The Dow Jones Industrial Average sold off more than 300 points on Wednesday after a stronger-than-expected ADP jobs report. ADP’s payroll report previews Friday’s jobs report from the Labor Department. Meanwhile, OPEC+ will meet to reportedly discuss a controversial production cut.
Ford engine (F) was flat on Wednesday morning after Morgan Stanley upgraded the stock from equal weight to overweight. investment banks Goldman Sachs (GS) and MorganStanley (MS) fell 2.2% and 2.3%, respectively, as Atlantic Equities expects investment banking activity to slow.
Market leader in electric vehicles Tesla (TSLA) traded nearly 4% lower on Wednesday. Among the Dow Jones Industrials are tech titans Apple (AAPL) and Microsoft (MSFT) were both significantly lower after the market open today.
As the stock market turns into a rally attempt, Murphy United States of America (MUSA), Neurocrine Life Sciences (NBIX), Apex Pharma (VRTX) and World Wrestling Entertainment (WWE) – as well as Dow Jones stocks UnitedHealth (UNH) – are among the top stocks to watch. Despite Tuesday’s gains, the market status remains “in correction” and investors should remain on the defensive.
Vertex is a new addition to the IBD Leaderboard. Murphy USA was featured in this week’s “Stocks Near a Buy Zone” column, along with three other top stock ideas. World Wrestling was Thursday’s stock of the day. Neurocrine was a stock of the day on September 26th.
Dow Jones Today: Treasury Yields, Oil Prices
After Wednesday’s opening bell, the Dow Jones Industrial Average fell 1%, while the S&P 500 lost 1.2%. The tech-heavy Nasdaq Composite fell 1.55%.
Among exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) fell 1.3% and the SPDR S&P 500 ETF (SPY) lost 1.1%.
The 10-year Treasury yield rallied to 3.7% on Wednesday morning and looks set to end a two-day losing streak. Last week, the 10-year Treasury yield briefly exceeded 4%, not in more than a decade. But it has fallen significantly this week.
Meanwhile, US oil prices extended this week’s gains, rising slowly on Wednesday, taking West Texas Intermediate futures to around $87 a barrel. Oil prices fell to their lowest level for the year last week before recovering. OPEC+ is widely expected to approve a sizeable production cut at its meeting in Vienna, Austria on Wednesday.
ADP jobs report, economic data
ADP’s September jobs report was released at 8:15 am ET. ADP private payrolls rose 208k, beating ADP estimates that called for growth of 200k, compared to 308k in August.
Next, the IHS/Markit US Services Purchasing Managers’ Index (PMI) improved to 49.3, slightly better than estimates and higher than August’s 43.7. Readings below 50 indicate a contraction.
Finally, the Institute of Supply Management services index beat the consensus estimate of 56.0, falling slightly to 56.7 from 56.9 in August.
Stock market rally attempt
On Tuesday, the Nasdaq Composite was the best-performing major index, up 3.3% for the day. The S&P 500 gained 3.1% and the Dow Jones Industrial Average rose 2.8%.
Tuesday’s Big Picture warned: “Remember this is only day two of the rally attempt and the market remains in a correction. Investors should avoid getting pulled too deep as no one can rule out another brutal reversal.”
Monday’s gains sparked a fresh stock market rally attempt which is your Day 1. Day 2 and Day 3 action is irrelevant as long as the index fails to undercut Friday’s last low. However, if that low breaks, the rally attempt is over and the market continues to look for a bottom.
Next, investors should wait on day 4 or later for a subsequent day. Starting Thursday (Day 4), expect the Nasdaq or S&P 500 to rise sharply with more volume than the previous session. A sufficiently large increase in climbing volume marks a subsequent day. That would give investors the green light to buy leading stocks that break out past the correct buy points.
Now, ahead of a possible follow-through day, 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, the market’s bottom signal. Missing this early opportunity can be a costly mistake.
Five Dow Jones stocks to watch right now
Keeping an Eye on Dow Jones Stocks: UnitedHealth
Dow Jones stock UnitedHealth rose 1.5% on Tuesday and is nearing a test of the key 50-day moving average. According to IBD MarketSmith chart analysis, shares are forming a flat base with a buy point of 553.23. UNH shares fell 0.4% on Wednesday morning.
UNH stock shows a solid 92 out of 99 perfect IBD Composite Ratings according to the IBD Stock Checkup. Investors can use the IBD Composite Rating to easily gauge the quality of a stock’s fundamental and technical metrics.
4 Top Growth Stocks to Watchrightent stock market correction
Top stocks to watch: Murphy USA, Neurocrine, Vertex, WWE
Gas station and convenience store leader Murphy USA is setting up a flat base with a buy point of 303.19. Stocks slumped gains to just 0.1% on Tuesday, finding stiff resistance at its 50-day moving average. A decisive recapture of this level would be bullish on the stock’s base building prospects. Shares fell 0.5% on Wednesday morning.
According to IBD MarketSmith chart analysis, Neurocrine Biosciences is attempting to clear the buy point of a flat base at 109.36. Shares briefly surpassed Tuesday’s entry but closed just below the buy trigger after contracting to 2.4%. The RS line made a new high on Friday, a bullish signal. Shares lost 0.5% early Wednesday.
IBD leaderboard stock Vertex Pharmaceuticals decisively recaptured its 50-day moving average last week. Shares are fast approaching the buy point of a flat base of 306.05 and above an early entry at 296.24. While the weak market status might keep you on the sidelines, the stock’s resilience makes it a top idea to watch. Its RS line is just below new highs, a potential sign of a major outperformance in the stock markets. VRTX shares fell 0.1% in early trading on Wednesday.
World Wrestling Entertainment is down 1% from a Cup base’s 75.33 entry after a 2.8% lead on Tuesday. The RS line continues to make new highs. WWE shares fell 0.3% early Wednesday.
Join IBD experts as they analyze leading stocks in the latest stock market rally attempt on IBD Live
Tesla shares rallied 2.9% on Tuesday after CEO Elon Musk made a buy offer Twitter (TWTR) at $54.20 per share, according to a Bloomberg article. On Monday, Tesla closed after a dive to its lowest level since July 18. Shares were down 3.8% on Wednesday morning.
Over the past few weeks, the stock’s relative strength line has hit its highest level since April, but has fallen sharply in recent sessions. Shares are about 40% off their 52-week high.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares rose 2.6% on Tuesday, contributing to Monday’s strong gains. Shares are still about 20% below their 52-week high and below their 50- and 200-day moving averages. Apple shares fell 1.2% Wednesday morning.
Microsoft was up 3.4% on Tuesday, further recovering from last week’s 52-week low. The software giant remains about 30% below its 52-week high. Microsoft shares were down 1% early Wednesday.
Follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.
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