The Dow Jones Industrial Average dropped Thursday morning after first-time unemployment claims unexpectedly dropped, retail sales climbed and factory indicators fell. Meanwhile, the 10-year Treasury yield remains on the cusp of hitting June’s 11-year high.
The Labor Department’s initial jobless claims dropped to 213,000. They were expected to rise to 228,000 vs. 222,000 in the previous week. And U.S. retail sales rose 0.3% in August vs. July, handily beating Econoday estimates that expected total sales to be flat. But the Philadelphia Fed manufacturing index posted a -9.9, far below the expected 3.1 reading.
Elsewhere, a tentative deal has been reached to avoid a rail workers strike as early as Friday, the Biden Administration announced. That news lifted rail stocks such as CSX (CSX) and Union Pacific (UNP) after they sank Wednesday.
Adobe (ADBE) reported better-than-expected quarterly earnings, but revenue slightly missed as the company released results before the open instead of its customary report after the close. The reason is the software giant confirmed it’s buying online design collaboration firm Figma for $20 billion. ADBE stock dived 13%.
In the market’s current volatility, Arista Networks (ANET), DoubleVerify (DV), Palo Alto Networks (PANW) and Pure Storage (PSTG) — as well as Dow Jones stock Chevron (CVX) — are among the top stocks to buy and watch. Keep in mind the market’s increased volatility is a good reason for investors to be more defensive, especially after Tuesday’s market dive.
DoubleVerify is an IBD Leaderboard stock. Chevron and Palo Alto were featured in this week’s Stocks Near A Buy Zone column.
Dow Jones Today: Treasury Yields, Oil Prices
After Thursday’s opening bell, the Dow Jones Industrial Average was down 0.3%, while the S&P 500 gave up 0.5%. The tech-heavy Nasdaq composite lost 0.7% in morning action.
The 10-year Treasury yield ticked higher to 3.44% Thursday morning. On Tuesday, the 10-year Treasury yield notched its highest closing level since June 14 and is just shy of the 11-year high of 3.48% set on June 14.
U.S. oil prices declined more than 1% early Thursday, as West Texas Intermediate futures traded around $87 a barrel. Natural gas futures slumped 6% as the rail strike was averted, which means coal shipments won’t be disrupted. Natgas futures soared 9% on Wednesday.
Stock Market Rally Under Pressure
On Wednesday, the Nasdaq Composite led the way, rising 0.7%. The S&P 500 mustered a 0.3% gain, while the Dow Jones Industrial Average was up only 0.1%.
Wednesday’s The Big Picture column commented, “Energy continues to rank No. 1 within IBD’s stock research tables in terms of mid- and long-term performance. The sector rose 4% on Tuesday on a price-weighted basis. Affirming the bullish action: Energy Select Sector SPDR (XLE) marched 2.8% higher amid crude oil futures’ fourth gain in five sessions to $88.98 a barrel. VanEck Oil Services (OIH) ran ahead 3.6%.”
The best way to find emerging stock market leadership is by using the relative strength line. The RS line measures a stock’s price performance vs. the S&P 500. If the stock is outperforming the broader market, the RS line angles upward. If a stock lags the broad market, the line will point lower.
The RS line is plotted on all IBD and MarketSmith charts. In addition, the IBD Stock Screener includes a list of top-rated stocks with relative strength lines at new highs. MarketSmith also has the “RS Blue Line Dot” list, which screens for RS lines at new highs. (IBD MarketSmith provides free access for a full week.)
If you’re new to IBD, consider taking a look at its stock trading system and CAN SLIM basics. Recognizing chart patterns is one key to the investment guidelines. IBD offers a broad range of growth stock lists, such as Leaderboard and SwingTrader.
Dow Jones Stocks To Watch: Chevron
Dow Jones stock Chevron rose 2.4%, once again nearing a cup with handle’s latest buy point at 166.93 — according to IBD MarketSmith chart analysis — amid a strong performance by energy stocks so far this year. The stock was down 1.45% early Thursday.
CVX stock shows a strong 97 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: Arista, DoubleVerify, Palo Alto Networks, Pure Storage
Arista Networks has added a handle to a double-bottom base, placing the correct entry at 132.97, according to IBD MarketSmith chart analysis. An early entry at 126.80 is also in play. Arista’s relative strength line is close to highs. ANET shares were slightly lower early Thursday.
IBD Leaderboard stock DoubleVerify is holding above a 28.07 buy point in a bottoming base. Shares are in the 5% buy zone that goes up to 29.47. DV shares lost 2% Thursday morning.
Cybersecurity leader Palo Alto Networks is nearing a 193.01 buy point in a cup with handle despite Wednesday’s 0.5% fall. An early entry around 187 exists due to a trendline, according to IBD Leaderboard commentary. Shares lost nearly 1% Thursday.
Pure Storage is approaching a 31.62 buy point in a cup with handle. Meanwhile, an early entry is also in play after the stock moved above a downtrend line within that handle. Shares were down more than 1% Thursday.
Tesla stock rallied 3.6%, rebounding from Wednesday’s 4% skid. Shares reclaimed their 200-day line, which they had just given up. The electric-vehicle giant inched lower Thursday morning.
Shares are about 27% of their 52-week high.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares rose 1% Wednesday, recovering a small part of Tuesday’s 5.9% tumble. They remain below their 50-day and 200-day lines. The stock is about 14% away from a buy point at 176.25 off a cup with handle. Apple stock dipped 0.3% Thursday.
Microsoft inched higher Wednesday, failing to regain much of Tuesday’s 5.5% slide. The software giant remains sharply below its 50-day and 200-day lines. Shares are about 28% off their 52-week high. Microsoft shares fell 1.2% Thursday morning.
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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