The Dow Jones Industrial Average sold off 400 points Friday morning after the Labor Department’s stronger-than-expected September jobs report. Advanced Micro Devices ( AMD ) plunged nearly 7%, triggering an early chip selloff, and reported weaker-than-expected third-quarter preliminary results late Thursday.
AMD warned that the weakness was a combination of a “weaker than expected PC market and significant inventory correction actions across the PC supply chain.” Meanwhile, Taiwan Semiconductor Manufacturing (TSM) reported higher than expected quarterly income. But the shares were still down around 3.5 percent.
The stock market today: Job report
September’s jobs report came out before Friday’s open at 8:30 a.m. ET. The U.S. economy added 263,000 jobs in September, topping Econoday estimates that called for a job gain of 250,000. The unemployment rate fell to 3.5%, below the estimate of 3.7%.
Aehr test systems (AEHR) countered the early action in the chip sector. It beat Wall Street estimates for the fiscal first quarter and kept its robust growth targets for the full year. Shares rose more than 12% in morning trading.
Lyft (LYFT) tumbled more than 5% after RBC downgraded the stock from outperform to sector perform with a price target of 16, down from 30. Twitter ( TWTR ) fell 1% Friday morning as a judge ruled that Elon Musk must complete his $44 billion Twitter deal by Oct. 28 or face a November trial.
Head of electric vehicles Tesla (TSLA) traded 2.2% lower on Friday. Among the Dow Jones industrials, tech titans apple (AAPL) and Microsoft (MSFT) were both sharply lower after today’s market opening.
While the stock market continues to wait for a day of trend change, Cummins (CMI), Murphy USA (MUSA), Neurocrine Life Sciences (NBIX), Vertex Pharmaceuticals (VRTX) and World Wrestling Entertainment (WWE) – as well as the Dow Jones stock UnitedHealth (UNH) — is among the best stocks to watch. Amid this week’s volatility, the market’s status remains “in correction” and investors should remain on the defensive.
Vertex is a recent addition to the IBD Leaderboard. Cummins is an IBD SwingTrader stock. Murphy USA was featured in this week’s Stock Near A Buy Zone column, along with three other top stock ideas. World Wrestling was a Stock Of The Day on September 29th. Neurocrine was a Stock Of The Day on September 26.
Dow Jones today: Treasury yields, oil prices
After Friday’s opening bell, the Dow Jones Industrial Average fell 1.35%, while the S&P 500 lost 1.75%. The tech-heavy Nasdaq Composite fell 2.3%, with AMD, Nvidia (NVDA), Intel (INTC) and ASML (ASML) led the declines.
Among exchange-traded funds, Nasdaq 100 tracker Invesco QQQ Trust ( QQQ ) was down 2%, and the SPDR S&P 500 ETF ( SPY ) fell 1.3%.
The 10-year government yield ticked up to 3.9% on Friday morning. The 10-year Treasury yield fell as low as 3.56% this week before rebounding. Last week, the 10-year government yield briefly topped 4%, which had not been done for more than ten years.
Meanwhile, US oil prices continued this week’s rally, rising more than 1% on Friday. West Texas Intermediate futures climbed near $90 a barrel. Last week, oil fell to its lowest level of the year – around $76 a barrel – before recovering.
Attempt at a stock market rally
On Thursday, the Dow Jones Industrial Average fell 1.1%, while the S&P 500 closed down 1%. The Nasdaq composite lost 0.7%, and the small-cap Russell 2000 fell 0.6%. The S&P 500 and Nasdaq are holding above their recent lows, so their rally attempts remain intact.
Monday’s market advance set off another rally attempt, which was your Day 1. However, if the major indexes broke below their September 30 lows, that would stop the rally attempt and leave the market still looking for a bottom.
Thursday’s The Big Picture commented: “Thursday was Day 4 of the stock market’s rally attempt, so investors are now patiently waiting for a follow-up day, which will signify the beginning of a new uptrend. Be aware that not all follow-ups work, so it’s important to increase exposure slowly and methodical, as the uptrend shows.”
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’s bottom signal. Missing that early opportunity can be a costly mistake.
One challenge with creating a watchlist during a correction is that when you wait for a follow-up day, stock charts can change. That means some bases among your watchlist stocks could be underperforming. So updating is important.
Check out IBD stock lists, like the IBD 50 and stocks near a buy zone, for more stock ideas.
Five Dow Jones stocks to watch now
Dow Jones stocks to watch: UnitedHealth
Dow Jones stock UnitedHealth fell 1.5% on Thursday, snapping a three-day winning streak and hitting resistance at the key 50-day line. Shares are building a flat base that has a buy point at 553.23, according to IBD MarketSmith chart analysis. UNH stock fell 1.55% Friday morning.
UNH stock scores a solid 94 out of a perfect 99 IBD Composite Rating, according to IBD Stock Checkup. Investors can use the IBD Composite Rating to easily measure the quality of a stock’s fundamental and technical metrics. UnitedHealth reports its third quarter results on October 14.
4 top growth stocks to watch right nowrent stock market correction
Top stocks to watch: Cummins, Murphy USA, Neurocrine, Vertex, WWE
Cummins is moving up quickly on the right side of a cup base that has a buy point at 233.95. The stock retook its 50-day line this week on heavy volume, a positive sign. The company’s upcoming earnings results are on November 4. Cummins shares were down 0.7% Friday morning.
Gas station and mini market leader Murphy USA is building a flat base with a buy point at 303.19. Shares fell 1.5% Thursday, continuing lower after Tuesday’s bearish reversal. The stock is finding strong resistance at its 50-day line. A decisive retracement of this level would be bullish for the stock’s base-building prospects. Earnings results for the third quarter will come on 26 October. Shares fell 1.4% on Friday.
Neurocrine Biosciences is in buy territory at 5% past a flat base buy point of 109.36, according to IBD MarketSmith chart analysis. The RS line hit a new high on Thursday, a bullish signal. The shares rose 0.7 percent early Friday.
IBD Leaderboard stock Vertex Pharmaceuticals is fast approaching a flat base 306.05 buy point and above an early entry at 296.24. While the weak market status may keep you on the sidelines, the stock’s resilience makes it a good idea to watch. Its RS line is near new highs, a potential sign of big stock market results. VRTX stock fell 0.3% on Friday.
World Wrestling Entertainment is trying to break out past a cup base of 75.33, but closed about 3% below the entry after Thursday’s 0.7% decline. The RS line hit a new high this week. WWE shares rose 0.1 percent on Friday.
Join IBD experts as they analyze leading stocks in the current stock market rally attempt on IBD Live
Tesla shares fell 1.1% on Thursday, closing at their lowest level since July 13. Shares fell 2.2% on Friday morning, then CEO Musk tweeted, “Excited to announce production start of Tesla Semi Truck with deliveries to @Pepsi Dec 1st!.” He added, “500 mile range and super fun to drive.”
Shares are about 40% off their 52-week high and sharply below the 50- and 200-day lines. The EV giant’s results for the third quarter are on 19 October.
Dow Jones Leaders: Apple, Microsoft
Among the Dow Jones stocks, Apple shares fell 0.7% on Thursday, ending a three-day winning streak. The shares are still approx. 21% off the 52-week high and below the 50- and 200-day lines. The result for the third quarter is on 27 October. Apple shares fell 2.2% on Friday morning.
Microsoft fell 1% Thursday, snapping a three-day winning streak. Shares are still on the way back from last week’s 52-week low. The software giant is still about 30% off its 52-week high. Microsoft shares fell 3.6% early Friday.
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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