The Dow Jones Industrial Average briefly dropped more than 250 points Monday before cutting losses, as the 10-year Treasury yield surged to an 11-year high ahead of the Federal Reserve’s interest-rate decision Wednesday. The major stock indexes threatened to add to last week’s stock market losses.
AutoZone (AZO) was an earnings mover Monday morning. Shares of the auto-parts store climbed 2.5% on better-than-expected fiscal fourth-quarter results. Other key earnings reporters this week include Costco (COST), Darden Restaurants (DRI), General Mills (GIS), KB Home (KBH) and Lennar (LEN).
Elsewhere, electric-vehicle leader Tesla (TSLA) traded down 1.7% Monday. Among the Dow Jones industrials, tech titans Apple (AAPL) and Microsoft (MSFT) were both sharply lower after today’s stock market open.
In the market’s current weakness, Continental Resources (CLR), DoubleVerify (DV), Vertex Pharmaceuticals (VRTX) — as well as Dow Jones stocks Chevron (CVX) and Merck (MRK) — are among the top stocks to watch. Keep in mind the new stock market correction is a good reason for investors to be mostly, if not entirely, on the sidelines.
DoubleVerify is an IBD Leaderboard stock, but its position size was trimmed during last week’s losses. Chevron was featured in last week’s Stocks Near A Buy Zone column.
Dow Jones Today: Treasury Yields, Oil Prices, Fed Meeting
After Monday’s opening bell, the Dow Jones Industrial Average lost 0.4%, while the S&P 500 moved down 0.35%. The tech-heavy Nasdaq composite gave up 0.3% in morning action.
Among exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) was down 0.85%, and the SPDR S&P 500 ETF (SPY) lost 0.8% in early trade.
The 10-year Treasury yield surged to 3.5% Monday, topping the 11-year high of 3.48% set on June 14. Meanwhile, US oil prices dropped more than 3% early Monday, as West Texas Intermediate futures traded below $82 a barrel.
The Federal Reserve’s two-day meeting will kick off Tuesday, with an interest-rate decision on Wednesday. Markets show an 80% chance the central bank will raise rates by 75 basis points and a 20% chance of a 100 basis-point hike. Investors will be looking for hints at the pace of future rate hikes, and how high the central bank will eventually go.
Stock Market Correction
On Friday, the Nasdaq Composite fell by the biggest margin out of the major indexes but closed at session highs. Nevertheless, it slid 0.9% for the day and plunged 5.5% for the week. It has now fallen in four of the past five weeks.
Friday’s The Big Picture column commented, “Since getting turned away near its 200-day moving average, the Nasdaq has swan-dived below all of its main moving averages. It is now down nearly 28% so far in 2022.”
During stock market correction, don’t tune out. Instead, create watchlists to find emerging stock market leadership by using the relative strength line. The RS line measures a stock’s price performance vs. the S&P 500. If the stock is outperforming the broader market, the RS line angles upward. If a stock lags the broad market, the line will point lower.
If you’re new to IBD, consider taking a look at its stock trading system and CAN SLIM basics. Recognizing chart patterns is one key to the investment guidelines. IBD offers a wide range of growth stock lists, such as Leaderboard and SwingTrader.
Investors can also create watchlists, 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, Merck
Dow Jones stock Chevron fell 2.6% Friday, ending about 6% away from its latest buy point at 166.93 out of a cup with handle — according to IBD MarketSmith chart analysis — amid a strong performance by energy stocks so far this year. The stock was down 2% early Monday.
CVX stock shows a strong 97 out of a perfect 99 IBD Composite Rating, per the IBD Stock Checkup. Investors can use the IBD Composite Rating to easily gauge the quality of a stock’s fundamental and technical metrics.
Drug giant Merck is also fighting the stock market downtrend. Shares are building a flat base that has a 95.82 buy point, but they are stuck below their 50-day line. Merck shares lost 1% early.
3 Top Growth Stocks To Buy And Watch In The CurRent Stock Market Rally
Top Stocks To Watch: Continental, DoubleVerify, Vertex
Oil explorer and producer Continental Resources is building a cup with handle with a 72.80 buy point, according to IBD MarketSmith chart analysis. The relative strength line hit a recent high last week, but remains a bit off its 52-week high. CLR shares were down 1.5% early Monday.
IBD Leaderboard stock DoubleVerify gave up its 28.07 buy point in a bottoming base during Friday’s 4.3% drop. DV shares were down 1.5% Monday morning.
Vertex Pharmaceuticals is just above its 50-day line following Friday’s 0.7% gain. The stock has been holding up well during the ongoing market weakness, as indicated by a RS line that is approaching new highs. There is no new base yet, but the stock’s resilience makes it a top idea to watch. Vertex shares were down 1.4% Monday.
Join IBD experts as they analyze leading stocks in the current stock market rally on IBD Live
Tesla stock inched lower Friday, snapping a two-day winning streak. Shares remain above their 200-day line, which has been a key level to watch. The electric-vehicle giant dropped 1.7% Monday morning.
Tesla arguably has a short base, within a much-larger consolidation, that has a 314.74 buy point. Bullishly, the stock’s RS line is at its highest level since April. Shares are about 27% of their 52-week high.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares dropped another 1.1% Friday, ending the week on a down note and closing at its lowest level since July 18. Apple stock lost 0.95% Monday.
Microsoft lost 0.3% Friday, holding just above its June lows. The software giant is about 30% off its 52-week high. Microsoft shares declined 0.9% Monday 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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