Dow Jones futures swung between narrow gains and losses Monday morning, as the market sought direction on the heels of Friday’s stock market dive. Federal offices, banks and the bond market were closed for the Columbus Day holiday. Tesla stock fell despite hitting a record of electric-vehicle deliveries from its Shanghai factory in September.
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Third-quarter earnings season kicks off this week with results due from BlackRock (BLK), Delta Air Lines (DAL), Citigroup (C), Domino’s Pizza (DPZ), Fastenal (FAST), Morgan Stanley (MS), PepsiCo (PEP), JPMorgan Chase (JPM), UnitedHealth (UNH), Walgreens Boots Alliance (WBA) and Wells Fargo (WFC).
U.S. automakers Ford (F) and General Motors (GM) fell following downgrades by UBS. Ford skidded 4% after being downgraded from neutral to sell, while GM stock declined more than 3%, moved from a buy rating to neutral.
Electric-vehicle leader Tesla (TSLA) traded 0.3% lower Monday. Among the Dow Jones industrials, tech titans Apple (AAPL) and Microsoft (MSFT) were mixed ahead of today’s stock market open.
As the stock market continues to wait for confirmation of a new uptrend, Cummins (CMI), Murphy USA (MUSA), Neurocrine Biosciences (NBIX), Vertex Pharmaceuticals (VRTX) and World Wrestling Entertainment (WWE) — as well as Dow Jones stocks Chevron (CVX) and UnitedHealth (UNH) — are among the top stocks to watch. Amid the recent volatility, the market’s status remains “in correction,” and investors should remain on the defensive.
Vertex is a recent addition to IBD Leaderboard and IBD’s Stock Of The Day on Friday. Murphy USA was featured in last week’s Stock Near A Buy Zone column, along with three other top stock ideas. World Wrestling was a Stock Of The Day on Sept. 29. Neurocrine was a Stock Of The Day on Sept. 26.
Dow Jones Today: Treasury Yields, Oil Prices
Ahead of Monday’s opening bell, Dow Jones futures rose 0.15% vs. fair value. Merck (MRK) helped prop the Dow, trading more than 2% higher after reporting positive trial results from a pulmonary arterial hypertension treatment.
S&P 500 futures inched higher, with Ford and GM taking the index’s hardest hits. Nasdaq 100 futures fell 0.1% in morning action.
Remember that overnight action in Dow Jones 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) was down 0.1%, and the SPDR S&P 500 ETF (SPY) fell 0.2%.
The 10-year Treasury yield was on hold, with bond markets closed for the Columbus Day holiday, after settling at 3.88% on Friday. Last week, the 10-year Treasury yield dropped as low as 3.56% before rebounding.
Meanwhile, U.S. oil prices gave up a small part of last week’s rebound, falling nearly 1% Monday. West Texas Intermediate futures traded just below $92 a barrel.
Stock Market Rally Attempt
All three major stock indexes gapped down Friday morning and never recovered. The Nasdaq composite slumped 3.8%; the S&P 500 lost 2.8% and the Dow Jones Industrial Average gave back 2.1%.
The losses did not undercut the lows set by the major indexes on Sept. 30. That left the rally attempt launched by Oct. 3’s strong gains in effect.
Friday’s The Big Picture commented, “The nascent rally attempt is still intact as indexes hold above their Sept. 30 lows. But the prospect of higher interest rates, a strong U.S. dollar, pressure on corporate earnings and worries about a hard landing for the economy are still major impediments for the stock market.”
Now, ahead of a potential follow-through day, is the perfect time to build a strong watchlist of top-performing stocks. Many long-term leaders tend to break out at or near the follow-through, the market bottoming signal. Missing that early opportunity can be a costly mistake.
One challenge to forming a watchlist during a correction is that, as you wait for a follow-through day, stock charts may change. That means some bases among your watchlist stocks may deteriorate. So updating is important.
Check out IBD Stock Lists, like the IBD 50 and Stocks Near A Buy Zone, for additional stock ideas.
Five Dow Jones Stocks To Watch Now
Dow Jones Stocks To Watch: Chevron, UnitedHealth
Dow Jones stock UnitedHealth declined 2.75% Friday, falling back to its long-term 200-day moving average line. Despite the recent losses, shares are still building a flat base that has a 553.23 buy point, according to IBD MarketSmith chart analysis. UnitedHealth reports its third-quarter results on Friday. UNH stock inched higher Monday morning.
Energy giant Chevron decisively reclaimed its 50-day line last week, as U.S. oil prices recovered. Shares are building a consolidation with a 182.50 buy point. Chevron shares moved down 0.5% early Monday, tracking lower with oil prices.
CVX stock boasts a strong 98 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.
4 Top Growth Stocks To Watch In The Current Stock Market Correction
Top Stocks To Watch: Cummins, Murphy USA, Neurocrine, Vertex, WWE
Cummins is moving rapidly up the right side of a cup base that has a 233.95 buy point. Shares reclaimed their 50-day line last week in heavy volume, a positive sign. The company’s upcoming earnings results are Nov. 4. Cummins stock popped 1.6%. Monday morning.
Gas station and mini-market leader Murphy USA is building a flat base with a 303.19 buy point. Shares declined 2.6% Friday, extending a losing streak to three sessions. The stock is finding stout resistance at its 50-day line. A decisive retake of this level would be bullish for the stock’s base-building prospects. Q3 earnings results are due out Oct. 26. Shares dipped 1.5% Monday.
Neurocrine Biosciences gave up its flat base’s 109.36 buy point, according to IBD MarketSmith chart analysis, during Friday’s 2.8% loss. The RS line hit a new high last week, a bullish signal. Shares were unchanged early Monday.
IBD Leaderboard stock Vertex Pharmaceuticals is still near flat base’s 306.05 buy point, but is back below an early entry at 296.24. While the weak market status may keep you on the sidelines, the stock’s resilience makes it a top idea to watch. Its RS line is at new highs, a sign of big stock market outperformance. VRTX stock traded 0.8% lower Monday.
World Wrestling Entertainment remains about 3% below a cup base’s 75.33 entry after Friday’s 0.7% drop. The RS line hit a new high Friday. WWE shares added 0.8% Monday.
Tesla Stock
Tesla stock dived 6.3% Friday, closing at its lowest level since July 13. Shares inched lower Monday morning. Tesla delivered more than 83,000 electric vehicles, an 8% increase from August, from its Shanghai factory in September, according to data released by the China Passenger Car Association.
Shares are about 46% off their 52-week high and sharply below their 50- and 200-day lines. The EV giant’s Q3 results are Oct. 19.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares sold off 3.7% Friday, ending near their recent lows. Shares are about 23% off their 52-week high and below their 50- and 200-day lines. Third-quarter earnings results are Oct. 27. Apple stock edged 0.2% higher Monday morning.
Microsoft dropped 5.1% Friday, finishing just off its 52-week low price. The software giant is 33% off its 52-week high. Microsoft shares slipped 0.6% early Monday.
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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