The Dow Jones Industrial Average dropped 150 points Monday, but the index still threatened to extend a losing streak to four sessions. Last week, the Dow Jones Industrial Average sold off with heavy losses and hit new 2022 lows.
Chinese electric-vehicle maker Li Auto rose about 6% even after slashing its third-quarter delivery outlook due to supply chain issues. Ride-hailing firm Lyft dropped nearly 4% after UBS downgraded the stock from buy to neutral.
Electric-vehicle leader Tesla traded 1.4% higher after reversing from early losses Monday. Among the Dow Jones industrials, tech titans Apple and Microsoft turned higher after today's stock market open.
Top stocks to watch amid the market's ongoing weakness include DoubleVerify, Neurocrine Biosciences, Toro and Vertex Pharmaceuticals — as well as Dow Jones stock UnitedHealth. Keep in mind the worsening stock market conditions are good reasons for investors to be mostly, if not entirely, on the sidelines.
DoubleVerify is an IBD Leaderboard stock. Tesla was featured in last week's Stocks Near A Buy Zone column. Neurocrine was Wednesday's IBD 50 Stocks To Watch pick.
Dow Jones Today: Treasury Yields, Oil Prices
After Monday's opening bell, the Dow Jones Industrial Average fell 0.3%, while the S&P 500 rose 0.1%. The tech-heavy Nasdaq Composite traded up 0.85% in morning action.
Among exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust was up 0.85%, and the SPDR S&P 500 ETF gained 0.1%.
The 10-year Treasury yield jumped to 3.78% Monday, which would be a new 12-year high. Last week, the 10-year Treasury yield notched its eighth consecutive week of gains and hit its highest level since April 2010. Meanwhile, U.S. oil prices threatened to extend Friday's losses, moving down 1%. West Texas Intermediate futures traded below $78 a barrel, at multi-month lows.
Stock Market Correction Worsens
On Friday, the Nasdaq Composite led the major stock indexes lower, selling off 1.8%. The Dow Jones Industrial Average and S&P 500 followed up with losses of 1.6% and 1.7%, respectively. All four major stock indexes hit new lows since IBD's market outlook changed to "market in correction" on Sept. 16.
Friday's The Big Picture column commented, "The VIX, often referred to as a Wall Street fear gauge, spiked Friday and ended up more than 8%. Investors should strap in for more painful times ahead, according to Oanda senior market analyst Edward Moya."
To prepare for a new stock market rally, investors should be watching for two things: a rally attempt, then a follow-through day.
In a market correction, the first day the index closes higher counts as day 1 of its attempted rally. The action on day 2 and day 3 is irrelevant as long as the index doesn't undercut its latest low. If that low is undercut, the rally try is done and the market needs to try again. Friday's action hit new correction lows, so we're back to looking for a day 1.
On day 4 and later, you are looking for the Nasdaq or S&P 500 to rise sharply in higher volume than the previous session. That's a follow-through day. It gives investors the green light to start buying leading stocks breaking out past correct buy points. It should put your portfolio and mindset in sync with the stock market action by gradually committing capital to leading stocks.
During stock market correction, don't tune out. Instead, create watchlists to find emerging stock market leadership 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.
Five Dow Jones Stocks To Watch Now
Dow Jones Stocks To Watch: UnitedHealth
Dow Jones stock UnitedHealth declined 0.8% Friday, still below its 50-day line. Shares are building a new flat base that has a 95.82 buy point, according to IBD MarketSmith chart analysis. The stock dropped nearly 2% Monday morning.
UNH stock shows a strong 95 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.
3 Top Growth Stocks To Buy And Watch In The Current Stock Market Correction
Top Stocks To Watch: DoubleVerify, Neurocrine, Toro, Vertex
IBD Leaderboard stock DoubleVerify remains below its 28.07 buy point in a bottoming base following Friday's 0.6% loss, according to IBD MarketSmith chart analysis. The stock is trying to find support around the 50-day line. DV shares fell 0.6% Monday morning.
Wednesday's IBD 50 Stocks To Watch pick, Neurocrine Biosciences, is building a flat base that has a 109.36 buy point. Shares found much-needed support around their 50-day line Friday, while the RS line hit a new high. Shares edged lower after Wells Fargo started the stock with an equal-weight rating and a 110 price target.
IBD 50 stock Toro is just 6% away from a flat base's 92.05 buy point. Bullishly, the stock's RS line hit a new high last week, indicating big stock market outperformance. Toro shares lost 0.4% Monday.
Vertex Pharmaceuticals continues to trade just below its 50-day line after Friday's 1% fall. The stock has been holding up well during the ongoing market weakness, as indicated by a RS line near new highs. A new flat base has a 306.05 buy point, and the stock's resilience makes it a top idea to watch. Vertex shares moved down 0.25% Monday.
Join IBD experts as they analyze leading stocks in the current stock market correction on IBD Live
Tesla Stock
Tesla stock traded down 4.6% Friday, breaking through support at the 50-day line. Shares moved up 1.4% Monday morning.
Last week, the stock's relative strength line reached its highest level since April, but has fallen sharply in recent sessions. Shares are about 34% of their 52-week high.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares dropped 1.5% Friday, extending a losing streak to three sessions. The stock is trading near recent lows, even as its RS line hit a new high Friday. Apple stock gained 1.4% Monday morning.
Microsoft declined 1.3% Friday, hitting another 52-week low. The software giant is about 32% off its 52-week high. Microsoft shares rose 0.85% early Monday.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.
