Stocks continue to slide lower after the sudden hawkish turn by the Federal Reserve has spooked investors — pushing the Dow Jones Industrial Average below three-month support levels and starting what looks like the first significant downtrend since January.
Both the April Fed meeting minutes released on Wednesday and a cavalcade of individual Fed speakers have all sent the same message: The market’s one-and-done rate hike expectations for 2016 were too low and we could see as many as three quarter-point hikes this year starting in June.
All of this, of course, assumes ongoing stabilization in inflation and continuing strength in the labor market. But with crude oil trading well and job openings near record highs, this looks assured.
With stocks trading in sideways range since late 2014, things look headed for another bout of volatility and weakness as Wall Street — which has grown addicted to the Fed’s largesse — throws another temper tantrum over policy normalization.
Here are three stocks to watch.
Blue-Chip Stocks at Risk: International Business Machines (IBM)
IBM (IBM) shares have been sliding sideways for the last three months, but remain in the midst of a downtrend going all the way back to 2013.
The company has been plagued by persistent revenue declines as its focus on the cloud and services has run smack into a global rut in IT spending.
The company will next report results on July 18 after the close. Analysts are looking for earnings of $2.88 per share on revenues of $20 billion.
Blue-Chip Stocks at Risk: Intel Corporation (INTC)
Intel Corporation (INTC) shares are languishing below their 200-day moving average continuing a stair-step pattern of lower highs and lower lows that started in late 2014 as PC sales remain moribund despite the much hyped release of Windows 10.
The announcement of 12,000 job cuts hasn’t restored confidence. Nor did an 8% growth in top-line sales for the first quarter, as growth remains uneven.
The company will next report results on July 20 after the close. Analysts are looking for earnings of 53 cents per share on revenues of $13.54 billion.
Blue-Chip Stocks at Risk: 3M Co (MMM)
3M (MMM) shares have broken down sharply out of a four-month uptrend, losing its 50-day moving average for the first time since February. Despite reporting an earnings beat for the first quarter on April 26, the stock experienced profit-taking on a 0.8% drop in local-currency organic sales.
The company will next report results on July 21 before the bell. Analysts are looking at earnings of $2.07 per share on revenues of $7.74 billion.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. A two-week and four-week free trial offer has been extended to InvestorPlace readers.
