Dow Jones Falls After Fed-Driven Market Selloff; Increase in government interest rates
The Dow Jones Industrial Average fell on Thursday, threatening to add to Wednesday’s Fed-driven stock market selloff. The Ministry of Labour’s weekly unemployment claims came out before the opening.
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Darden restaurants (DRI), together with home builders KB Home (KBH) and Lennar (LEN), were important earnings factors on Thursday morning. A strong early move Salesforce.com ( CRM ) supported Dow, after the company reaffirmed a revenue target of $50 billion for 2026.
Darden Restaurants shares fell nearly 2%. KB Home shares fell nearly 3%, and Lennar shares traded up 1% after the market opened. Salesforce traded up more than 2%.
Block ( SQ ) fell nearly 2% after being downgraded from buy to neutral at Mizuho. Head of electric vehicles Tesla ( TSLA ) traded 0.1% lower on Thursday. Among the Dow Jones industrials, tech titans apple (AAPL) and Microsoft (MSFT) was modestly lower after today’s market opening.
Top stocks to watch amid the market’s recent weakness include Continental resources (CLR), DoubleVerify (DV), Neurocrine Life Sciences (NBIX) and Vertex Pharmaceuticals (VRTX) — as well as the Dow Jones stock Chevron (CVX). Remember, the new stock market correction is a good reason for investors to be mostly, if not completely, on the sidelines.
DoubleVerify is an IBD Leaderboard stock, but its position size was trimmed during last week’s losses. Tesla was featured in this week’s Stocks near a buy zone column. Neurocrine was Wednesday’s IBD 50 Stocks To Watch pick.
Dow Jones Today: Treasury Yields, Oil Prices, Jobless Claims
After Thursday’s opening bell, the Dow Jones Industrial Average lost 0.6%, while the S&P 500 was down 0.8%. The technology-heavy Nasdaq Composite fell 1.15% in morning action.
Among exchange-traded funds, Nasdaq 100 tracker Invesco QQQ Trust ( QQQ ) was down 0.9%, and the SPDR S&P 500 ETF ( SPY ) fell 0.7%.
The 10-year Treasury yield rose to 3.65% on Thursday, recovering from Wednesday’s drop. On Wednesday, the 10-year Treasury yield hit a new high of 3.62% before reversing lower. Meanwhile, US oil prices appeared to be recovering after two days of losses. Oil prices rose more than 1%, pushing West Texas Intermediate futures back above $84 a barrel.
Released early Thursday, initial jobless claims came in at 213,000, below estimates that had expected a rise to 220,000 from 213,000 last week.
Stock correction
On Wednesday, the stock market posted yet another disappointing development, as the major stock indices sold off after the Fed’s interest rate decision. The Dow Jones Industrial Average and S&P 500 both lost 1.7%, while the Nasdaq fell 1.8%.
Wednesday’s The Big Picture column commented that Fed Chairman Jerome Powell “made it crystal clear that the Fed’s No. 1 job today is to focus on getting the long-term inflation rate to 2% annually. And it will be a long time before that can occur .”
To prepare for another stock market rally, investors should wait for two things: a rally attempt, then a follow-up day.
In a market correction, the first day the index closes higher counts as Day 1 of the attempted rally. The action on day 2 and day 3 is irrelevant as long as the index does not undercut its most recent low. If the low is breached, the rally attempt has been made and the market must try again. Wednesday’s action undermined recent lows, so we’re back to looking for a Day 1.
On day 4 and beyond, look for the Nasdaq or S&P 500 to rise sharply in higher volume than the previous session. It is a follow-up day. It gives investors the green light to start buying leading stocks that break out previous correct buy points. It should put your portfolio and mindset in sync with the stock market by gradually committing capital to leading stocks.
During stock market correction, do not tune out. Instead, create watch lists to find emerging leadership in the stock market using the relative strength line. The RS line measures a share’s price development vs. S&P 500. If the stock outperforms the broader market, the RS line angles upward. If a stock lags the broad market, the line will point lower.
Five Dow Jones stocks to watch now
Dow Jones stocks to watch: Chevron
Dow Jones shares Chevron fell 0.8% on Wednesday, still barely above crucial support around its 50-day line. Shares are trading about 6% from their last buy point at 166.93 a cup with handles — according to IBD MarketSmith chart analysis — amid a strong run for energy stocks so far this year. The stock rose 1.8% as oil prices jumped early Thursday.
CVX stock scores a strong 97 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.
3 top growth stocks to buy and watch nowrent stock market correction
Top stocks to watch: Continental, DoubleVerify, Neurocrine, Vertex
Oil explorer and producer Continental Resources is building a cup-with-handle with a buy point of 72.80, according to IBD MarketSmith chart analysis. The relative strength line hit a recent high last week, but remains slightly off its 52-week high. CLR shares were up 1.7% early Thursday.
IBD Leaderboard stock DoubleVerify remains below the 28.07 buy point in a bottom base after Wednesday’s 1.25% loss. The DV share was down 1.3% on Thursday morning.
Wednesday’s IBD 50 Stocks To Watch pick, Neurocrine Biosciences, is building a flat base that has a buy point at 109.36. The share’s RS line reached a new high on Wednesday, which indicates big stock market returns. The stock fell 1.5 percent on Thursday.
Vertex Pharmaceuticals fell further below its 50-day line after Wednesday’s 2.3% loss. The stock has held up well during the ongoing market weakness, as indicated by an RS line approaching new highs. A new flat base has a buy point at 306.05 and the stock’s resilience makes it a good idea to watch. The Vertex share fell 0.55 percent on Thursday.
Join IBD experts as they analyze leading stocks in the current stock market correction on IBD Live
Tesla shares
Tesla stock traded down 2.6% on Wednesday as it continues to trade just outside the buy point at a short base of 314.74. In the meantime, look for more buy points if the stock is able to climb further up the right side of its larger consolidation, which stretches back to January. The stock was down 0.1 percent on Thursday morning.
Bullishly, the stock’s RS line is at its highest level since April. Shares are about 27% off their 52-week high.
Dow Jones Leaders: Apple, Microsoft
Among the Dow Jones stocks, Apple shares fell 2% on Wednesday, snapping a two-day winning streak. Last week, the stock closed at its lowest level since 18 July. Apple shares traded down 0.5% on Thursday morning.
Microsoft lost 1.4% on Wednesday, hitting a new 52-week low. The software giant is about 32% off its 52-week high. Microsoft shares lost 0.1 percent early Thursday.
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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