palo Alto is an IBD Leaderboard watchlist stock. And Salesforce was featured

Dow Jones Today: Oil Prices, Treasury Yields

After Tuesday's market open, the Dow Jones Industrial Average lost 0.9%, and the S&P 500 dropped 1%. The tech-heavy Nasdaq composite fell 0.85% in morning action.

The Nasdaq 100 tracker Invesco QQQ Trust, (QQQ), fell 1% while the SPDR S&P500 ETF (SPY), moved down 0.8% on Tuesday morning.

Monday's 10-year U.S. Treasury yield rebounded to 3.98%. Powell's testimony led to the 10-year yield trading higher at 3.99% on Tuesday.

Oil prices pulled back less than 1% in morning trade Tuesday. West Texas Intermediate futures traded around $80 a barrel, holding near their recent highs.

Stock Market Rally

Monday's market ended tightly mixed. The Dow Jones Industrial Average and S&P 500 gained 0.1% apiece. The tech-heavy Nasdaq composite closed 0.1% lower after giving up solid gains.

Monday's Big Picture column commented, "The stock market seems to be growing more confident that the Fed will be able to tame inflation without sending the U.S. economy into a harsh recession. That said, a hawkish tone this week from Powell wouldn't be surprising as recent readings on inflation have revealed stubbornly high prices amid strong hiring and consumer spending. Inflation will eventually come down to the Fed's preferred target around 2%, but how long will it take?"

IBD's The Big Picture column amid the now-struggling stock market rally.

Dow Jones Stocks to Buy and Watch: American Express, JPMorgan

American Express is rapidly approaching a 182.25 buy point in a giant cup with handle. Shares are just 2% below their buy point, as they inched lower Monday. Bullishly, the stock's relative strength line is at new highs, a particularly positive sign ahead of a potential breakout. AXP stock fell 0.6% Tuesday morning.

Banking giant JPMorgan is in buy range above its 138.76 flat-base buy point amid a 0.6% loss Monday, according to IBD MarketSmith chart analysis. Shares found good support at their 50-day line in recent sessions. JPM shares traded down 0.4% early Tuesday.

JPM stock shows a solid 93 out of a perfect 99 IBD Composite Rating, per the IBD Stock Checkup. The Composite Rating is designed to help investors easily find top growth stocks.

Top Stocks To Buy And Watch: Palo Alto, Salesforce

Palo Alto Networks is within striking distance of a base's 193.01 buy point following a 12.5% surge on Feb. 22. PANW stock traded down 0.2% Tuesday morning.

Backstory: 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.

Last week, Dow Jones leader Salesforce staged a bullish breakaway gap past a 178.94 buy point on strong fourth-quarter results. Shares surged 11.5% Thursday and are in the 5% buy zone that goes up to 187.89. CRM stock gained 0.5% Tuesday.

Backstory: Salesforce sells its software via a subscription model. Salesforce software is used by businesses to manage sales operations and customer relations. The company is now expanding into customer service, marketing and e-commerce. Salesforce stated that it had disbanded its M&A committee, implying it will no longer make large acquisitions amid increasing pressure from activist investors.

Arista, Alteryx above the Latest Buy Points

After Monday's 1.35% increase, Arista Networks is now just below 140.91 buy points from a cup basis. The stock is now in a decisive retake, with a buy range of 147.96. ANET stock rose 1.3% Tuesday morning.

Backstory: Arista sells switches to speed up communication between racks of computer servers packed in data centers. Analysts believe that Arista is growing in the "enterprise" market, which includes large corporations, government agencies, and educational institutions. In the last quarter, earnings jumped 72%

IBD Leaderboard stock Alteryx passed a trendline buy point of 66.50 in a handle on an early stage cup. Aggressive investors may buy on the breakout above that trendline. A conventional entry at 70.73 could also be in play. Only 4% is left to reach that buy point. Alteryx fell 0.4% Tuesday.

Backstory: A self-service platform was created by the Irvine firm for data analytics. The demand is evident as sales rose from $100 million per quarter in 2021, to $216 million for the third quarter 2022. This represents a 75% increase compared to a year ago and $301 million for Q4 2022 which represents 73% growth. Alteryx posted a profit at 84 cents per share in Q4, the largest quarterly earnings in company history.

Stocks To Buy And Watch In Stock Market Rally

These are six top stocks to buy and watch in today's stock market, including two Dow Jones leaders.

Company Name Symbol Correct Buy Point Type Of Buy Point
Arista Networks (ANET) 140.91 Cup base
Alteryx (AYX) 70.73 Cup with handle
American Express (AXP) 182.25 Cup with handle
Palo Alto Networks (PANW) 193.01 Consolidation
JPMorgan (JPM) 138.76 Flat base
Salesforce (CRM) 178.94 Cup with handle

Source: IBD Data As Of March 7, 2023

Tesla Stock

Tesla stock skidded 2% Monday after the EV giant slashed U.S. vehicle pricing once again Sunday evening, the latest sign demand for Tesla vehicles may be waning after an initial boost came from January price cuts.

Shares are still below their 200-day mark despite their strong rebound since Jan. 6. This key level is a potential resistance zone. Monday's close was around half off the 52-week high. Investors who are aggressive can take advantage of the February 16 high of 217.65 to gain entry. Tesla stock must clear the 200-day mark, which is currently below 221.

Tesla shares fell 2.9% Tuesday morning, threatening to add to Monday's losses.

Dow Jones Leaders: Apple, Microsoft

Among Dow Jones stocks, Apple shares jumped 1.85% Monday, closing at their highest level since Feb. 15. The stock fell 0.9% early Tuesday.

Microsoft shares rose further after Monday's 0.6% increase. After recent declines, the stock is around 20% below its 52-week peak. MSFT stock fell 0.8% Tuesday morning.