Dow Jones reverses on hot inflation data; Fat minutes next; PepsiCo jumps on earnings
The Dow Jones Industrial Average turned higher on Wednesday despite warm inflation data from the producer price index. Minutes from the Federal Reserve’s latest policy meeting will come later in the day.
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The U.S. Labor Department’s producer index, or PPI, rose 0.4% in September from the previous month, hotter than the expected 0.2% increase, according to an Econoday estimate. Wholesale inflation rose by 8.5% from a year ago, higher than the estimate of 8.4%.
Also on Wednesday, the minutes from the Federal Reserve meeting on 20-21. September at 2 p.m. ET. And the consumer price index comes on Thursday, with retail sales in September ending on Friday.
The third quarter earnings season starts this week, with PepsiCo (PEP) reports strong earnings results Wednesday morning. Shares rose 3% in early morning trading.
The stock market today: Earnings in print
Thursday morning, Black stone (BLK), Delta Air Lines Lines (VALLEY), Domino’s Pizza (DPZ), Taiwan Semiconductor Manufacturing (TSM) and Walgreens Boots Alliance (WBA) will release its quarterly results.
Head of electric vehicles Tesla (TSLA) traded down 1.5% on Wednesday. Among the Dow Jones industrials, tech titans apple (AAPL) and Microsoft (MSFT) was mixed after today’s stock market opening. Intel (INTC) fell 0.7% after Bloomberg reported that the company plans to lay off thousands of workers as early as this month.
Cardinal health (CAH), ConocoPhillips (POLICEMAN), Denbury (THE) and Vertex Pharmaceuticals (VRTX) – as well as Dow Jones stocks Chevron (CVX) and Merck (MRK) — is among the best stocks to watch. Remember, the ongoing stock market correction is a time for investors to sit on the sidelines and build watch lists of top growth stocks.
Cardinal Health and Vertex are IBD Leaderboard stocks. Chevron and Conoco were featured in this week’s Stock Near A Buy Zone column, along with two other top stock ideas. Vertex was IBD’s Stock Of The Day on Friday. Merck was Tuesday’s IBD 50 Stocks To Watch pick.
Dow Jones today: Treasury yields, oil prices
After Wednesday’s opening bell, the Dow Jones Industrial Average was up 0.2% after reversing early losses, while the S&P 500 rose 0.2%. The technology-heavy Nasdaq composite rose 0.3% in morning action.
Among exchange-traded funds, Nasdaq 100 tracker Invesco QQQ Trust ( QQQ ) was up 0.3%, and the SPDR S&P 500 ETF ( SPY ) rose 0.2%.
The 10-year Treasury yield ticked higher on Wednesday, rising to 3.96% and on pace to extend a four-day winning streak. The 10-year government yield is approaching 4%, just as it did at the end of September.
Meanwhile, U.S. oil prices fell more than 1% on Wednesday, sending West Texas Intermediate futures to near $88 a barrel. Oil prices continue to fall after two consecutive days of heavy losses.
Attempt at a stock market rally
On Tuesday, the Nasdaq extended its losing streak to five sessions, falling 1.1%. Four straight closes near session lows bring the possibility of a trip down to the 10,000 level into play. It is an important support level to watch, especially since it is quite close to the June 2020 Nasdaq breakout area.
Tuesday’s The Big Picture commented: “With the Dow still holding above its Sept. 30 low, Tuesday marked the seventh day of a rally attempt for the index, but the S&P 500 and Nasdaq are still looking for the first day of their rally attempts. . S&P undercuts the September 30 low with Tuesday’s loss.”
The S&P 500 held just above its own recent lows. So the S&P 500’s rally attempt remains intact, meaning a potential follow-up day on that index is still possible.
Ahead of a potential follow-up day, now is the perfect time to build a strong watchlist of top-performing stocks. Many long-term leaders tend to break out on or near the follow-through day, confirming a new uptrend. 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: Chevron, Merck
Energy giant Chevron decisively retook its 50-day line last week as US oil prices rebounded. The shares are consolidating below a buy point of 182.50 ahead of the company’s earnings announcement on 28 October. Chevron shares fell 0.3% early Wednesday, following lower oil prices.
CVX stock has a strong 98 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.
Dow Jones member and IBD 50 stock Merck is building a double bottom with a buy point at 93.12, according to IBD MarketSmith pattern recognition. The relative strength line hit a new high on Monday, as the stock definitively regained its key 50-day moving average. The results for the third quarter will be published on 27 October before the opening bell.
Merck shares rose on Wednesday morning. Meanwhile, biotechnology Modern ( MRNA ) rose nearly 5% on news that it would partner with Merck to develop a melanoma treatment the companies are calling a personalized cancer vaccine.
4 top growth stocks to watch right nowrent stock market correction
Top stocks to watch: Cardinal, Conoco, Denbury, Vertex
IBD Leaderboard stock and medical leader Cardinal Health is forming a flat base that has a buy point at 72.38, according to IBD MarketSmith chart analysis. Shares are also in buy territory amid a first test of its 10-week moving average, per Leaderboard commentary. Earnings are due on November 4. Shares were down nearly 2% on Wednesday.
Energy giant ConocoPhillips fell further below a 118.49 buy point in a cup with handles during Tuesday’s 1% drop. The share’s RS line reached a new high last week, which illustrates a strong excess return on the stock market. Earnings come November 3rd. Shares fell 0.2% on Wednesday, the fall coinciding with the drop in oil prices.
Denbury rose 6.6% on Monday, breaking out past a cup base’s 94.05 buy point, following reports that Exxon Mobil (XOM) is considering a takeover. Shares are barely back in the 5% chase zone that goes up to 98.75, although the market remains in a correction. The company will report earnings on 3 November. Shares lost 0.3% on Wednesday.
Biotech leader Vertex Pharmaceuticals continues to build a flat base with a buy point at 306.05 and an early entry at 296.90. Its RS line made another high Tuesday, a sign of big stock market gains. VRTX shares fell 0.4% higher on Wednesday, after the company said it is advancing an investigational program regarding treatment for a rare, protein-based disease that can cause liver and lung damage.
Join IBD experts as they analyze leading stocks in the current stock market rally attempt on IBD Live
Tesla shares
Tesla shares slid 2.9% on Tuesday, extending a losing streak to five sessions. Shares are at their lowest level since early July and about 48% off their 52-week high. Tesla shares fell 1.5 percent on Wednesday morning.
The EV giant’s results for the third quarter are on 19 October. Tesla is expected to earn an adjusted $1.03 per share on sales of $22.4 billion.
Dow Jones Leaders: Apple, Microsoft
Among the Dow Jones stocks, Apple fell 1% on Tuesday but remains above recent lows. Still, shares are about 24% off their 52-week high and below the 50- and 200-day lines. Apple shares fell 0.1 percent on Wednesday.
Microsoft fell 1.7% on Tuesday, extending a losing streak to four sessions and hitting another 52-week low. The software giant is about 36% off its 52-week high. The Microsoft share lost 0.4 percent early Wednesday.
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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