Dow Jones Futures: What To Do After Today's Stock Market Surge; Fed Set To Hike Interest Rates

Dow Jones futures were lower after Tuesday's stock market surge. The Federal Reserve's interest-rate decision is due out Wednesday afternoon. The Russia-Ukraine war remains a key focal point in the stock market today. Treasury yields held at their highest level since July 2019, while U.S. oil prices fell below $95 a barrel Tuesday.

Investors need patience and discipline right now, keeping cash mostly on the sidelines to see if the new market rally attempt can signal a new uptrend. Dow Jones health care giant UnitedHealth (UNH), Costco (COST) and O'Reilly Automotive (ORLY) are among those holding up well in the current stock market volatility.

Stock Market Today

On Tuesday, the Dow Jones Industrial Average advanced 1.8%, while the S&P 500 rose 2.1%. The tech-heavy Nasdaq composite surged 2.9%. The Nasdaq and S&P 500 snapped three-day losing streaks.

Among the Dow Jones leaders, Apple (AAPL) rallied 3% and Microsoft (MSFT) traded up 3.9% in today's stock market. UnitedHealth, a Dow Jones stock to watch, finished Tuesday just below a new buy point.

Electric-vehicle leader Tesla (TSLA) raced more than 4.5% higher Tuesday after announcing price hikes for its cars.

Amid the volatile, headline-driven market, Costco, O'Reilly Automotive, Regeneron Pharmaceuticals (REGN) and Vertex Pharmaceuticals (VRTX) are among Tuesday's top stocks to watch. Keep in mind that current stock market conditions should keep investors in cash and on the sidelines.

Microsoft, Tesla and Vertex are IBD Leaderboard stocks. O'Reilly was Tuesday's IBD 50 Stocks To Watch pick. And Costco and Regeneron were featured in this week's Stocks Near A Buy Zone column.

Dow Jones Today: Fed Decision

After Tuesday's market close, Dow Jones futures lost 0.3% vs. fair value, while S&P 500 futures moved down 0.3%. Nasdaq 100 futures dropped 0.2% vs. fair value. Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session. Among exchange traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) jumped 3.1%, and the SPDR S&P 500 ETF (SPY) climbed 2.2% Tuesday.

The 10-year U.S. Treasury yield rose to 2.16% to hit its highest point since July 2019. On Monday, the 10-year Treasury yield surged to 2.14%. U.S. oil prices plunged more than 7% Tuesday, as West Texas Intermediate crude traded around $95 a barrel. Dow Jones energy giant Chevron (CVX) tumbled more than 5%, but is still sharply above the 20%-25% profit-taking area from a cup base's 113.21 entry.

The Federal Reserve's two-day meeting will end Wednesday with an interest-rate decision at 2:00 p.m. ET. Expectations call for the central bank to raise interest rates by a quarter percentage point, which would be the first increase since 2018.

Stock Market Rally Attempt: What To Do Now

The stock market posted strong action Tuesday, as the major stock indexes finished with big gains. But a key element of a follow-through day — higher volume than the previous day — was lacking. So despite the strong gains, the stock market correction is still here.

A follow-through day — signaling the start of a new uptrend — is still possible on the S&P 500 anytime now, since the major stock index didn't undercut the lows on Feb. 24. Meanwhile, the Nasdaq hit fresh correction lows Monday, so it will take some time before a potential follow-through day on that index. However, even if a follow-through day occurs, there isn't a whole lot of merchandise to purchase after the recent heavy losses in the broad market.

During market corrections, investors should be in cash. But don't tune out. Instead, keep a watchlist of top-performing stocks that are trying to hold up during the market weakness. Use the relative strength line to help you identify some emerging leaders. You can also find stocks newly added to IBD's proprietary watchlists like the IBD 50 here.

Be sure to check out the IBD University on how to identify market bottoms and get invested after a follow-through day.

Tuesday's The Big Picture column commented, "To be sure, Tuesday's gains were impressive. But, as we learned only days ago, big gains don't necessarily signal true market uptrends. Tuesday's index gains were the largest since March 9, which only took the market lower." Amid the current volatility, it's an important time to read and follow IBD's The Big Picture column.

If you're new to IBD, consider taking a look at its stock trading system and CAN SLIM basics. Recognizing chart patterns is one key to the investment guidelines. IBD offers a broad range of growth stock lists, such as Leaderboard and SwingTrader.

Investors also can create watchlists, find companies nearing a buy point, or develop custom screens at IBD MarketSmith.

Four Dow Jones Stocks To Watch Now

Dow Jones Stocks To Watch: UnitedHealth

Managed care giant UnitedHealth shows a 500.10 buy point with a handle entry on a double-bottom base. Shares ended Tuesday within striking distance of their latest entry after the session's 2.05% rise. UNH was Monday's IBD Stock Of The Day.

Bullishly, the stock's relative strength line is near new highs, indicating significant stock market outperformance.

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