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The Dow Jones industrial average stretched its gain to 0.8% and notched session highs before surrendering all of that advance. At around 2:45 p.m. the Dow slipped about 0.1% after the Federal Reserve raised short-term interest rates by a quarter point, a widely expected move.
Still, oil, steel and transport stocks led the market higher and may produce new solid breakouts.
At least nine of the 30 stocks in the Dow Jones industrials had rallied 1 point or more ahead of the U.S. central bank’s decision, and Boeing (BA) at one point took a strong step toward potentially reclaiming its rising 50-day moving average. Shares of the plane and satellite maker rolled up more than 3 points to as high as 341.88, cutting a swift 13.3% drop from its 371.60 peak by nearly half, before reversing lower and falling around 0.2%.
Quincy Krosby, chief market strategist at Prudential Financial, noted that “the statement gave a reprieve to the concern of a fourth rate hike this year, although if inflation continues to gain traction, the FOMC appears ready to include a fourth rate increase.”
Fellow Dow 30 component Chevron (CVX) and numerous other oil and gas exploration companies rose sharply on the back of another big spike in West Texas Intermediate crude prices. Chevron rose 2.9% to 117.80 but still lies beneath its 50-day line. Watch for the right side of a potential new base to build. The base’s left-side high is 133.88.
The integrated oil major has shown nifty top-line growth as revenues rose 42%, 18%, 20% and 19% vs. year-ago levels in the past four quarters. The Street sees Chevron earning $1.48 a share, up 5%, and revenue jumping 21% to $40.47 billion.
WTI futures gained more than 2% and reached $65.24 a barrel, the highest level since December 2015. Weekly U.S. crude oil supplies sank by 2.6 million barrels in the latest reported week. The U.S. dollar fell mildly vs. both the euro and the Japanese yen.
IBD’s Canadian oil and gas exploration group showed the strongest gain, up 8.6%. Through Tuesday’s close, the group ranked a lowly 194th among 197 IBD industry groups and subgroups for six-month relative performance.
The S&P 500 rallied nearly 0.6% while the Nasdaq composite lifted 0.5%, padding its year-to-date gain to 7.2%. The Dow continues to lag by rising around 0.8% since Jan. 1 at 24,928. Semiconductor, steel, railroad, basic chemical and automaker firms also scored gains of 2% or more.
In Leaderboard, Luxembourg-based steel pipe specialist Tenaris (TS) reaffirmed the notion that 2018 is going to be another year for the stockpickers. The member of IBD’s Steel-Producers industry group flew almost 5% higher to 37.53 in roughly average turnover and is in buy range after a second breakout attempt from a long, deep cup with handle.
Tenaris, who serves many oil and gas companies across North America, joined Leaderboard on March 9. It grew earnings per share 500% and 575% in the past two quarters on sales gains of 32% and 52%.
All of the 12 stocks in Leaderboard, which is up more than 10% year to date through Tuesday, featured charts that are annotated with the correct buy points and sell points to help users maximize their profits and minimize losses.
Tenaris sports a robust 96 Composite Rating on a scale of 1 to 99 in IBD Stock Checkup.
Oil firms weren’t the only stocks in the vast energy sector to rock.
Warrior Met Coal (HCC), highlighted in this Inside The IBD 50 column last week, extended its early gains and jumped more than 5% to 31.64. The solid gain, albeit in light turnover, signals eagerness among institutional investors to not let the stock collapse beneath the rising 50-day moving average.
Warrior broke out of a cup with handle at 17.60 on Nov. 13 and is now making its second rebound off the 50-day moving average near 29, a sound follow-on buy point. Even at follow-on entries, investors should always have a defensive system in place by using the golden rule of selling.
The Dow transports gained 0.5% as big rallies in delivery service, ship transport, trucking and railroad stocks offset a sell-off in the airline sector.
FedEx (FDX), one of the 20 components in the Dow transportation average, rose more than 2% and reached as high as 258 as shares attempt to make a bullish jump back above the 50-day moving average. Volume is running more than double average levels.
FedEx on Tuesday posted a 62% boost in earnings for the February-ended fiscal third quarter to $3.72 a share, smashing the Thomson Reuters.
The Federal Reserve is widely expected to boost the fed funds rate on overnight loans from the central bank to a 1.5%-1.75% target range during an announcement scheduled for 2 p.m. ET.
The U.S. central bank increased short-term interest rates by a quarter point five times from December 2015 to December 2017, and so far it’s stuck to a policy of gradual tightening given that inflation is not growing at a fast clip.
As reported in the “Vital Signs” graphic on top of page A2 in the March 5 edition of IBD Weekly, core consumer prices rose 1.8% vs. year-ago levels, not quite meeting the Fed’s target of minimum 2% inflation. U.S. average hourly wages rose 2.6% in February vs. the same month in 2017, below the consensus estimate of 2.9%.
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(Please follow Saito-Chung on Twitter at @IBD_DChung for more commentary and analysis on stocks, the economy, and financial markets.)