Dow Jones reverses on key economic data; 10-year government yield nears 11-year high

The Dow Jones Industrial Average turned higher Thursday morning after initial jobless claims unexpectedly fell, retail sales rose and factory indicators fell. Meanwhile, the 10-year Treasury yield remains on the verge of hitting June’s 11-year high.

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The Labor Department’s initial jobless claims fell to 213,000. They were expected to rise to 228,000 against 222,000 last week. And U.S. retail sales rose 0.3% in August compared with July, handily beating Econoday estimates that expected overall sales to be flat. But the Philadelphia Fed’s manufacturing index posted a -9.9, well below the expected 3.1 reading.

Elsewhere, a tentative agreement has been reached to avoid a strike by railroad workers as early as Friday, the Biden administration announced. That news lifted railway shares such as CSX (CSX) and Union Pacific (UNP) after they fell on Wednesday.

Adobe ( ADBE ) reported better-than-expected quarterly earnings, but revenue missed slightly as the company released pre-opening results instead of the usual post-close report. The reason is that the software giant confirmed that it is buying web design collaboration firm Figma for $20 billion. The ADBE share plunged 13%.

Head of electric vehicles Tesla ( TSLA ) traded up 1% Thursday. Among the Dow Jones industrials, tech titans apple (AAPL) and Microsoft (MSFT) was lower after today’s market opening.

In the current market volatility, Arista Networks (A WEB), DoubleVerify (DV), Palo Alto Networks (PANW) and Clean storage (PSTG) — as well as the Dow Jones stock Chevron (CVX) — is among the best stocks to buy and watch. Remember, the market’s increased volatility is a good reason for investors to be more defensive, especially after Tuesday’s market plunge.

DoubleVerify is an IBD Leaderboard stock. Chevron and Palo Alto were featured in this week’s Stocks Near a Buy Zone column.

Dow Jones today: Treasury yields, oil prices

After Thursday’s opening bell, the Dow Jones Industrial Average reversed early losses to gain 0.25%, while the S&P 500 rose 0.1%. The technology-heavy Nasdaq composite rose 0.1% in morning action.

Among exchange-traded funds, Nasdaq 100 tracker Invesco QQQ Trust ( QQQ ) was up 0.2%, and the SPDR S&P 500 ETF ( SPY ) rose 0.15% in early trade.

The 10-year government yield ticked up to 3.45% on Thursday morning. On Tuesday, the 10-year Treasury yield hit its highest closing level since June 14, just shy of the 11-year high of 3.48% set for June 14.

U.S. oil prices fell more than 1% early Thursday, as West Texas Intermediate futures traded around $87 a barrel. Natural gas futures fell 6% as the rail strike was averted, meaning coal shipments will not be disrupted. Natgas futures rose 9% on Wednesday.

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Stock market rally under pressure

On Wednesday, the Nasdaq Composite led the way, rising 0.7 percent. The S&P 500 gained 0.3%, while the Dow Jones Industrial Average rose just 0.1%.

Wednesday’s The Big Picture column commented: “Energy continues to rank No. 1 in IBD’s stock analysis charts for medium- and long-term performance. The sector rose 4% on Tuesday on a price-weighted basis. Confirming the bullish action: Energy Select Sector SPDR ( XLE ) marched 2.8% higher amid crude futures’ fourth gain in five sessions to $88.98 a barrel. VanEck Oil Services ( OIH ) advanced 3.6%.”

The best way to find emerging leadership in the stock market is by 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.

The RS line is plotted on all IBD and MarketSmith charts. In addition, the IBD Stock Screener includes a list of top-rated stocks with relative strength lines at new highs. MarketSmith also has the “RS Blue Line Dot” list, which looks for RS lines with new highs. (IBD MarketSmith provides free access for a full week.)

If you are new to IBD, consider taking a look at the stock trading system and CAN SLIM basics. Recognizing chart patterns is a key to investment guidelines. IBD offers a wide variety of growth stock lists, such as Leaderboard and SwingTrader.

Investors can also create watch lists, find companies nearing a buy point, or develop custom screens at IBD MarketSmith.

Five Dow Jones stocks to watch now

Dow Jones stocks to watch: Chevron

Dow Jones stock Chevron rose 2.4%, again nearing a cup-with-handle last buy point of 166.93 — according to IBD MarketSmith chart analysis — amid a strong run by energy stocks so far this year. The share fell 1.45 percent 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 nowra stock market rally

Top stocks to watch: Arista, DoubleVerify, Palo Alto Networks, Pure Storage

Arista Networks has added a handle to a double-bottom base, placing the correct entry at 132.97, according to IBD MarketSmith chart analysis. An early entry of 126.80 is also in play. Arista’s relative strength line is near highs. The ANET share was slightly lower early Thursday.

IBD Leaderboard stock DoubleVerify holds above a buy point of 28.07 in a bottom base. Shares are in the 5% buy zone which goes up to 29.47. The DV share lost 2% on Thursday morning.

Cybersecurity leader Palo Alto Networks is nearing a 193.01 buy point in a cup with handles despite Wednesday’s 0.5% drop. An early entry around 187 exists because of a trendline, according to IBD Leaderboard commentary. Shares lost nearly 1% Thursday.

Pure Storage is approaching a 31.62 buy point in a cup with handle. Meanwhile, an early entry is also in play after the stock moved above a downtrend within that handle. Shares fell more than 1 percent on Thursday.

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

Tesla shares

Tesla shares rose 3.6%, recovering from Wednesday’s 4% slide. The stock retook its 200-day line, which it had just given up. The electric car giant rose 1% on Thursday morning.

Shares are about 27% off their 52-week high.

Dow Jones Leaders: Apple, Microsoft

Among the Dow Jones stocks, Apple shares rose 1% on Wednesday, recouping a small portion of Tuesday’s 5.9% drop. They remain below their 50-day and 200-day lines. The stock is about 14% away from a cup-with-handle buy point of 176.25. Apple shares fell 0.3 percent on Thursday.

Microsoft rallied on Wednesday, failing to recover much of Tuesday’s 5.5% slide. The software giant is holding strongly below its 50-day and 200-day lines. Shares are about 28% off their 52-week high. Microsoft shares fell 1.2 percent on Thursday morning.

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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