The Dow Jones Industrial Average fell sharply on Wednesday ahead of the highly anticipated Fed minutes of the central bank’s latest policy meeting, while U.S. retail sales were weaker than expected. Bed bath and beyond (BBBY) surged again on Wednesday morning.
BBBY stock was expected to continue its scorching streak of gains on Wednesday amid renewed interest in the meme stock, as shares soared as much as 45% before paring gains to 20% in the morning talks. Bed Bath & Beyond, a struggling retailer with big losses, is up 355% from a July 27 low of 4.54 through Tuesday’s close.
Analog Devices shares fell more than 4%. Lowe’s shares fell nearly 1%. Target shares fell 4%, while TJX shares traded down 1%.
Leader in electric vehicles You’re here (TSLA) traded down 1% on Wednesday morning. Somewhere else, Dow Jones Technology Leaders Apple (AAPL) and Microsoft (MSFT) were shuffled after today’s stock market open.
In the current healthy market environment, Dow Jones stocks Coke (IS) and Merck (M.K.R.) – as good as Albemarle (ALB), Costco (COST), Monolithic power systems (MPWR) and Ollie’s Bargain Outlet (OLI) – are among the best stocks to buy and watch.
Dow Jones Today: Treasury Yields, Oil Prices
Early Wednesday, the Dow Jones Industrial Average fell 0.55%, on pace to snap a five-day winning streak. The S&P 500 fell 0.7%. And the tech-heavy Nasdaq composite traded down 1.1% in morning trading.
The 10-year Treasury yield rose to 2.88% early Wednesday, after Tuesday’s close at 2.79%. The 10-year Treasury yield is rebounding after hitting its lowest level since early April in recent weeks.
Meanwhile, U.S. oil prices edged lower, threatening to extend a four-game losing streak that left futures down more than 8%. West Texas Intermediate futures were trading just above $87 a barrel, the lowest since January.
Lack of U.S. retail sales, Fed minutes
US retail sales were released at 8:30 a.m. ET. July sales were flat on the previous month, missing Econoday’s estimate of a 0.1% rise. Excluding automobiles, retail sales rose 0.4% in July. Excluding automobiles and gas, sales rose 0.7%.
The Federal Reserve releases the minutes of its last meeting at 2 p.m. ET. The minutes are expected to reveal clues to Federal Open Market Committee members’ thoughts on potential interest rate hikes at the upcoming September meeting.
At the last Fed meetingthe central bank hiked rates by 75 basis points for the second consecutive meeting, and Fed Chairman Jerome Powell indicated that a third such hike “may be appropriate” in September.
Stock market rally
On Tuesday, the Nasdaq composite fell 1.1% intraday but trimmed its loss to 0.2% at the close. The S&P 500 rose 0.2%, while the Dow Jones Industrialists gained 0.7%.
Tuesday’s The Big Picture column commented: “Another resilient performance was good news for the bulls, but the stock market is starting to look overbought by at least one indicator. The short-term overbought/oversold oscillator (found in MarketSmith entering the NASDQ) is rapidly approaching its early June peak. This is the last time the Nasdaq showed overbought conditions. The index fell sharply for three consecutive sessions from June 9-13. Over the month, the Nasdaq fell 9.7%.
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Dow Jones Earnings: Cisco Systems
Networking giant Cisco Systems will release its second-quarter results after the close on Wednesday. Dow Jones stock is expected to gain 82 cents per share on sales of $12.7 billion.
Shares of Cisco ended Tuesday about 27% off their 52-week high.
Dow Jones stocks to watch: Coca-Cola, Merck
Soda giant Dow Jones, Coca-Cola, builds a flat base that has a buy point of 67.30. A handle entry at 65.14 is also in play. Stocks rebound from their 50-day line and attempt to break above the handle entry on Tuesday’s 0.8% gain. The title fell slightly on Wednesday morning.
Merck is also building a flat base, a pattern that shows a buy point of 95.82. Stocks are trying to hold above their 50-day line, according to IBD MarketSmith graphical analysis. Merck shares rose 0.3% on Wednesday.
MRK Stock shows a solid 94 over a perfect 99 IBD Composite Assessment, speak IBD inventory check. Investors can use the IBD Composite Rating to easily assess the quality of a stock’s fundamental and technical metrics.
Top stocks to watch: Albemarle, Costco, Monolithic, Ollie’s
Lithium producer Albemarle remains in the buy range after Friday’s breakout after a big cup with handle at 273.78 point of purchase. The 5% buy zone rises to 287.47. Earlier last week, shares broke above a smaller cup with a handle with a buy point of 250.25. Shares fell 1.15% on Tuesday, ending a four-day winning streak. The stock was down about 0.4% on Wednesday morning. lithium giant Chemical and Mining Society of Chile (M²) will report after closing.
IBD classification Costco stock exceeds a mug with handle with a buy point of 552.81. The stock rose 1.3% on Tuesday, closing just above the last entry. Shares slid 0.6% early Wednesday.
Recent IBD stock of the day Monolithic Power Systems added a handful to a cup base last week, moving the correct buy point from 580.10 to 541.49. Meanwhile, stocks remain above an entry of 514.80. The stock fell 1.6% on Wednesday.
Ollie’s Bargain Outlet is bouncing back from its 10 week line – a critical support level – placing the leading discount retailer in a new buy zone. Equities also carve out a handle after a large cup base, putting the last buy point at 72.37. The current price action is around 9% of this entry. The shares were down 2.8% on Wednesday morning.
Tesla stock fell 0.9% on Tuesday, ending a two-day winning streak. Shares of the electric vehicle giant were down 1% on Wednesday morning.
This week, stocks closed at their highest level since May 4. Stocks are once again trying to decisively break above resistance around their 200-day line, which is a key level to watch. The stock is about 25% off its 52-week high. The 3-for-1 stock split will take place on August 24.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones StocksApple shares edged down 0.1% on Tuesday as the stock fell continue to build the right side of a cup base which has a buy point of 179.71. Another interpretation could be a large double bottom that dates back to January. Either way, the point of purchase is the same. Keep an eye out for a potential grip forming and offer a lower entry.
On the upside, the stock’s relative strength line is already reaching new highs, indicating strong stock market outperformance. Shares rose 0.5% on Wednesday morning after a pair of target price increases.
Microsoft fell 0.3% on Tuesday, ending just short of the 200-day long-term line, which is a key resistance area to watch. The stock fell 0.4% on Wednesday morning.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen to learn more about growth stocks and the Dow Jones Industrial Average.
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