Dow Jones falls 200 points on hot inflation data; Tesla shares fall ahead of AI Day
The Dow Jones Industrial Average fell on Friday morning on hot inflation data, which came from the Personal Consumption Expenditure Price Index, heading into the final trading session of the quarter. Tesla shares fell ahead of the company’s AI day, while Micron Technology and Nike were key drivers of earnings.
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Inflation data
The Federal Reserve’s preferred measure of inflation came out Friday, with the personal consumption expenditures price index rising 0.3% for the month of August, marking a year-over-year increase of 6.2%. Both figures were warmer than expected. Personal income rose 0.3% in August, in line with Econoday estimates.
The PCE price index is one measure of US inflation, and tracks the change in the prices of goods and services purchased by consumers throughout the economy.
Stock market today: Micron, Nike earnings
Micron technology (MU) and Nike (NKE) were key earnings reporters overnight.
Micron shares rose more than 2% after the memory chip giant missed Wall Street’s already lowered expectations for fourth-quarter sales and guided much lower for the current quarter. It also reduces investment plans.
Nike shares plunged 12% after the Dow just beat Wall Street expectations for its first-quarter earnings report. But gross margins fell as inventory increased, and the sportswear giant said it would move aggressively to liquidate excess merchandise.
Head of electric vehicles Tesla (TSLA) traded 1.3% lower on Friday. Technical titans apple (AAPL) and Microsoft (MSFT) was mixed after today’s stock market opening.
In the ongoing weakness of the stock market, DoubleVerify (DV), Hostess Brands (TWNK), Neurocrine Life Sciences (NBIX), Tour (TTC), Vertex Pharmaceuticals (VRTX) and World Wrestling Entertainment (WWE) – as well as the Dow Jones stock UnitedHealth (UNH) — is among the best stocks to watch. Remember, the deeper stock market correction is a time for investors to sit on the sidelines and map out watch lists.
DoubleVerify and Vertex are IBD Leaderboard stocks. Hostess and Toro were featured in this week’s Stock Near A Buy Zone column. Neurocrine Biosciences was Monday’s stock of the day.
Dow Jones today: Treasury yields, oil prices
After Friday’s opening bell, the Dow Jones Industrial Average fell 0.55%, while the S&P 500 was down 0.5%. The technology-heavy Nasdaq Composite lost 0.3% in morning action.
Among exchange-traded funds, Nasdaq 100 tracker Invesco QQQ Trust ( QQQ ) was down 0.55%, and the SPDR S&P 500 ETF ( SPY ) fell 0.6%.
The 10-year Treasury yield fell to 3.72% on Friday morning. Earlier this week, the 10-year Treasury yield topped 4%, which had not been done in more than a decade. The 10-year government yield is battling for its ninth straight weekly advance, marking the longest rise since 2004.
Meanwhile, oil prices in the US fell slightly. West Texas Intermediate futures were just below $81 a barrel, after falling to their lowest level of the year on Monday.
Stock correction
On Thursday, the Dow Jones Industrial Average sold off 1.5%, while the S&P 500 closed down 2.1%. The Nasdaq composite plunged 2.8%. The small-cap Russell 2000 lost nearly 2.4%. The S&P 500 and Nasdaq broke past recent lows, ending the fledgling rally attempt.
Thursday’s The Big Picture column commented, “Amid a stock market that continues to fall precipitously, new IBD Leaderboard stock Vertex Pharmaceuticals is a stock market leader to watch.”
When the Nasdaq breached its lows on September 23, the tech-heavy composite’s two-day rally attempt fizzled out. Investors are now looking for another rally attempt. Amid the continued selloff, investors should remain largely, if not completely, on the sidelines.
It is nevertheless important for investors to make good use of this downtime. Now is an ideal opportunity to study market bottoms and build a strong watchlist of top-performing stocks. Many long-term leaders tend to break out on or near the follow-through day, the signal at the bottom of the market. Missing that early opportunity can be a costly mistake.
Five Dow Jones stocks to watch now
Dow Jones stocks to watch: UnitedHealth
Dow Jones stock UnitedHealth continues to hold above its long-term 200-day line. Shares are building a flat base that has a buy point at 553.23, according to IBD MarketSmith chart analysis. The stock’s resilience made it Tuesday’s IBD 50 Stocks To Watch pick. Shares rose 0.5 percent Friday morning.
UNH stock scores a solid 95 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.
4 top growth stocks to watch right nowrent stock market correction
Top stocks to watch: DoubleVerify, Hostess, Neurocrine, Toro, Vertex, WWE
IBD Leaderboard stock DoubleVerify closed just below the 28.07 buy point in a bottom base after Thursday’s 0.3% drop. Per Leaderboard commentary, DoubleVerify found support near its 50-day line and has a relative strength line at new highs. The shares fell 1.2 percent on Friday.
Twinkie maker Hostess Brands is in the 5% chase zone above a 23.23 buy point out of a cup with handle, according to IBD MarketSmith chart analysis. Bullishly, Hostess’ relative strength line continues to make new highs. Remember, the weak market trend should keep you on the sidelines, but it is one of the best stocks to watch. The stock rose 0.1 percent on Friday.
Monday’s IBD Stock Of The Day, Neurocrine Biosciences, is still building a flat base that has a buy point at 109.36. Shares are right at the 50-day line after Thursday’s loss of 0.1%. The RS line hit a new high on Thursday, so the stock has avoided much of the market’s steep decline in recent sessions. The shares rose 0.3 percent on Friday.
Toro stock has a flat base and about 5% away from a 92.05 buy point. Shares are trading back below the 50-day line after Thursday’s 1.2% decline. The RS line is at new heights. Toro shares rose 0.3 percent on Friday.
Vertex Pharmaceuticals decisively retook its 50-day line after Wednesday’s 2.7% rally. It forms a flat base with a buy point of 306.05 and an early entry of 296.24. The stock’s resilience makes it a top idea to watch. Shares rose on Friday.
World Wrestling Entertainment continues to build a flat base that has an entry of 75.33. The stock is still trying to recover its 50-day line. A decisive retracement of that key level would be bullish for the stock’s base-building prospects. WWE stock was up 0.1% early Friday.
Join IBD experts as they analyze leading stocks in the current stock market correction on IBD Live
Tesla shares
Tesla shares slid 6.8% on Thursday, snapping a three-day winning streak and closing at the lowest level since July 26. Shares are sharply below the 50-day line. Tesla shares fell 1.3% ahead of the company’s AI Day.
AI Day is an event where Tesla showcases its latest technology. CEO Elon Musk said in a June 2 chirping that the event, originally scheduled for August 19, would be pushed back with the hope that a prototype of their Optimus robot would work at a later date.
The AI event is set to start at 5:00 PM PT, which means all news will come after the end of extended trading. Over the weekend, Tesla is likely to release third quarter delivery data. So investors won’t be able to weigh in until early Monday.
Last week, the stock’s relative strength line reached its highest level since April, but has fallen sharply in recent sessions. Shares are about 35% off their 52-week high.
Dow Jones Leaders: Apple, Microsoft
Among the Dow Jones stocks, Apple stock plunged 4.9% on Thursday after an analyst downgrade. Apple shares fell 0.5% on Friday morning, threatening to extend a losing streak to three sessions.
Microsoft fell 1.5% on Thursday, hitting a new 52-week low. The software giant is more than 32% off its 52-week high. Microsoft shares rose 0.1 percent 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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