On Tuesday, the Dow Jones Industrial Average dropped 125 points despite positive housing data and the start of the Federal Reserve’s two-day meeting. Meanwhile, Tesla stock continued its downward trend after falling below the $200 price level on Monday. CAT stock also suffered losses due to disappointing earnings results.
Housing Data Surprises Market
Early on Tuesday, the Case-Shiller Home Price Index surpassed expectations, with a 1% increase in August compared to July’s 0.9% growth. Analysts had predicted a 0.7% climb. Additionally, the Federal Housing Finance Agency House Price Index rose 0.6% in August, beating estimates for a 0.5% increase. Year over year, the FHFA index grew by 5.6%.
Federal Reserve Meeting and Interest Rate Decision
The Federal Reserve meeting began on Tuesday, with an interest rate decision scheduled for Wednesday at 2 p.m. ET. Market forecasts show zero chance of a rate hike at this meeting, and only a slim possibility of an increase at the subsequent meeting on December 13.
Earnings Movers
Several companies reported earnings on Tuesday, including Amgen, Arista Networks, Caterpillar, Lattice Semiconductor, Monolithic Power, Pinterest, and Pfizer. Amgen shares dropped nearly 3% in early trading, while ANET stock saw an 11% increase. CAT stock tumbled nearly 6%, while Lattice shares plunged 15%. MPWR stock jumped approximately 6%, and Pinterest shares soared 16%. Pfizer shares were down nearly 1%.
Market Performance
After the opening bell on Tuesday, the Dow Jones Industrial Average decreased by 0.35%, while the S&P 500 fell by 0.2%. The Nasdaq composite, which has a heavy concentration of technology stocks, experienced a 0.6% decline in morning trading. ETFs tracking these indices, such as Invesco QQQ Trust and SPDR S&P 500 ETF, also showed losses. The yield on the 10-year U.S. Treasury bond decreased slightly to 4.86% on Tuesday, compared to Monday’s settlement at 4.87%. Oil prices rebounded slightly, with West Texas Intermediate futures rising by nearly 1% but still remaining below $83 per barrel.
Stock Market Correction
On Monday, the Dow Jones Industrial Average rallied 1.6%, or 510 points, while the S&P 500 and the Nasdaq composite both advanced by 1.2%. The Nasdaq has now entered its second day of a rally attempt, with a potential follow-through rally confirmation possible on the fourth day. The market is still in a correction status, emphasizing the importance of reading IBD’s The Big Picture column and understanding how to navigate a weak market environment.
Best Stocks To Watch
Among the stocks to watch during the stock market correction are International Seaways, Lululemon Athletica, Light & Wonder, and Tradeweb Markets. Walmart and UnitedHealth, both Dow Jones giants, should also be on investors’ radars. Walmart is currently tracing a cup base with a buy point of $165.85, while UnitedHealth is forming a handle in a consolidation pattern with a new buy point at $546.78. International Seaways is attempting to break out of a cup-with-handle pattern with an entry price of $48.40, while Lululemon is still below its flat base’s buy point of $406.94. Light & Wonder is tracing a flat base with an entry point of $79.97, and Tradeweb recently broke out of a flat base at $87.53.
Magnificent Seven Stocks
Within the group of “Magnificent Seven” stocks, Tesla, Amazon, and Nvidia experienced declines on Tuesday. Apple and Microsoft, both Dow Jones tech icons, also traded lower after the market opened. Amazon made a bullish move on Monday by crossing above its 50-day line with a 3.9% gain, moving closer to a buy point of $134.48. Nvidia saw a 1.6% increase on Monday after reaching its lowest price since mid-June. Tesla stock fell 4.8% on Monday, closing below $200 for the first time since May 26. Apple shares rallied 1.2% on Monday, while Microsoft stock bounced 2.3% and showed signs of recovery.
For more information on growth stocks and the Dow Jones Industrial Average, follow Scott Lehtonen on X/Twitter at @IBD_SLehtonen.
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