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Dow Jones futures dived 500 points Thursday on hot inflation data from the consumer price index. Third-quarter earnings season heats up as Dow Jones stock Walgreens jumped on better-than-expected earnings and sales results.
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The Labor Department’s Consumer Price Index came out Thursday morning at 8:30 a.m. ET. Consumer prices rose 0.4% in September vs. the previous month, hotter than the expected 0.2% rise. Inflation rose 8.2% in September from a year ago — also hotter than estimates and just below August’s 8.3% reading.
Meanwhile, first-time jobless claims rose to 228,000 vs. 219,000 in the previous week, higher than the 225,000 Econoday estimate. Lastly, September retail sales are out Friday.
Stock Market Today: Earnings Season Heats Up
On Thursday morning, BlackRock (BLK), Delta Air Lines (DAL), Domino’s Pizza (DPZ), Taiwan Semiconductor Manufacturing (TSM) and Walgreens Boots Alliance (WBA) released their quarterly earnings results.
BlackRock stock inched higher after its third-quarter results, while Delta rose 4.3% despite missing Q3 estimates, as the carrier posted an upbeat forecast. Domino’s rallied nearly 7% in early morning trade. Apple chip supplier TSMC climbed 2.6% after issuing a better-than-expected Q4 revenue outlook. And Walgreens jumped more than 4% after beating earnings and sales estimates.
Electric-vehicle leader Tesla (TSLA) traded down around 3% Thursday. Among the Dow Jones industrials, tech titans Apple (AAPL) and Microsoft (MSFT) were both sharply lower ahead of today’s stock market open.
Cardinal Health (CAH), ConocoPhillips (COP), Denbury (DEN) and Vertex Pharmaceuticals (VRTX) — as well as Dow Jones stocks Chevron (CVX) and Merck (MRK) — are among the top stocks to watch. Keep in mind that the ongoing stock market correction is a time for investors to sit on the sidelines and build watchlists 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
Ahead of Thursday’s opening bell, Dow Jones futures sold off 1.7% vs. fair value, while the S&P 500 futures moved down 2.1%. The tech-heavy Nasdaq 100 futures dived 2.9%.
Remember that overnight action in Dow Jones futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Among exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) was down 2.5%, and the SPDR S&P 500 ETF (SPY) fell 1.5%.
The 10-year Treasury yield jumped Thursday, topping 4% after the hot inflation data. Meanwhile, U.S. oil prices fell around 1% Thursday, sending West Texas Intermediate futures below $87 a barrel. Oil prices are threatening to add to three straight days of losses.
Stock Market Rally Attempt
On Wednesday, the Nasdaq composite, for the most part, flitted up and down within a relatively narrow range. At the day’s high, it gained almost 0.7%. The tech-heavy index closed 9 points lower, off less than 0.1%. Meanwhile, the S&P 500 eased 0.3%, while the Dow Jones Industrial Average edged 0.1% lower. All of these indexes traced inside days of their own as well.
Wednesday’s The Big Picture commented, “The latest Investors Intelligence survey noted a jump in bearishness to 44.1% vs. 41.8% a week earlier. The bulls ratio edged lower, from 25.4% to 25%. Moreover, the survey notes this is a new low since early 2016.”
The bulls/bears index is a contrary psychological market indicator. Markets historically have had a tendency to turn higher when bearish sentiment runs strongest among the newsletter writers and advisors surveyed.
Following losses in recent days, the major stock indexes are again in search of a Day 1 to start a new rally attempt. On Day 4 and later, investors should then look for a potential follow-through day. Until then, use your time to hone a strong watchlist of top-performing stocks. Many long-term leaders tend to break out at or near the follow-through day, which confirms a fresh uptrend. Missing that early opportunity can be a costly mistake.
Check out IBD Stock Lists, like the IBD 50 and Stocks Near A Buy Zone, for additional stock ideas.
Five Dow Jones Stocks To Watch Now
Dow Jones Stocks To Watch: Chevron, Merck
Energy giant Chevron decisively reclaimed its 50-day line last week, as U.S. oil prices recovered. Shares are consolidating below a 182.50 buy point ahead of the company’s Oct. 28 earnings release. Chevron shares rose 1% early Thursday, tracking slightly higher with oil prices.
CVX stock boasts a strong 98 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.
Dow Jones member and IBD 50 stock Merck is building a double bottom with a 93.12 buy point, according to IBD MarketSmith pattern recognition. The relative strength line hit a new high this week, as the stock decisively regained its key 50-day moving average. Third-quarter earnings results are due out Oct. 27 before the opening bell.
Merck shares rose 0.8% Thursday morning.
4 Top Growth Stocks To Watch In The Current Stock Market Correction
Top Stocks To Watch: Cardinal, Conoco, Denbury, Vertex
IBD Leaderboard stock and medical leader Cardinal Health is shaping a flat base that has a 72.38 buy point, according to IBD MarketSmith chart analysis. The drug distribution heavyweight’s shares are again testing their key 10-week moving average, per Leaderboard commentary. Earnings are due Nov. 4. Shares traded unchanged Thursday.
Energy giant ConocoPhillips remains just below a 118.49 buy point in a cup with handle after Wednesday’s 0.6% gain. The stock’s RS line hit a new high in recent sessions, illustrating strong stock market outperformance. Earnings are due Nov. 3. Shares moved up 1.6% Thursday, its rise outpacing the climb in oil prices.
Denbury surged 6.6% Monday, breaking out past a cup base’s 94.05 buy point, following reports that Exxon Mobil (XOM) is considering a takeover. Shares are back in the 5% chase zone that runs up to 98.75 following two straight days of mild losses, though the market remains in a correction. The company will report earnings are Nov. 3. Shares added 0.4% Thursday.
Biotech leader Vertex Pharmaceuticals continues to build a flat base with a 306.05 buy point and an early entry at 296.90. Its RS line made a new high Tuesday, a sign of big stock market outperformance. VRTX stock is testing its 50-day line, where it will look for much-needed support. Shares traded up 0.8% Thursday.
Join IBD experts as they analyze leading stocks in the current stock market rally attempt on IBD Live
Tesla Stock
Tesla stock rose 0.3% Wednesday, finally snapping a five-day losing streak. Shares are still at their lowest level since early July and about 48% off their 52-week high. Tesla stock moved down around 3% Thursday morning.
The EV giant’s third-quarter results are Oct. 19. Tesla is expected to earn an adjusted $1.03 per share on sales of $22.4 billion.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares declined 0.5% Wednesday, but are still holding above recent lows. Still, shares are around 24% off their 52-week high and below their 50- and 200-day lines. Apple stock moved down more than 2% Thursday.
Microsoft inched up 0.15% Wednesday, ending a four-day losing streak. Shares are trying to rebound from this week’s 52-week low price. The software giant is about 35% off its 52-week high. Microsoft shares lost around 2% early Thursday.
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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