The Dow Jones Industrial Average trimmed sharp losses Friday morning on hot inflation data, which came from the personal consumption expenditure price index, heading into the final trading session of the quarter. Tesla stock rose before the company’s AI Day, while Micron Technology and Nike were key earnings movers.
The Federal Reserve’s preferred measure of inflation came out Friday, with the personal consumption expenditure price index rising 0.3% for the month of August, marking a year-over-year increase of 6.2%. Both numbers were hotter than expected. Personal income rose 0.3% in August, in line with Econoday estimates.
The PCE price index is one measure of U.S. inflation, tracking the change in prices of goods and services purchased by consumers throughout the economy.
Stock Market Today: Micron, Nike Earnings
Micron shares rose more than 1% after the memory-chip giant missed Wall Street’s already lowered expectations for sales in its fiscal fourth quarter and guided much lower for the current quarter. It’s also slashing capital spending plans.
Nike stock plunged 12% after the Dow Jones stock just beat Wall Street expectations for its first-quarter earnings report. But gross margins fell as inventories jumped, and the athletic apparel giant said it would move aggressively to liquidate excess wares.
In the ongoing stock market weakness, DoubleVerify (DV), Hostess Brands (TWNK), Neurocrine Biosciences (NBIX), Toro (TTC), Vertex Pharmaceuticals (VRTX) and World Wrestling Entertainment (WWE) — as well as Dow Jones stock UnitedHealth (UNH) — are among the top stocks to watch. Keep in mind that the deepening stock market correction is a time for investors to sit on the sidelines and map out watchlists.
Dow Jones Today: Treasury Yields, Oil Prices
After Friday’s opening bell, the Dow Jones Industrial Average fell 0.2%, while the S&P 500 moved down less than 0.1%. The tech-heavy Nasdaq Composite gained 0.2% in morning action.
The 10-year Treasury yield slipped to 3.7% Friday morning. Earlier this week, the 10-year Treasury yield briefly topped 4%, which hadn’t been done for more than decade. The 10-year Treasury yield is vying for its ninth-straight weekly advance, marking its longest rally since 2004.
Meanwhile, U.S. oil prices fell slightly. West Texas Intermediate futures were just below $81 a barrel, after falling to their lowest level of the year on Monday.
Stock Market Correction
On Thursday, the Dow Jones Industrial Average sold off 1.5%, while the S&P 500 closed down 2.1%. The Nasdaq composite dived 2.8%. The small-cap Russell 2000 lost nearly 2.4%. The S&P 500 and Nasdaq undercut their recent lows, ending the young rally attempt.
With the Nasdaq undercutting its Sept. 23 lows, the tech-heavy composite’s two-day rally attempt fizzled out. Investors are now looking for another rally attempt. Amid the continued selling, investors should remain mostly, if not entirely, on the sidelines.
Nevertheless, it is important for investors to put this downtime to good use. Now is an ideal opportunity to study market bottoms and to build a strong watchlist of top-performing stocks. Many long-term leaders tend to break out at or near the follow-through day, the market bottoming signal. Missing that early opportunity can be a costly mistake.
Dow Jones Stocks To Watch: UnitedHealth
Dow Jones stock UnitedHealth continues to hold above its long-term 200-day line. Shares are building a flat base that has a 553.23 buy point, according to IBD MarketSmith chart analysis. The stock’s resilience made it Tuesday’s IBD 50 Stocks To Watch pick. Shares were up 1.1% Friday morning.
UNH stock shows a solid 95 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.
Top Stocks To Watch: DoubleVerify, Hostess, Neurocrine, Toro, Vertex, WWE
IBD Leaderboard stock DoubleVerify closed just below its 28.07 buy point in a bottoming base after Thursday’s 0.3% fall. Per Leaderboard commentary, DoubleVerify found support near its 50-day line and has a relative strength line at new highs. Shares traded down 0.4% Friday.
Twinkie maker Hostess Brands is in the 5% chase zone above a 23.23 buy point out of a cup with handle, according to IBD MarketSmith chart analysis. Bullishly, Hostess’ relative strength line continues to make new highs. Keep in mind that the weak market trend should keep you on the sidelines, but it is one of the top stocks to watch. The stock was up 0.1% Friday.
Monday’s IBD Stock Of The Day, Neurocrine Biosciences, is still building a flat base that has a 109.36 buy point. Shares are right at their 50-day line following Thursday’s 0.1% loss. The RS line hit a new high Thursday, so the stock has avoided much of the market’s steep drop in recent sessions. Shares were up 1.6% Friday.
Toro stock is in a flat base and about 5% away from a 92.05 buy point. Shares are trading back below their 50-day line after Thursday’s 1.2% decline. The RS line is at new highs. Toro shares traded up 0.2% Friday.
Vertex Pharmaceuticals decisively regained its 50-day line following Wednesday’s 2.7% rally. It is forming a flat base with a 306.05 buy point, and an early entry at 296.24. The stock’s resilience makes it a top idea to watch. Shares lost 0.2% Friday.
World Wrestling Entertainment continues to build a flat base that has a 75.33 entry. Shares are still trying to recover their 50-day line. A decisive retake of that key level would be bullish for the stock’s base-building prospects. WWE shares were up 2.3% early Friday.
Tesla stock skidded 6.8% Thursday, snapping a three-day win streak and closing at its lowest level since July 26. Shares are sharply below their 50-day line. Tesla stock rallied 1% ahead of the company’s AI Day.
AI Day is an event in which Tesla showcases its latest technology. Chief Executive Elon Musk said in a June 2 tweet that the event, originally scheduled for Aug. 19, would be pushed back with the hope that a prototype of its Optimus robot would be working by the later date.
The AI event is set to start at 5 p.m. PT, which means any news will come after the end of extended trading. Over the weekend, Tesla will likely release third-quarter deliveries data. So investors won’t be able to weigh in until early Monday.
Last week, the stock’s relative strength line reached its highest level since April, but has fallen sharply in recent sessions. Shares are about 35% of their 52-week high.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares dived 4.9% Thursday on an analyst downgrade. Apple stock fell 0.2% Friday morning, threatening to extend a losing streak to three sessions.
Microsoft dropped 1.5% Thursday, hitting a new 52-week low. The software giant is more than 32% off its 52-week high. Microsoft shares rose 0.6% early Friday.
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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