Dow Jones rises 550 points, but this key signal is missing; Netflix, Tesla earnings on deck

Dow Jones futures were higher before Tuesday’s open after the Dow Jones Industrial Average rose more than 550 points on Monday. Netflix earnings are out late Tuesday, and Tesla earnings are due on Wednesday.

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But first, Dow Jones stocks Goldman Sachs (GS) and Johnson & Johnson (JNJ) will report early Tuesday.

Stock Market Today: Bank Of America, Charles Schwab Earnings

On Monday, the Dow Jones Industrial Average rose 1.9% and the S&P 500 rose 2.65%. The tech-heavy Nasdaq composite climbed 3.4%. And the small-cap Russell 2000 rose 3.2%.

Among exchange-traded funds, Nasdaq 100 tracker Invesco QQQ Trust ( QQQ ) rose 3.3% and the SPDR S&P 500 ( SPY ) rose 2.5%.

Bank of America (BAC) and Charles Schwab (SCHW) reported its quarterly results Monday morning. BAC shares jumped 6.1%, while Charles Schwab shares sold 2.25%.

EV giant Tesla (TSLA) ran 7% higher, rebounding from Friday’s big slide. Among Dow Jones stocks, apple (AAPL) traded up 2.9% and Microsoft (MSFT) climbed 3.9% in today’s stock market.

AutoZone (AVOID), Cardinal health (CAH), Molina Healthcare (MOH) 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. Merck and Molina Healthcare were featured in this week’s Stocks Near A Buy Zone column, along with two other top stock ideas.

4 top growth stocks to watch right nowrent stock market correction

Dow Jones Futures Today: Treasury Yields, Oil Prices

Ahead of Tuesday’s opening bell, Dow Jones futures were up 0.5%, while S&P 500 futures were up 0.55%. Nasdaq 100 futures rose 0.5% relative to fair value. Keep in mind that overnight action in Dow Jones futures and elsewhere does not necessarily translate into actual trading in the next regular session.

The 10-year government yield ticked up to 4.01%, closing above 4% for the second session in a row. Meanwhile, U.S. oil prices extended losses from Friday’s drop, easing on Monday. West Texas Intermediate futures traded below $86 a barrel.

Q3 Earnings Season

Third quarter earnings season heats up this week, with key reports from Lockheed Martin (LMT), Netflix (NFLX), Procter & Gamble (PG), Travelers (TRV), Alcoa (AA), IBM (IBM), Tesla, American Express (AXP) and Verizon Communications (VZ), along with a number of other high-profile companies.

Earnings reports cause many of the biggest moves in stocks, and they require special care. Strong earnings can propel stocks to previously untouchable levels—and above new buy points—while a less-than-impressive announcement can send stocks tumbling.

The stock market’s reaction to an earnings announcement can often tell you more than the earnings themselves. If results appear strong but the stock still falls, investors may be concerned about the sustainability of growth, rising costs or other potential negative factors.

With the market in rally attempt mode, investors should track companies that easily beat earnings results and have strong upside reactions. They could be among the stock market’s leaders if the market is able to recover.

What to do in today’s stock market: Look for this key signal

Despite Monday’s big gains, the market trend remains in a correction amid heavy losses in recent sessions. Investors are still looking for a follow-up day, which is the key signal that can upgrade the market trend to a confirmed uptrend. The earliest the Nasdaq and S&P 500 could trigger that trend reversal day is Tuesday (Day 4 of the current rally attempt). With IBD trending as a “market in correction,” investors are safer on the sidelines.

Now is the ideal 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, the signal at the bottom of the market. Missing that early opportunity can be a costly mistake.

Friday’s The Big Picture column commented: “Technically, the rally attempt is intact, but the reversal lowers the odds for a bullish follow-through. The 21-day exponential moving averages remain tough resistance, so that’s where investors should look as buyers return.”

Five Dow Jones stocks to watch now

Dow Jones stocks to watch: Chevron, Merck

Energy giant Chevron continues to consolidate above its 50-day line, building a base showing a buy point at 182.50. An early entry of 166.93 is also in play. The Chevron share rose 0.7 percent on Monday.

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 breaks out above a double-bottom 93.12 buy point, according to IBD MarketSmith pattern recognition. Shares rose 2.1% on Monday, closing above the buy point. Remember, the ongoing market correction is a reason to stay on the sidelines; However, the stock is showing abnormal signs of strength. The relative strength line hit a new high last week. Third quarter results are due on 27 October before the opening bell.

Top stocks to watch: AutoZone, Cardinal, Molina, Vertex

Auto parts leader and recent IBD Stock Of The Day AutoZone is about 3% away from a cupbase buy point of 2,362.34. Keep an eye out for a potential handle to offer a lower entry. AutoZone shares rose 1.5 percent on Monday.

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. The income is due on November 4.

Molina Healthcare ended Monday just 2% below a flat-base buy point of 361.35. The stock’s RS line hit a new high last week, confirming that healthcare is a leader to watch.

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 has hit a new high in recent sessions, a sign of big stock market gains.

Netflix revenue

The Netflix earnings will come on Tuesday after the stock market closes. The streaming giant’s adjusted EPS is expected to fall 33% to $2.14 on revenue of $7.83 billion.

Netflix shares are building a double bottom base with a buy point at 250.49. The stock is about 65% off its 52-week high.

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

Tesla shares

Tesla shares rose 7% on Monday, nearly erasing Friday’s 7.55% plunge. On Friday, shares closed at their lowest level since June 2021. Despite Monday’s rally, the stock is still about 47% lower than its 52-week high.

The EV giant’s results for the third quarter are due late Wednesday. Tesla is expected to earn an adjusted $1.01 per share on sales of $22.1 billion.

Dow Jones Leaders: Apple, Microsoft

Among the Dow Jones stocks, Apple shares rose 2.9% on Monday, back from Friday’s 3.2% selloff. Still, shares are about 23% off their 52-week high and below the 50- and 200-day lines.

Microsoft rose 3.9%, continuing its retreat from last week’s 52-week low. The software giant is about 32% off its 52-week high.

Apple earnings are expected on October 27, while Microsoft’s is due on October 25.

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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