Dow Jones futures fell 425 points on Friday morning Fed chief Jerome Powell remarks Early action at a Federal Reserve event in Washington DC threatened to extend the stock market’s three-day losing streak, keeping the Nasdaq and S&P 500 on track for their sixth weekly decline in the past seven weeks.
European indices also fell on Friday after economic activity in Europe fell sharply in September, trade surveys showed. The risk of recession is increasing. “The eurozone recession is in the cards as companies intensify price pressures associated with poor business conditions and rising energy costs,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.
London’s FTSE 100 fell 2.2%. Frankfurt’s DAX and CAC 40 in Paris fell 2.2% in afternoon trading.
Costco Wholesale ,cost) was a major earner on Friday morning. Costco reported better-than-expected fiscal fourth-quarter earnings and sales results late Thursday, yet Costco stock fell more than 2% in morning trading. In early September, Costco shares triggered a 7%-8% loss-cutting rule by a cup with Handel’s 552.81 buy point.
electric-vehicle leader Tesla ,TSLA) traded more than 2% lower on Friday. In Dow Jones Industrialists, Tech Titans Apple ,AAPL) And Microsoft ,msft) were down sharply before today’s stock market opened.
Top stocks to watch amid recent market weakness include continental resources ,CLR, double verify ,DV, Neurocrine Biosciences ,NBIX) And Vertex Pharmaceuticals ,VRTX) – as well as Dow Jones stocks beam ,CVX) Keep in mind that the new stock market correction is a good reason for investors, if not completely, on the sidelines.
DoubleVerify is a IBD Leaderboard stock, but its position size was truncated during last week’s losses. Tesla was featured in this week’s Stocks Near a Buy Zone column. Neurocrine was Wednesday’s IBD 50 Stock to Watch pick.
Dow Jones Today: Treasury Yield, Oil Prices
Before Friday’s opening bell, Dow Jones futures traded 1.4% versus fair value, while S&P 500 futures were down 1.45%. Nasdaq 100 futures were down 1.4% in morning action. Remember that overnight activity in Dow Jones Futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
The 10-year Treasury yield rose to 3.76% on Friday, hitting its highest level since April 2010. Meanwhile, fears of a lackluster demand due to European data helped push US oil prices lower by more than 3%. West Texas Intermediate futures fell to nearly $80 a barrel, the lowest level since February.
stock market correction
On Thursday, the Dow Jones Industrial Average fell 0.4%, testing the 30,000 level, where the index bounced back in June and July. Dow futures pointed to a breakout of that support in premarket trade. The S&P 500 closed down 0.8% on Thursday. The Nasdaq Composite lost 1.4%. The small-cap Russell 2000 lagged behind, slipping 2.3%.
All four major stock indexes hit new lows since the IBD changed its market outlook to a “market in correction” on September 16.
Thursday’s The Big Picture column commented, “Top growth stocks underperformed Thursday as the Innovator IBD50 ETF.ffty) hit a new 52-week low, down 3.1%. In fact, the ETF is now at its lowest level since March 2020, close to the lows of the COVID bear market.”
To prepare for a new stock market rally, investors should focus on two things: a rally attempt, then a follow-up day.
In a market correction, on the first day the index counts as high as the day before its attempted rally. Actions on the second day and the third day are irrelevant as long as the index does not lower to its latest low. If that low is cut, a rally attempt is made and the market needs to try again. Thursday’s action triggered further corrections, so we are back in the hunt for a day.
On Day 4 and onwards, you are looking for the Nasdaq or S&P 500 to move faster than the previous session. That’s a follow-up day. This gives investors the green light to start buying major stocks by breaking past correct buy points. This should keep your portfolio and mindset in sync with stock market action by gradually capitalizing on major stocks.
During a stock market correction, don’t tune out. Instead, create a watchlist to find emerging stock market leadership using the relative strength line. The RS line measures a stock’s price performance versus the S&P 500. If the stock is outperforming the broader market, the RS line curves upward. If a stock lags behind the broader market, the line will point downward.
Five Dow Jones stocks to watch now
Dow Jones Stocks to Watch: Chevron
Dow Jones stock Chevron edged lower on Thursday, yet barely held onto key support around its 50-day line. Shares are trading at 166.93 outside a cup, about 6% off their latest buy point – amid the strong performance of energy stocks so far this year, according to IBD MarketSmith chart analysis. The stock sold more than 2% as oil prices plunged early Friday.
CVX Stock Shows a strong 98 out of 99 overall ratings per IBD IBD Stock Checkup. Investors can use the IBD composite rating to easily measure the quality of a stock’s fundamental and technical metrics.
3 Top Growth Stocks to Buy and WatchRstock market correction
Top stocks to watch: Continental, DoubleVerify, Neurocrine, Vertex
Oil explorer and producer Continental Resources is forming a cup with a 72.80 buy point, according to IBD MarketSmith chart analysis. The relative strength line touched recent highs last week, but it is slightly off its 52-week high. CLR shares were down about 3% early Friday.
IBD leaderboard stock DoubleVerify remains at a base below its 28.07 buy point after Thursday’s 1.6% loss. The stock is trading just above its 50-day line. DV shares fell 0.9% on Friday morning.
Wednesday’s IBD 50 Stocks to Watch pick, Neurocrine Biosciences, is forming a flat base with a 109.36 buy point. The RS line of the stock hit a new high on Wednesday, indicating an outperformance from the larger stock market. Shares remained unchanged on Friday.
Vertex Pharmaceuticals is close to reclaiming its 50-day line after Thursday’s 2.1% rally. The stock has been holding well during the ongoing weakness in the market, as indicated by an RS line reaching new highs. A new flat base has a 306.05 buy point, and the stock’s flexibility makes it a top idea to watch. Vertex shares were flat on Friday.
Tesla’s stock traded down 4.1% on Thursday, testing support around the 50-day line. Shares continue to shape a short base with 314.74 buy point. In the meantime, keep an eye out for additional buy points if the stock is able to climb further to the right of its larger consolidation, which dates back to January. Shares fell further by 2.1% on Friday morning.
Bullishly, the stock’s RS line reached its highest level since April this week. The stock is up about 30% from its 52-week high.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones shares, Apple shares fell 0.6% on Thursday, down from Wednesday’s 2% drop. The stock is trading near recent lows. Apple’s stock fell 1.6% on Friday morning.
Microsoft gained 0.85% on Thursday, its highest after hitting a 52-week low. The software giant is down about 32% from its 52-week high. Microsoft shares fell 1.1% early Friday.
Be sure to follow Scott Lehton on Twitter @IBD_SLehtonen For more information on growth stocks and the Dow Jones Industrial Average.
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