Dow Jones reverses on hot inflation data; JPMorgan, UnitedHealth rally on earnings

The Dow Jones Industrial Average turned lower on Friday amid weaker-than-expected US retail sales data. Dow Jones stocks JPMorgan (JPM) and UnitedHealth (UNH) increased after a better-than-expected result.

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September retail sales were flat, missing Econoday estimates for a 0.2% increase. Meanwhile, consumer sentiment topped estimates with a reading of 59.8 in September, above estimates for a reading of 58.8. Finally, the University of Michigan One-Year Inflation Expectations were warmer than expected, at 5.1% in October versus 4.7% in September. The UoM inflation expectations measure the percentage by which consumers expect the price of goods and services to change over the next 12 months.

The stock market today: The earnings season is heating up

Friday started with a busy mix of earnings news. Banks JPMorgan, Morgan Stanley (MS), Citigroup (C) and Wells Fargo (WFC) reported. The health giant UnitedHealth did the same.

Citigroup shares fell less than 1% shortly after the company’s report. JPM shares rose 2% after better-than-expected third-quarter results, while Morgan Stanley shares fell 3% on weak earnings and sales. UNH stock rose 2% on strong results, along with a positive outlook. And Wells Fargo shares jumped 3% despite missing earnings estimates.

Delta Air Lines ( DAL ) rose more than 2% on an analyst upgrade, following its third-quarter report on Wednesday. Grocery chains Hooks (KR) and Albertsons (ACI) traded sharply lower, after the companies confirmed that Kroger would buy Albertsons, in an effort to better compete with Walmart (WMT) and Amazon (AMZN).

Head of electric vehicles Tesla ( TSLA ) reversed 1.6% lower Friday. Among the Dow Jones industrials, tech titans apple (AAPL) and Microsoft (MSFT) was slightly higher after today’s market opening.

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 Friday’s open, the Dow Jones Industrial Average turned 0.1% lower, while the S&P 500 was down 0.3%. The technology-heavy Nasdaq composite reversed 0.8% in morning action.

Among exchange-traded funds, Nasdaq 100 tracker Invesco QQQ Trust (QQQ) was down 0.2%, and the SPDR S&P 500 ETF (SPY) was up 0.1%.

The 10-year Treasury yield fell on Friday, falling to 3.88% after Thursday’s brief jump above 4%. That jump came after inflation data showed September prices rose 0.4%, hotter than the expected 0.2% increase.

Meanwhile, US oil prices lost about 2% on Friday, sending West Texas Intermediate futures below $88 a barrel. The oil price threatens to give back a large part of Thursday’s rise.

Attempt at a stock market rally

On Thursday, the Dow Jones Industrial Average sold off as much as 1.6% before finishing up 2.8%. The tech-heavy Nasdaq composite reversed an early dive of more than 3% to rise 2.2%. The Nasdaq made its best comeback since February 24, according to Dow Jones Market Data.

Thursday’s The Big Picture commented: “With the market in correction mode, investors should track companies that easily beat earnings results and have strong upside reactions. They could be among the stock market leaders if the market is able to extend the rally.”

Thursday was day 1 of the stock market’s last rally attempt, so investors are now waiting for a follow-up day, which could happen as early as Tuesday next week. A follow-up day confirms the beginning of a new uptrend. Be aware that not all follow-ups work, so it’s important to increase exposure slowly and methodically as the uptrend emerges.

Check out IBD stock lists, such as the IBD 50 and stocks near a buy zone, for stock ideas.

Five Dow Jones stocks to watch now

Dow Jones stocks to watch: Chevron, Merck

Energy giant Chevron found support at its 50-day line on Thursday, advancing nearly 5%. The shares are consolidating below a buy point of 182.50 ahead of the company’s earnings announcement on 28 October. Chevron shares fell 1.2% early Friday, trailing 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 nearing a double-bottom buy point at 93.12, according to IBD MarketSmith pattern recognition. The relative strength line reached a new high this week, as the stock decisively regained its key 50-day moving average. Third quarter results are due on 27 October before the opening bell.

Merck shares fell 0.1 percent on Friday morning.

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 of drug distribution heavyweights are once again finding support around their key 10-week moving averages, per Leaderboard commentary. Earnings are due on November 4. Shares traded up 0.7% on Friday.

Energy giant ConocoPhillips regained a 118.49 buy point in a cup with handles amid Thursday’s 5.5% advance. The stock’s RS line reached a new high on Thursday, illustrating strong stock market returns. Earnings are due on 3 November. Shares were down 1.1% on Friday.

Denbury tested the cup base buy point of 94.05 on Thursday, briefly giving up that level before closing above it. Shares erupted earlier this week on reports of that Exxon Mobil (XOM) is considering a takeover. Shares are in the 5% chase zone going up to 98.75, although the market remains in a correction. The company will report earnings on 3 November. Shares fell 0.75% on Friday.

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 this week, confirming the biotech leader as a key stock to watch. VRTX stock found support at its 50-day line on Thursday. The income is due on 27 October. Shares rose 0.8% on Friday.

Join IBD experts as they analyze leading stocks in the current stock market rally attempt on IBD Live

Tesla shares

Tesla shares rose 2.1% on Thursday, reversing heavy morning losses. Shares remain at their lowest level since early July and around 47% of their 52-week high. Tesla shares fell 1.6 percent Friday 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 shares rose 3.4% on Thursday, recovering from new recent lows. Still, shares are about 22% off their 52-week high and below the 50- and 200-day lines. Apple shares rose 0.3 percent on Friday.

Microsoft rose 3.8% Thursday, rebounding from this week’s 52-week low. The software giant is about 33% off its 52-week high. Microsoft shares rose 1% 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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