Dow Jones futures rose Monday morning as a correcting stock market braces for an important week of Federal Reserve news. European markets edged higher after UBS (UBS) agreed to buy Credit Suisse (CS) in a bid to restore confidence in the banking system. Meanwhile, First Republic Bank (FRC) plunged 20% on a credit rating downgrade.
Over the weekend, Swiss regulators brokered a deal for UBS to buy rival Swiss bank Credit Suisse for 3 billion Swiss francs ($3.24 billion), a substantial discount to Credit Suisse’s $8 billion market cap on Friday. UBS shares reversed from losses to rise 1% in premarket trade, while CS American depositary receipts crashed 58%.
The SPDR S&P Regional Bank ETF (KRE) rose 1.3%. First Republic dived 20% after a credit rating downgrade. S&P Global downgraded the bank into junk status, saying the recent $30 billion infusion may not solve its liquidity issues. Western Alliance (WAL) jumped nearly 12%, while Keycorp (KEY) was up 1.9%.
Among larger banks, U.S. Bancorp (USB) climbed more than 3% after Baird upgraded the stock to outperform, from neutral. The note set a price target at 52 —almost 58% above where shares closed on Friday.
The Federal Reserve’s two-day meeting kicks off Tuesday, with views on the probable rate strategy vacillating. As of Monday morning, odds of a quarter-point Fed rate hike Wednesday were at 62%. Instead of more future rate hikes, Wall Street now sees the Fed shifting to rate cuts starting by July, if not sooner. By the end of the year, markets expect the federal funds rate to fall below 4%.
The banking crisis may have have upended the Fed’s plan to keep interest rates higher for longer.
FL stock gained 1.2% in morning trade after its report. Pinduoduo shares tumbled 13% on weaker-than-expected Q4 revenue results.
Stock Market Today
Chip leader Advanced Micro Devices (AMD), IBD SwingTrader stock Meta Platforms (META) and IBD Leaderboard Palo Alto Networks (PANW) — 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. AMD featured in Wednesday’s IBD Screen Of The Day. And Nike was featured in last week’s Stocks Near A Buy Zone column. Meta is an IBD SwingTrader stock.
Dow Jones Today: Oil Prices, Treasury Yields
Ahead of Monday’s opening bell, Dow Jones futures rose 0.5% vs. fair value, while S&P 500 futures gained 0.4%. The Nasdaq 100 futures, which do not track financials, traded up 0.3% in morning action.
The 10-year U.S. Treasury yield dived to 3.39% Friday, ending with big weekly loss as investors packed into the safe-haven bond market amid the ongoing banking crisis. On Monday, the 10-year Treasury yield rose to 3.44% in early trade, near its lowest levels since September 2022.
U.S. oil prices continued lower following last week’s 13% dive. West Texas Intermediate traded below $66 a barrel early Monday, down 1.5%, its lowest level since September 2021.
Stock Market Correction
On Friday, the Dow Jones Industrial Average sold off 1.2% and the S&P 500 lost 1.1%. The Nasdaq composite declined 0.7%.
Friday’s Big Picture column commented, “The stock market ended the week on the ropes amid a painful bear attack on quadruple-witching day. Next week will be key in finding out whether indexes can fight back — or get clobbered to the canvas.”
Now is an important time to read IBD’s The Big Picture column amid the ongoing stock market correction.
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 down 0.2% early Monday.
Following recent declines, the stock remains 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. The stock above a 178.94 cup-with-handle entry after last week’s big gains. Still, the market is in a correction, so investors should avoid new purchases until the market environment improves. CRM stock lost 0.2% early Monday.
Top Stocks To Watch: AMD, Meta, Palo Alto
Advanced Micro Devices broke out past an 89.04 buy point in a flat base last week and has a solid 10% cushion above the entry. The 5% buy range that topped out at 93.49. AMD featured in Wednesday’s IBD Screen Of The Day column. AMD stock fell 0.6% Monday morning.
Backstory: 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 of dollars on a risky bet to build the “metaverse,” a virtual reality world that has yet to take hold.
IBD Leaderboard stock Palo Alto Networks is trading just short of a cup-with-handle’s 192.94 buy point after Friday’s 0.3% drop. PANW stock traded down 0.3% Monday.
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.
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|
|Meta Platforms||(META)||197.26||Flat base|
|Palo Alto Networks||(PANW)||192.94||Cup with handle|
|Salesforce||(CRM)||178.94||Cup with handle|
Source: IBD Data As Of March 20, 2023
Tesla stock dropped 2.2% Friday, trading back and forth as it continues to hold above its key 50-day moving average. Shares closed Friday around 53% off their 52-week high.
TSLA stock fell 1% Monday morning, as it threatened to extend Friday’s losses.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares fell 0.55% Friday, ending a four-day win streak that saw them rebound from their long-term 200-day line. AAPL rose 0.1% Monday morning.
Microsoft shares broke out above a flat base’s 276.86 buy point Friday, rising 1.2%. The buy zone goes up to 290.70. MSFT stock fell 0.3% early Monday.
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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