The Dow Jones Industrial Average rebounded sharply Tuesday, as the 10-year Treasury yield hit another 12-year high. Monday's losses sent the Dow Jones Industrial Average into September's final few sessions in bear market territory, more than 20% below its early January high.
Jabil was a key earnings reporter Tuesday morning. The stock jumped 4% after beating earnings and sales estimates. Shares are building a cup-with-handle base with a 65.98 buy point.
FedEx moved up 0.4% despite a Morgan Stanley price-target cut from 250 to 125, after last week's earnings miss. Dow Jones stock McDonald's rose 0.2% as Citigroup maintained its neutral rating on the stock with a lowered 246 price target. And Lucid Group rallied more than 4% after Cantor Fitzgerald started coverage with an overweight rating.
Electric-vehicle leader Tesla traded nearly 4% higher Tuesday as investors await China EV registrations data and details on the company's third-quarter deliveries. Tech titans Apple and Microsoft were among the slew of Dow Jones industrials stocks trading sharply higher after today's stock market open.
In the ongoing stock market weakness, DoubleVerify, Hostess Brands, Neurocrine Biosciences, Toro and Vertex Pharmaceuticals — as well as Dow Jones stock UnitedHealth — are among the top stocks to watch. Keep in mind that the deepening stock market correction is a great reason for investors to sit on the sidelines.
DoubleVerify is an IBD Leaderboard stock. Hostess and Toro were featured in this week's Stock Near A Buy Zone column.
Dow Jones Today: Treasury Yields, Oil Prices
After Tuesday's opening bell, the Dow Jones Industrial Average rallied 0.6%, while the S&P 500 moved up 0.8%. The tech-heavy Nasdaq Composite rose 1.15% in morning action.
Among exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust was up 2%, and the SPDR S&P 500 ETF gained 1.5%.
The 10-year Treasury yield ticked higher to 3.95% Tuesday, adding to Monday's close at 3.87% — a new 12-year high. Meanwhile, U.S. oil prices also bounced back from Monday's losses, moving up more than 1%. West Texas Intermediate futures traded below $78 a barrel, after falling to their lowest level of the year on Monday.
Two housing market readings are due out early Tuesday, including the Case-Shiller home price index for July, at 9 a.m. ET, and the Commerce Department's new homes sales report for August, at 10 a.m. ET. Econoday expects new home sales to decline from 511,000 to 498,000 month over month.
Stock Market Correction
The market added a fifth day to its selloff on Monday, as the Dow Jones Industrial Average tumbled 1.1% and the S&P 500 dropped 1%. The tech-heavy Nasdaq composite declined 0.6%, and the small-cap Russell 2000 lost 1.4%.
Monday's The Big Picture column commented, "At one point Monday, the Nasdaq composite was up 1.4%. It turned out to be a mirage, as the stock market indexes quickly faded and closed with more losses. The faux rally was symptomatic of bear markets, when stocks often find strength in the early hours but buyers disappear by the close."
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. Monday's action hit new correction lows, so we're still 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.
Nevertheless, it is important for investors to put this downtime to good use. Now is an ideal opportunity to study market bottoms and 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 declined 1% Monday, stemming its slide around the long-term 200-day line. Shares are building a flat base that has a 553.23 buy point, according to IBD MarketSmith chart analysis. With shares about 8% from their 52-week high, they have their work cut out for them ahead of a potential breakout. The stock rose 0.4% Tuesday 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.
4 Top Growth Stocks To Watch In The Current Stock Market Correction
Top Stocks To Watch: DoubleVerify, Hostess, Neurocrine, Toro, Vertex
IBD Leaderboard stock DoubleVerify is still below its 28.07 buy point in a bottoming base despite Monday's 0.55% rise. Per Leaderboard commentary, DoubleVerify has reversed below an early trendline entry near 27 in a bottoming base and is seeking support near its 50-day line. Shares rose 2% Tuesday.
Twinkie maker Hostess Brands is in the 5% buy area above a 23.23 buy point out of a cup with handle, according to IBD MarketSmith chart analysis. Bullishly, Hostess' relative strength line is at new highs. Keep in mind that the weak market trend should keep you on the sidelines, but it is one of the top stocks to watch. The stock was up 1.4% Tuesday.
Wednesday's IBD 50 Stocks To Watch pick, Neurocrine Biosciences, is building a flat base that has a 109.36 buy point. Shares finally gave up support around their 50-day line Monday, dropping 2.8%. Despite Monday's slide, the RS line hit a new high last week, so the stock has avoided much of the market's weakness. Shares inched higher Tuesday. Neurocrine was also Monday's IBD Stock Of The Day.
Toro stock is in a flat base and about 6% away from a 92.05 buy point. Shares are trading just under their 50-day line after Monday's 0.5% fall. The RS line is at new highs. Toro shares traded up 1.3% Tuesday.
Vertex Pharmaceuticals is falling further below its 50-day line following Monday's 2.35% loss. It is forming a flat base with a 306.05 buy point. The stock's resilience makes it a top idea to watch. Shares gained 2% Tuesday.
Join IBD experts as they analyze leading stocks in the current stock market correction on IBD Live
Tesla Stock
Tesla stock moved up 0.25% Monday, snapping a four-day losing streak. Still, shares are sharply below their 50-day line following last week's heavy losses. Tesla stock gained almost 4% early Tuesday.
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 climbed 0.2% Monday, ending a three-day losing streak. The stock is trading near recent lows, even as its RS line hit another new high Monday. Apple stock rose 2.25% Tuesday morning.
Microsoft lost 0.2% Monday, ending just off Friday's 52-week low. The software giant is more than 30% off its 52-week high. Microsoft shares rebounded 1.4% early Tuesday.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.
