The Dow Jones Industrial Average briefly fell more than 250 points on Monday before paring losses, as the 10-year Treasury yield hit an 11-year high ahead of the Federal Reserve’s interest rate decision on Wednesday . Major stock indexes threatened to add to last week’s stock market losses.
Auto area (AZO) was an earnings driver on Monday morning. Shares of the auto parts store soared 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), Knowledge base home (KBH) and Lennar (LEN).
Elsewhere, leader in electric vehicles You’re here (TSLA) was trading down 1.7% on Monday. Among the industrialists of the Dow Jones, the titans of tech Apple (AAPL) and Microsoft (MSFT) were both down sharply after today’s stock market open.
In the current weak market, Continental Resources (CLR), DoubleVerify (DV), Vertex Pharmaceuticals (VRTX) – as well as Dow Jones stocks Chevron (CLC) and Merck (MRK) – are among the best stocks to watch. Keep in mind that the new stock market correction is a good reason for investors to be mostly, if not entirely, on the sidelines.
DoubleVerify is an IBD ranking stock, but its position size was reduced 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 fell 0.35%. The tech-heavy Nasdaq composite fell 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) was down 0.8% in early trading.
The 10-year Treasury yield jumped to 3.5% on Monday, topping the 11-year high of 3.48% set on June 14. Meanwhile, U.S. oil prices fell more than 3% early Monday as West Texas Intermediate futures traded below $82 a barrel.
The Federal Reserve’s two-day meeting begins on Tuesday, with an interest rate decision on Wednesday. Markets show an 80% chance of the central bank raising rates by 75 basis points and a 20% chance of a 100 basis point hike. Investors will be looking for clues about the pace of future rate hikes and how high the central bank will eventually reach.
Stock market correction
On Friday, the Nasdaq Composite fell by the widest margin of the major indexes, but closed at session highs. Nonetheless, it slipped 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 being turned down near its 200-day moving average, the Nasdaq has plunged below all of its major moving averages. It is now down nearly 28% so far in 2022.”
During the stock market correction, do not log out. Instead, create watchlists to find emerging stock market leadership using the relative strength line. The RS line measures a stock’s price performance relative to the S&P 500. If the stock is outperforming the broader market, the RS line slopes up. If a stock is lagging the general market, the line will point down.
If you are new to IBD, consider taking a look at its stock trading system and CAN SLIM basics. Recognizing chart patterns is one of the keys to investing guidelines. IBD offers a wide range of growth stock listings, such as Leaderboard and SwingTrader.
Investors can also create watchlists, find companies close to 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 Chevron stock fell 2.6% on Friday, ending around 6% from its last buy point at 166.93 on a cup with a handle – according to IBD MarketSmith’s chart analysis – amid strong performance from energy stocks so far this year. The stock was down 2% on Monday morning.
The CVX stock is posting a solid 97 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.
Pharmaceutical giant Merck is also struggling against the stock market’s bearish trend. Stocks are building a flat base that has a buy point of 95.82, but they are stuck below their 50-day line. Merck shares fell 1% early.
3 most important growth stocks to buy and watch in the currentrStock market rally
Top stocks to watch: Continental, DoubleVerify, Vertex
Oil explorer and producer Continental Resources is building a cup with a handle with a buy point of 72.80, according to IBD MarketSmith’s 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% on Monday morning.
IBD Leaderboard DoubleVerify stock dropped from its buy point of 28.07 to a low on Friday’s 4.3% decline. Shares of DV were down 1.5% on Monday morning.
Vertex Pharmaceuticals is just above its 50-day line after Friday’s 0.7% gain. The stock has held up well during the current market weakness, as indicated by an RS line approaching new highs. There’s no new base yet, but the title’s resilience makes it a great one to watch. Vertex shares were down 1.4% on Monday.
Join IBD experts as they analyze the top stocks of the current stock market rally on IBD Live
Tesla stock fell slightly on Friday, ending a two-day winning streak. Stocks remain above their 200-day line, which has been a key level to watch. The electric vehicle giant fell 1.7% on Monday morning.
Tesla arguably has a short base, within a much larger consolidation, which has a buy point of 314.74. On the upside, the stock’s RS line is at its highest level since April. The shares are down about 27% from their 52-week high.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares fell another 1.1% on Friday, ending the week on a weaker note and closing at its lowest level since July 18. Apple shares fell 0.95% on Monday.
Microsoft lost 0.3% on Friday, holding just above its June lows. The software giant is around 30% off its 52-week high. Microsoft shares were down 0.9% on Monday morning.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen to learn more about growth stocks and the Dow Jones Industrial Average.
YOU MIGHT ALSO LIKE:
Top growth stocks to buy and watch
Learn to Time the Market with IBD’s ETF Market Strategy
Find the best long-term investments with IBD’s long-term leaders
MarketSmith: research, charts, data and coaching in one place
How to Research Growth Stocks: Why This IBD Tool Simplifies Finding the Best Stocks