Dow Jones Futures Erase Gains On Hot Inflation Data; Fed Minutes Next; PepsiCo Jumps
Dow Jones futures erased early gains Wednesday on hot inflation data — the producer price index. Minutes from the Federal Reserve’s latest policy meeting are due out later Wednesday.
Stock Market Today: Inflation Data, Fed Minutes, PepsiCo Earnings
The U.S. Labor Department’s producer index, or PPI, rose 0.4% in September vs. the previous month, hotter than the expected 0.2% rise, per Econoday estimates. Wholesale inflation rose 8.5% from a year ago, higher than the 8.4% estimate.
Also on Wednesday, the minutes from the Sept. 20-21 Federal Reserve meeting are due at 2 p.m. ET. And the consumer price index is due Thursday, with September retail sales out Friday.
Third-quarter earnings season gets started this week, with PepsiCo (PEP) reporting strong earnings results Wednesday morning. Shares rallied 2% in early morning trade.
On Thursday morning, BlackRock (BLK), Delta Air Lines (DAL), Domino’s Pizza (DPZ), Taiwan Semiconductor Manufacturing (TSM) and Walgreens Boots Alliance (WBA) will release their quarterly earnings results.
Electric-vehicle leader Tesla (TSLA) traded up 1% Wednesday. Among the Dow Jones industrials, tech titans Apple (AAPL) and Microsoft (MSFT) turned mixed ahead of today’s stock market open. Intel (INTC) rose 1% after Bloomberg reported the company is planning to lay off thousands of workers as early as this month.
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 Wednesday’s opening bell, Dow Jones futures inched higher vs. fair value after giving up solid gains, while the S&P 500 futures moved up 0.2%. The tech-heavy Nasdaq 100 futures climbed 0.3%.
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 up 0.5%, and the SPDR S&P 500 ETF (SPY) rose 0.2%.
The 10-year Treasury yield ticked higher Wednesday, rising to 3.96% and on pace to extend a four-day win streak. The 10-year Treasury yield is nearing 4%, just as it did in late September.
Meanwhile, U.S. oil prices rose less than 1% Wednesday, sending West Texas Intermediate futures to near $90 a barrel. Oil prices are trying to rebound after two straight days of sharp losses.
Stock Market Rally Attempt
On Tuesday, the Nasdaq extended its losing streak to five sessions, falling 1.1%. Four straight closes near session lows brings the possibility of a trip down to the 10,000 level into play. It’s a key support level to watch, especially since it’s pretty close to the Nasdaq’s breakout area in June 2020.
Tuesday’s The Big Picture commented, “Since the Dow is still holding above its Sept. 30 low, Tuesday marked the seventh day of a rally attempt for the index, but the S&P 500 and Nasdaq are still looking for the first day of their rally attempts. The S&P undercut its Sept. 30 low with Tuesday’s loss.”
The S&P 500 held just above its own recent lows. So, the S&P 500’s rally attempt remains intact, which means a potential follow-through day on that index is still possible.
Ahead of a potential follow-through day, now is the perfect time to build 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.
One challenge to forming a watchlist during a correction is that, as you wait for a follow-through day, stock charts may change. That means some bases among your watchlist stocks may deteriorate. So updating is important.
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 climbed 0.5% early Wednesday, tracking 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 Monday, as the stock decisively regained its key 50-day moving average. Q3 earnings results are due out Oct. 27 before the opening bell.
Merck shares inched higher Wednesday morning. Meanwhile, biotech Moderna (MRNA) rallied nearly 5% on news that it would partner with Merck in developing a personalized cancer vaccine.
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. Shares are also in buy range amid a first test of its 10-week moving average, per Leaderboard commentary. Earnings are due Nov. 4. Shares traded slightly lower Wednesday.
Energy giant ConocoPhillips fell further below a 118.49 buy point in a cup with handle during Tuesday’s 1% fall. The stock’s RS line hit a new high last week, illustrating strong stock market outperformance. Earnings are due Nov. 3. Shares moved up 1% Wednesday, its rise coinciding with 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 barely back in the 5% chase zone that runs up to 98.75, though the market remains in a correction. The company will report earnings are Nov. 3. Shares jumped 3.8% Wednesday.
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 popped nearly 2% higher Wednesday, after the company said it was advancing an investigational program regarding treatment for a rare, protein-based disease that can cause liver and lung damage.
Join IBD experts as they analyze leading stocks in the current stock market rally attempt on IBD Live
Tesla stock skidded 2.9% Tuesday, extending a losing streak to five sessions. Shares are at their lowest level since early July and about 48% off their 52-week high. Tesla stock rose 0.6% Wednesday 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 1% Tuesday, 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 up 0.3% Wednesday.
Microsoft slid 1.7% Tuesday, extending a losing streak to four sessions and hitting another 52-week low. The software giant is about 36% off its 52-week high. Microsoft shares inched lower early Wednesday.
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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