Dow Jones Futures Sell Off: Has The Stock Market Bottomed? Fed Meeting Up Next

Dow Jones futures sold off 300 points late Monday. The stock market recovered from huge losses Monday ahead of the Federal Reserve’s two-day policy meeting. IBM earnings kicked off five Dow Jones members reporting earnings ahead of Tuesday’s open. Meanwhile, Microsoft earnings are due late Tuesday.

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On Monday, the Dow Jones Industrial Average climbed 0.3%, reversing after declining as much as 3.25%. The S&P 500 rose 0.3% after plunging as much as 4%, while the tech-heavy Nasdaq composite advanced 0.6% after erasing a 4.9% dive.

Among the Dow Jones leaders, Apple (AAPL) lost 0.5% Monday, while Microsoft (MSFT) was up 0.1% in today’s stock market.

Electric-vehicle leader Tesla (TSLA) traded down 1.5% Monday. Lucid Group (LCID) erased big losses. And Chinese EV leaders Li Auto (LI) and Xpeng Motors (XPEV) ended squarely lower.

Among Monday’s top stocks to watch, American International Group (AIG), Baker Hughes (BKR), CF Industries (CF) and ConocoPhillips (COP) are near new buy zones. Keep in mind the current stock market status cautions investors to remain on the sidelines.

Microsoft and Tesla are IBD Leaderboard stocks. ConocoPhillips featured in this week’s Stocks Near A Buy Zone column.

Dow Jones Today: Fed Policy Meeting

After the stock market close Monday, Dow Jones futures fell 0.85% vs. fair value, while S&P 500 futures moved down 1.2%. Nasdaq 100 futures were down 1.65% vs. fair value. Among exchange traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) rallied 0.5% Monday, and the SPDR S&P 500 ETF (SPY) moved down 1.2%.

The Federal Reserve’s two-day policy meeting will kick off Tuesday with a policy decision due out Wednesday. The Fed is expected to end asset purchases in March and then start to raise interest rates in a bid to fight inflation.

The 10-year Treasury yield ticked down to 1.73% Monday, falling for a second straight session.

Has The Stock Market Bottomed?

The stock market staged a dramatic recovery Monday, as all three major stock indexes erased huge losses to turn higher. Even though it’s a step in the right direction, one day doesn’t make a trend, so the stock market remains in a correction. Investors should mostly, if not entirely, be on the sidelines and in cash. Avoid making new purchases and prepare for the next uptrend by building your watchlist with stocks that have strong relative strength lines and sound fundamentals.

Remember, investors should be interpreting the daily market action, not predicting whether stocks will go up or down. Monday proved to be Day 1 of a new rally attempt. Now, be on the lookout for a follow-through day, which is when a major index posts strong gains in volume heavier than the prior day. Follow-throughs occur as early as Day 4 of the attempted rally. As long as major stock indexes remain above Monday’s intraday lows, then the rally attempt will be intact.

Friday’s The Big Picture commented: “Several indicators point toward an oversold market, but that doesn’t mean a bottom is near. Renewed signs of accumulation would certainly help the indexes’ cause, but there are no signs of it yet as institutional investors continue to unwind positions in growth stocks.”

Amid this recent weakness, now is an important time to check out IBD’s The Big Picture.

Five Best Dow Jones Stocks To Watch Now

Dow Jones Earnings: IBM Reports; 4 More On Deck

Dow Jones stock IBM (IBM) reported better-than-expected fourth-quarter results after the market close Monday. IBM stock jumped more than 5% in extended trade. IBM shares are building a double-bottom base with a 146.10 buy point.

Early Tuesday, 3M (MMM), American Express (AXP), Johnson & Johnson (JNJ) and Verizon Communications (VZ) will report their quarterly results. All four Dow Jones stocks are below their long-term 200-day lines.

Three Top Growth Stocks To Watch In The Current Stock Market Weakness

Stocks To Watch: AIG, Baker, CF, ConocoPhillips

AIG rose 0.2% Monday, closing just above the 50-day moving average. AIG shares are forming a cup-with-handle base with a 62.35 buy point, according to IBD MarketSmith chart analysis.

Energy leader Baker Hughes continues to trade just below a 27.76 cup-base buy point after Monday’s 0.6% fall.

CF Industries is building an ascending base with a 74.87 buy point. Shares rebounded further from their 50-day line, rising 3.6%. Bullishly, the stock’s RS line hit a new high, indicating strong stock market outperformance.

Oil and gas giant ConocoPhillips snapped a three-day losing streak, rising 0.4% Monday. Shares remain above a 78.08 buy point in a consolidation. COP stock boasts a perfect 99 IBD Composite Rating, per the IBD Stock Checkup.

Join IBD experts as they analyze leading stocks in the current stock market correction on IBD Live

EV Stocks: Li Auto, Xpeng, Lucid Motors

Li Auto stock extended a losing streak to four sessions Monday, falling 2.3%. Shares closed further below their long-term 200-day line.

Xpeng Motors, Tuesday’s IBD 50 Stocks To Watch pick, slid 4.4% Monday, dropping below its 200-day line.

Among U.S.-based EV stocks, Lucid Motors shares erased sharp losses Monday, trading unchanged. LCID stock remains extended past a 28.49 buy point in a cup-with-handle base. Meanwhile, the stock’s basing process ran into more trouble during last week’s losses and the stock is once again back below the key 50-day line.

Tesla Stock

Tesla stock skidded 1.5% Monday, briefly hitting its lowest level since Oct. 18 during the session’s heavy midday losses. Shares are now sharply below their 50-day line and approaching their 200-day moving average line.

The stock traded as high as 1,243.49 on Nov. 4, but ended Monday about 25% off that 52-week high.

Dow Jones Leaders: Apple, Microsoft

Among Dow Jones stocks, Apple stock dropped another 0.5% Monday, falling further below the key 50-day line. Shares remain about 6% past a 153.27 buy point out of a cup-with-handle base, according to IBD MarketSmith chart analysis.

Software leader Microsoft rose 0.1% Monday, as the top Dow Jones stock found support at its long-term 200-day moving average line. Microsoft earnings are due after the close Tuesday. Analysts expect the software giant to earn $2.31 per share on sales of $50.6 billion.

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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