The Dow Jones Industrial Average rose as much as 230 points before trimming gains Wednesday morning ahead of the Federal Reserve’s interest rate decision set for 2 p.m. ET, to be followed by Fed Chairman Jerome Powell’s press conference.

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General Mills (GIS) was a mover Wednesday, with shares rising more than 6% in morning trade after strong earnings results, though sales missed estimates. Homebuilders KB Home (KBH) and Lennar (LEN) will report after the close.

Micron Technology (MU) rose more than 1% even after Mizuho downgraded the stock to neutral from buy.

Elsewhere, electric-vehicle leader Tesla (TSLA) traded 0.4% lower Wednesday. Among the Dow Jones industrials, tech titans Apple (AAPL) and Microsoft (MSFT) were mixed after today’s stock market open.

Top stocks to watch amid the market’s recent weakness include Continental Resources (CLR), DoubleVerify (DV) and Vertex Pharmaceuticals (VRTX)  — as well as Dow Jones stocks Chevron (CVX) and Merck (MRK). Keep in mind the new stock market correction is a good reason for investors to be mostly, if not entirely, on the sidelines.

DoubleVerify is an IBD Leaderboard stock, but its position size was trimmed during last week’s losses. Tesla was featured in this week’s Stocks Near A Buy Zone column.

Dow Jones Today: Treasury Yields, Oil Prices, Fed Meeting

After Wednesday’s opening bell, the Dow Jones Industrial Average rose 0.6%, while the S&P 500 moved up 0.65%. The tech-heavy Nasdaq Composite gained 0.35% in morning action.

Among exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) was up 0.2%, and the SPDR S&P 500 ETF (SPY) rose 0.5% in early trade.

The 10-year Treasury yield ticked lower to 3.54% Wednesday, easing from this week’s new high. Meanwhile, U.S. oil and natural gas prices surged. Oil prices rose more than 2%, putting West Texas Intermediate futures above $86 a barrel.

The Federal Reserve’s two-day meeting will conclude Wednesday, with an interest rate decision at 2 p.m. ET and comments from Fed Chairman Jerome Powell at 2:30 p.m. Markets show expectations at 82% that the central bank will raise rates by 75 basis points and an 18% probability of a 100 basis-point hike. Investors will be looking for hints at the pace of future rate hikes, and how high the central bank will eventually go.

Adding it all up, markets expect the Federal Reserve’s key policy rate to end this year with a target range of either 4%-4.25% or, a bit more likely, 4.25%-4.5%. And that may not be all. Odds have nosed above 50% for one further quarter-point hike to a range of 4.5%-4.75% next March or May, according to CME Group’s FedWatch page.

Stock Market Correction

On Tuesday, the stock market posted another disappointing performance. The Dow Jones Industrial Average lost 1%, while the S&P 500 declined 1.1%, both undercutting their Friday lows.

Tuesday’s The Big Picture column commented, “Amid expectations for a hawkish statement, the stock market may not like what the Fed has to say Wednesday. A tradable rally could ultimately lift the Nasdaq back to the 12,000 level. But it’s still a market under distribution, so a trip to the June lows could also be in the cards.”

To prepare for a new stock market rally, investors should be waiting for a follow-through day. When the market is in a correction, look for at least one major index to attempt a bottom.

The first day the index closes higher counts as Day 1 of its attempted rally. The action on Day 2 and Day 3 is irrelevant as long as the index doesn’t undercut its latest low. If that low is undercut, the rally try is done and the market needs to try again.

On Day 4 and later, you are looking for the Nasdaq or S&P 500 to rise sharply in higher volume than the previous session. That’s a follow-through day. It gives investors the green light to start buying leading stocks breaking out past correct buy points. It should put your portfolio and mindset in sync with the stock market action by gradually committing capital to leading stocks.

During stock market correction, don’t tune out. Instead, create watchlists to find emerging stock market leadership by using the relative strength line. The RS line measures a stock’s price performance vs. the S&P 500. If the stock is outperforming the broader market, the RS line angles upward. If a stock lags the broad market, the line will point lower.

Five Dow Jones Stocks To Watch Now

Dow Jones Stocks To Watch: Chevron, Merck

Dow Jones stock Chevron fell 0.4% Tuesday, still holding above crucial support around its 50-day line. Shares are trading about 6% away from their latest buy point at 166.93 out of a cup with handle — according to IBD MarketSmith chart analysis — amid a strong performance by energy stocks so far this year. The stock climbed 1.4% early Wednesday.

CVX stock shows a strong 97 out of a perfect 99 IBD Composite Rating, per the IBD Stock Checkup. Investors can use the IBD Composite Rating to easily gauge the quality of a stock’s fundamental and technical metrics.

Drug giant Merck is also trying to fight the stock market downtrend. Shares are building a flat base that has a 95.82 buy point, but they are stuck below their 50-day line and near their recent lows. Merck shares were up 0.3% early Wednesday.

3 Top Growth Stocks To Buy And Watch In The Current Stock Market Correction

Top Stocks To Watch: Continental, DoubleVerify, Vertex

Oil explorer and producer Continental Resources is building a cup with handle with a 72.80 buy point, according to IBD MarketSmith chart analysis. The relative strength line touched a recent high last week, but remains a bit off its 52-week high. CLR shares traded up 1.7% early Wednesday.

IBD Leaderboard stock DoubleVerify remains below its 28.07 buy point in a bottoming base following Tuesday’s 1.35% loss. DV shares were down 0.4% Wednesday morning.

Vertex Pharmaceuticals remains below its 50-day line despite Tuesday’s 0.6% gain. The stock has been holding up well during the ongoing market weakness, as indicated by a RS line that is approaching new highs. There is no new base yet, but the stock’s resilience makes it a top idea to watch. Vertex shares rose 0.1% Wednesday.

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

Tesla Stock

Tesla stock traded down a fraction Tuesday, as it approaches a short base’s 314.74 buy point. Meanwhile, keep an eye out for additional buy points if the stock is able to climb further up the right side of its larger consolidation, which spans back to January. Shares moved down 0.4% Wednesday morning.

Bullishly, the stock’s RS line is at its highest level since April. Shares are about 25% of their 52-week high.

Dow Jones Leaders: Apple, Microsoft

Among Dow Jones stocks, Apple shares climbed 1.6% Tuesday, adding to Monday’s gain. Last week, the stock closed at its lowest level since July 18. Apple stock traded down 0.1% Wednesday morning.

Microsoft lost 0.85% Tuesday, hitting another 52-week low. The software giant is about 30% off its 52-week high. Microsoft shares gained 0.9% early Wednesday.

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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