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Dow Jones Dives 500 Points On Hot Inflation Report; 10-Year Treasury Yield Tops 4%; Apple, Tesla Drop

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Dow up over 450 points as stocks erase post-CPI plunge

Stocks rose sharply in volatile trade late Thursday morning, erasing a steep plunge seen after a rise in the core reading of the consumer price index sparked an across-the-board tumble.

The Dow Jones Industrial Average DJIA, 1.70% was up 466 points, or 1.6%, after a drop of nearly 550 points, or 1.8%, in early activity. The S&P 500 SPX, 1.31% rose 1.4% as it erased a loss of 2.39%, while the Nasdaq Composite rose 1.1% after dropping as much as 3.15%. If gains hold, the Dow would see its biggest comeback in percentage terms since May 20, while the S&P 500 and Nasdaq were set for their biggest comebacks since Feb. 24.

The Dow Jones Industrial Average plunged as much as 500 points before paring losses Thursday on hot inflation data from the consumer price index. Third-quarter earnings season heats up as Dow Jones stock Walgreens rallied on better-than-expected earnings and sales results.

Meanwhile, first-time jobless claims rose to 228,000 vs. 219,000 in the previous week, higher than the 225,000 Econoday estimate. Lastly, September retail sales are out Friday.

Stock Market Today: Earnings Season Heats Up

On Thursday morning, BlackRock (BLK), Delta Air Lines (DAL), Domino’s Pizza (DPZ), Taiwan Semiconductor Manufacturing (TSM) and Walgreens Boots Alliance (WBA) released their quarterly earnings results.

BlackRock stock lost 5% after its third-quarter results, while Delta fell just 1% despite missing third-quarter estimates, as the carrier posted an upbeat forecast. Domino’s rallied 6% in early morning trade. Apple chip supplier TSMC fell 2.2% after issuing a better-than-expected revenue outlook for the fourth quarter. And Walgreens rose more than 1% after beating earnings and sales estimates.

Dow Jones

Electric-vehicle leader Tesla (TSLA) traded down around 4% Thursday. Among the Dow Jones industrials, tech titans Apple (AAPL) and Microsoft (MSFT) were both sharply lower after today’s stock market open.

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Cardinal Health (CAH), ConocoPhillips (COP), Denbury (DEN) and Vertex Pharmaceuticals (VRTX) — as well as Dow Jones stocks Chevron (CVX) and Merck (MRK) — are among the top stocks to watch. Keep in mind that the ongoing 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 IBD Leaderboard stocks. Chevron and Conoco were featured in this week’s Stock Near A Buy Zone column, along with two other top stock ideas. Vertex was IBD’s Stock Of The Day on Friday. Merck was Tuesday’s IBD 50 Stocks To Watch pick.

Dow Jones Today: Treasury Yields, Oil Prices

After Thursday’s opening bell, the Dow Jones Industrial Average cut losses to 0.8%, while the S&P 500 moved down 1.2%. The tech-heavy Nasdaq composite plunged 1.7%.

Among exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) was down 2.25%, and the SPDR S&P 500 ETF (SPY) fell 1.5%.

The 10-year Treasury yield jumped Thursday, topping 4% after the hot inflation data to trade at 4.06%. Meanwhile, U.S. oil prices fell around 1% Thursday, sending West Texas Intermediate futures below $87 a barrel. Oil prices are threatening to add to three straight days of losses.

Stock Market Rally Attempt

On Wednesday, the Nasdaq composite wavered within a relatively narrow range. At the day’s high, it gained almost 0.7%. The tech-heavy index closed 9 points lower, off less than 0.1%. Meanwhile, the S&P 500 eased 0.3%, while the Dow Jones Industrial Average edged 0.1% lower. All of these indexes traced inside days of their own as well.

Wednesday’s The Big Picture commented, “The latest Investors Intelligence survey noted a jump in bearishness to 44.1% vs. 41.8% a week earlier. The bulls ratio edged lower, from 25.4% to 25%. Moreover, the survey notes this is a new low since early 2016.”

The bulls/bears index is a contrary psychological market indicator. Markets historically have had a tendency to turn higher when bearish sentiment runs strongest among the newsletter writers and advisors surveyed.

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Following losses in recent days, the major stock indexes are again in search of a Day 1 to start a new rally attempt. On Day 4 and later, investors should then look for a potential follow-through day. Until then, use your time to hone a strong watchlist of top-performing stocks. Many long-term leaders tend to break out at or near the follow-through day, which confirms a fresh uptrend. Missing that early opportunity can be a costly mistake.

Check out IBD Stock Lists, like the IBD 50 and Stocks Near A Buy Zone, for additional stock ideas.

Dow Jones Stocks To Watch: Chevron, Merck

Energy giant Chevron decisively reclaimed its 50-day line last week, as U.S. oil prices recovered. Shares are consolidating below a 182.50 buy point ahead of the company’s Oct. 28 earnings release. Chevron shares fell 0.3% early Thursday, tracking lower with oil prices.

CVX stock boasts a strong 98 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.

Dow Jones member and IBD 50 stock Merck is building a double bottom with a 93.12 buy point, according to IBD MarketSmith pattern recognition. The relative strength line hit a new high this week, as the stock decisively regained its key 50-day moving average. Third-quarter earnings results are due out Oct. 27 before the opening bell.

Merck shares fell 0.9% Thursday morning.


Top Stocks To Watch: Cardinal, Conoco, Denbury, Vertex

IBD Leaderboard stock and medical leader Cardinal Health is shaping a flat base that has a 72.38 buy point, according to IBD MarketSmith chart analysis. The drug distribution heavyweight’s shares are again testing their key 10-week moving average, per Leaderboard commentary. Earnings are due Nov. 4. Shares traded down 0.6% Thursday.

Energy giant ConocoPhillips remains just below a 118.49 buy point in a cup with handle after Wednesday’s 0.6% gain. The stock’s RS line hit a new high in recent sessions, illustrating strong stock market outperformance. Earnings are due Nov. 3. Shares moved down 0.8% Thursday.

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Denbury surged 6.6% Monday, breaking out past a cup base’s 94.05 buy point, following reports that Exxon Mobil (XOM) is considering a takeover. Shares are back in the 5% chase zone that runs up to 98.75 following two straight days of mild losses, though the market remains in a correction. The company will report earnings Nov. 3. Shares lost 3% Thursday.

Biotech leader Vertex Pharmaceuticals continues to build a flat base with a 306.05 buy point and an early entry at 296.90. Its RS line made a new high Tuesday, a sign of big stock market outperformance. VRTX stock is testing its 50-day line, where it will look for much-needed support. Shares traded down 1.3% Thursday.


Tesla Stock

Tesla stock rose 0.3% Wednesday, finally snapping a five-day losing streak. Shares are still at their lowest level since early July and about 48% off their 52-week high. Tesla stock skidded around 4% Thursday morning.

The EV giant’s third-quarter results are Oct. 19. Tesla is expected to earn an adjusted $1.03 per share on sales of $22.4 billion.

Dow Jones Leaders: Apple, Microsoft

Among Dow Jones stocks, Apple shares declined 0.5% Wednesday, but are still holding above recent lows. Still, shares are around 24% off their 52-week high and below their 50- and 200-day lines. Apple stock moved down 2.5% Thursday.

Microsoft inched up 0.15% Wednesday, ending a four-day losing streak. Shares are trying to rebound from this week’s 52-week low price. The software giant is about 35% off its 52-week high. Microsoft shares lost 2.6% early Thursday.

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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