Dow Jones futures were higher ahead of Tuesday’s open after the Nasdaq hit a fresh low in the bear market on Monday. Meanwhile, the third-quarter earnings season kicks off this week, with Dow Jones stock results JP Morgan (JMP), UnitedHealth (UNH) and Walgreens Boot Alliance (WBA).
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Stock market today: Ford and GM drop downgrades
On Monday, the Dow Jones Industrial Average fell 0.3% and the S&P 500 lost 0.75%. The tech-heavy Nasdaq composite fell 1%. And the small-cap Russell 2000 lost 0.6%.
Among exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) was down 1% and the SPDR S&P 500 (SPY) was down 0.8%.
American car manufacturers Ford (F) and General Motors (GM) received downgrades from UBS. Ford slipped 6.8% after being downgraded from neutral to sell. GM stock fell 4% and fell from a buy rating to neutral. A potential severe recession on the horizon has some analysts worried about major automaker stocks.
VE Giant You’re here (TSLA) fell slightly on Monday after setting a record for electric vehicle deliveries from its Shanghai factory in September. Among Dow Jones stocks, Apple (AAPL) rose 0.2% and Microsoft (MSFT) slipped 2.1% in the current stock market.
Cardinal Health (ACH), Conoco Phillips (COP), Denbury (DEN) and Vertex Pharmaceuticals (VRTX) – as well as Dow Jones stocks Chevron (CVX) and UnitedHealth – are among the best stocks to watch. Keep in mind that the current 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 stocks in the IBD ranking. Chevron and Conoco were featured in this week’s Stock Near A Buy Zone column, along with two other top stock ideas.
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Dow Jones Futures Today: Treasury Yields, Oil Prices
Before Tuesday’s opening bell, Dow Jones futures were up 0.15% relative to fair value, while S&P 500 futures were up 0.2%. Nasdaq 100 futures gained 0.3% relative to fair value. Remember that overnight action on futures contracts on Dow Jones and elsewhere does not necessarily translate into actual trading in the next regular trading session.
The 10-year Treasury yield was suspended on Monday as bond markets closed for the Columbus Day holiday, after stabilizing at 3.88% on Friday. Last week, the 10-year Treasury yield fell as low as 3.56% before bouncing back.
Meanwhile, U.S. oil prices gave up some of last week’s rebound, falling about 2% on Monday. West Texas Intermediate futures were trading below $91 a barrel, around its highest level since late August.
Third Quarter Earnings Season
The third-quarter earnings season kicks off this week, with key reports coming in from Dow Jones JPMorgan, UnitedHealth and Walgreens Boots Alliance stocks, as well as a number of other leading companies.
Earnings reports drive many of the largest stock moves and require close attention. Strong earnings can fuel major stocks to never-before-seen levels — and above new buy points — while a less-than-impressive news can send stocks tumbling.
The stock market’s reaction to an earnings release can often tell you more than the earnings themselves. If results look strong but the stock still slips, investors may worry about the sustainability of growth, rising costs, or other potential negative effects.
With the market in correction mode, investors should follow companies that easily outpace earnings results and have strong upside reactions. They could be among the stock market leaders if the market is able to rebound.
What to do in today’s stock market
Amid the current stock market volatility, the IBD market trend remains “market in correction”. This means that investors are safer on the sidelines.
Monday’s losses on the Nasdaq saw the tech-heavy composite hit a fresh 2022 low and end its nascent rally attempt, while the S&P 500 held just above its own recent lows. Thus, the S&P 500’s attempted rally remains intact, meaning that a potential tracking day on this index is still possible.
To recap, Monday was Day 6 of the S&P 500 rally attempt, while the Nasdaq is now looking for another Day 1.
Now is a great time to build a strong watchlist of top performing stocks. Many long-term leaders tend to break out on or near the day after the market bottom signal. Missing that first opportunity can be a costly mistake.
One of the challenges of building a watchlist during a correction is that while you wait for a tracking day, stock charts can change. This means that certain bases among the stocks on your watchlist may deteriorate. The update is therefore important.
Friday’s The Big Picture column commented: “It’s tempting to buy stocks that are holding up well in a weak market, but a negative market tide makes it difficult to make meaningful progress. Individual investors should always favor a position of heavy cash until the stock market returns to a “confirmed uptrend”.
Five Dow Jones stocks to watch now
Dow Jones stocks to watch: Chevron, UnitedHealth
Dow Jones UnitedHealth stock fell 1.2% on Monday, dropping support at its 200-day long-term moving average line. Despite recent losses, stocks are still building a flat base that has a buy point of 553.23, according to IBD MarketSmith’s chart analysis. UnitedHealth reports its third quarter results on Friday.
Energy giant Chevron decisively recovered its 50-day line last week as US oil prices recovered. Stocks are building a consolidation with a buy point of 182.50. Chevron stock fell 1.8% on Monday, trending lower with oil prices.
The CVX stock boasts a solid 98 out of a perfect IBD composite rating of 99, according to the IBD Stocks Balance Sheet. Investors can use the IBD Composite Rating to easily assess the quality of a stock’s fundamental and technical metrics.
4 growth stocks to watch in the currentrent Stock market correction
Top stocks to watch: Cardinal, Conoco, Denbury, Vertex
IBD Leaderboard stock and medical leader Cardinal Health are shaping a flat base that has a buy point of 72.38, according to IBD MarketSmith’s chart analysis. The stock is also in the buy range amid an initial test of its 10-week moving average, according to the rankings commentary. Winnings are due November 4.
Energy giant ConocoPhillips fell below a buy point of 118.49 in a handle cup during Monday’s 1.4% decline. The stock’s RS line hit a new high last week, illustrating strong market outperformance.
Denbury jumped 6.6%, overtaking the 94.05 buy point by a cup base, following reports that Exxon Mobil (XOM) is considering a recovery. The shares are already out of the 5% continuation zone which hit 98.75.
Biotech leader Vertex Pharmaceuticals continues to build a flat base with a buy point of 306.05 and an early entry at 296.90. Its RS line reached a new high on Monday, a sign of a big stock market outperformance.
Join IBD experts as they analyze the top stocks of the current market correction on IBD Live
Tesla Stock
Tesla stock fell slightly on Monday, extending a three-day losing streak. Shares are at their lowest level since early July and about 46% off their 52-week high.
On Monday, Tesla set a record for electric vehicle deliveries from its Shanghai factory in September, but they remained well below sights. Tesla’s shipments report could bolster demand concerns, particularly in China, as Elon Musk’s electric vehicle giant ramps up production capacity.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares reversed from losses to rebound 0.2% on Monday, halting a two-day decline. Still, stocks are more than 20% off their 52-week high and below their 50- and 200-day lines.
Microsoft slid 2.2%, extending a three-session losing streak and hitting another 52-week low. The software giant is around 34% off its 52-week high.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen to learn more about growth stocks and the Dow Jones Industrial Average.
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