Dow Jones futures sold off 300 points Wednesday morning after a stronger-than-expected ADP employment report. ADP’s payrolls report previews Friday’s jobs report from the Labor Department. Meanwhile, OPEC+ will meet to reportedly consider a controversial production cut.
Ford Motor (F) climbed 1.8% Wednesday morning after Morgan Stanley upgraded the stock from equal-weight to overweight. Investment banks Goldman Sachs (GS) and Morgan Stanley (MS) dropped 1.6% and 1.3%, respectively, as Atlantic Equities expects declining investment banking activity.
Electric-vehicle leader Tesla (TSLA) traded 1.3% lower Wednesday. Among the Dow Jones industrials, tech titans Apple (AAPL) and Microsoft (MSFT) were both squarely lower ahead of today’s stock market open.
As the stock market turns up into a rally attempt, Murphy USA (MUSA), Neurocrine Biosciences (NBIX), Vertex Pharmaceuticals (VRTX) and World Wrestling Entertainment (WWE) — as well as Dow Jones stock UnitedHealth (UNH) — are among the top stocks to watch. Despite Tuesday’s gains, the market’s status remains “in correction,” and investors should remain on the defensive.
Vertex is a recent addition to IBD Leaderboard. Murphy USA was featured in this week’s Stock Near A Buy Zone column, along with three other top stock ideas. World Wrestling was a Stock Of The Day on Thursday. Neurocrine was a Stock Of The Day on Sept. 26.
Dow Jones Today: Treasury Yields, Oil Prices
Ahead of Wednesday’s opening bell, Dow Jones futures dropped 1.1% vs. fair value, while S&P 500 futures lost 1.15%. Nasdaq 100 futures declined 1.3%. Remember that overnight action in Dow Jones futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
The 10-year Treasury yield rebounded to 3.7% Wednesday morning, set to snap a two-day losing streak. Last week, the 10-year Treasury yield briefly topped 4%, which hadn’t been done for more than decade. But it has fallen significantly this week.
Meanwhile, U.S. oil prices gave up a sliver of their recent gains, easing 0.5% Wednesday, taking West Texas Intermediate futures to around $86 a barrel. Last week, oil fell to its lowest level of the year before rebounding. OPEC+ is widely expected to approve a sizable production cut Wednesday when it meets in Vienna, Austria.
ADP Jobs Report, Economic Data
ADP’s September employment report came out at 8:15 a.m. ET. ADP’s private payrolls rose 208,000, topping ADP estimates that expected growth of 200,000, down from August’s 308,000.
Next, the IHS/Markit U.S. services purchasing managers’ index (PMI) is due out at 9:45 a.m. It is expected to improve to 49.2 from August’s 43.7 reading. Readings below 50 indicate contraction.
Lastly, the Institute of Supply Management’s services index, out at 10 a.m., is expected to dip slightly to 56.0 from August’s 56.9 reading.
Stock Market Rally Attempt
On Tuesday, the Nasdaq composite fared best out of the major indexes, surging 3.3% for the day. The S&P 500 advanced 3.1% and the Dow Jones Industrial Average climbed 2.8%.
Tuesday’s The Big Picture cautioned, “Keep in mind this is just the second day of the rally attempt and the market remains in a correction. Investors should avoid getting sucked in too deeply because no one can rule out another brutal reversal.”
Monday’s gains kicked off a new stock market rally attempt, which is your Day 1. The action on Day 2 and Day 3 is irrelevant as long as the index doesn’t undercut its latest low, from Friday. If that low is undercut, however, the rally try is done and the market continues to search for a bottom.
Next, on Day 4 or later, investors should be waiting for a follow-through day. Starting Thursday (Day 4), you are looking for the Nasdaq or S&P 500 to rise sharply in higher volume than the previous session. A large enough rise in climbing volume marks a follow-through day. That would give investors the green light to start buying leading stocks breaking out past correct buy points.
Now, ahead of a potential 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 bottoming signal. Missing that early opportunity can be a costly mistake.
Five Dow Jones Stocks To Watch Now
Dow Jones Stocks To Watch: UnitedHealth
Dow Jones stock UnitedHealth advanced 1.5% Tuesday and is nearing a test of the key 50-day line. Shares are building a flat base that has a 553.23 buy point, according to IBD MarketSmith chart analysis. UNH stock was unchanged Wednesday morning.
UNH stock shows a solid 92 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.
4 Top Growth Stocks To Watch In The Current Stock Market Correction
Top Stocks To Watch: Murphy USA, Neurocrine, Vertex, WWE
Gas station and mini-market leader Murphy USA is building a flat base with a 303.19 buy point. Shares slashed gains to just 0.1% Tuesday, finding stout resistance at their 50-day line. A decisive retake of this level would be bullish for the stock’s base-building prospects. Shares were flat Wednesday morning.
Neurocrine Biosciences is trying to break out past a flat base’s 109.36 buy point, according to IBD MarketSmith chart analysis. Shares briefly topped the entry Tuesday, but they closed just below the buy trigger after paring gains to 2.4%. The RS line hit a new high Friday, a bullish signal. Shares added 0.2% early Wednesday.
IBD Leaderboard stock Vertex Pharmaceuticals decisively regained its 50-day line last week. Shares are rapidly approaching a flat base’s 306.05 buy point and are above an early entry at 296.24. While the weak market status may keep you on the sidelines, the stock’s resilience makes it a top idea to watch. Its RS line is just off new highs, a potential sign of big stock market outperformance. VRTX stock dipped 0.6% in Wednesday’s premarket trade.
World Wrestling Entertainment is just 1% away from a cup base’s 75.33 entry following Tuesday’s 2.8% advance. The RS line continues to notch new highs. WWE shares perked up 0.,2% early Wednesday.
Tesla stock rebounded 2.9% Tuesday after CEO Elon Musk offered to buy Twitter (TWTR) for $54.20 a share, according to a Bloomberg article. On Monday, Tesla’s dive saw it close at its lowest level since July 18. Shares slipped 1.8% Wednesday morning.
In recent weeks, the stock’s relative strength line reached 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 climbed 2.6% Tuesday, adding to Monday’s strong gains. Shares are still about 20% off their 52-week high and below their 50- and 200-day lines. Apple stock fell 1% Wednesday morning.
Microsoft rose 3.4% Tuesday, continuing to rebound from last week’s 52-week low price. The software giant remains about 30% off its 52-week high. Microsoft shares slipped 0.9% early Wednesday.
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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