The Dow Jones Industrial Average is drifting lower again on Tuesday as the Federal Reserve begins its two-day policy meeting. Expectations are extremely high that the Fed will raise interest again for the second time in three months; a massive acceleration from the prior pace of two rate hikes over the past 10 years.
The move comes amid growing evidence of labor market tightening and building inflationary pressure. Measures of both business, investor, and consumer confidence — all leading indicators of economic activity — have also being soaring since the surprise election of President Donald Trump and his plans for tax cuts, infrastructure spending, and deregulation.
Yet after a historic run-up in recent months, the specter of higher interest rates is threatening to result in some profit taking and weakness. It has been more than 100 days since large-cap stocks suffered a 1% pullback. Commodities and bonds are already weakening.
With this in mind, keep an eye on these three Dow Jones stocks looking weak and vulnerable to some downside movement:
Dow Jones Stocks Feeling the Pressure: Intel (INTC)
Intel Corporation (NASDAQ:INTC) shares are trading below their 200-day moving average for the first time since June — rolling down out of a double-top pattern with resistance near the $38-a-share level.
The impetus? The apparent response from investors over the company’s $15.3 billion acquisition of Israeli autonomous vehicle systems maker Mobileye NV (NYSE:MBLY) announced on Monday.
While Mobileye instantly puts Intel right in the thick of the “car of tomorrow,” the hefty tag represents a 34% premium to MBLY’s closing price, leading to questions about valuation.
INTC will next report results on April 27 after the close. Analysts are looking for earnings of 61 cents per share on revenues of $14.51 billion.
Dow Jones Stocks Feeling the Pressure: General Electric (GE)
General Electric Company (NYSE:GE) shares are threatening to fall below their post-November uptrend after dropping below both its 200-day and 50-day moving averages. Shares have formed double-top resistance near the $32-a-share level and have now reversed roughly half of its post-election “pile into all the industrials” rally.
Fundamentally, GE has a valuation problem, trading at or above the same price-to-book, price-to-sales and price-to-earnings levels as when the stock peaked in 2007.
The only thing that’s lower, really, is the price of GE stock.
General Electric will next release results on April 21 before the bell. Analysts are looking for earnings of 17 cents per share on revenues of $26.5 billion.
Dow Jones Stocks Feeling the Pressure: Exxon Mobil (XOM)
Exxon Mobil Corporation (NYSE:XOM) can at least make the case that it’s something of a bargain right now, but that’s not much solace at the moment.
XOM shares are threatening to break down below the trading range that’s been in place since September as crude oil weakens further below the $50-a-barrel level. Crude oil has been hit by a combination of inventory concerns, ramping U.S. shale oil activity and fears that OPEC will soon abandon its oil production freeze agreement as it loses market share once more.
Exxon peers including Chevron Corporation (NYSE:CVX) and Royal Dutch Shell PLC (NYSE:RDS.B) are under similar pressure.
The company will next report results on April 28 before the bell. Analysts are looking or earnings of 91 cents per share on revenues of $69.8 billion.
Anthony Mirhaydari is founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
