The Dow Jones Industrial Average was down 500 points Friday morning after the Labor Department’s stronger-than-expected jobs report for September. Advanced Micro Devices (AMD) fell 8% and sparked an early sell-off among chip stocks, issuing weaker-than-expected preliminary third-quarter earnings results late Thursday.
X
AMD warned that the weakness was a combination of a “weaker-than-expected PC market and significant inventory correction actions across the PC supply chain.” Meanwhile, Taiwan Semiconductor Manufacturing (TSM) posted better-than-expected quarterly revenue. But shares were still down about 3.5%.
Today’s stock market: employment report
The September jobs report came out before the open on Friday at 8:30 am ET. The US economy grew by 263,000 jobs in September, beating Econoday estimates calling for 250,000 job growth. The unemployment rate fell to 3.5%, lower than the estimate of 3.7%.
Aehr Test Systems ( AEHR ) countered early chip sector action. It beat Wall Street estimates for its fiscal first quarter and maintained its robust growth targets for the full year. Shares rose more than 12% in morning trade.
Lyft ( LYFT ) fell more than 5% after RBC downgraded the stock from outperform to sector perform with a price target of 16, down from 30. Twitter ( TWTR ) fell 1% on Friday morning, as a judge ruled that Elon Musk must complete his $44 billion Twitter settlement by Oct. 28 or face trial in November.
Electric vehicle leader Tesla ( TSLA ) traded 3.1% lower on Friday. Among the Dow Jones industrials, tech titans Apple ( AAPL ) and Microsoft ( MSFT ) were both sharply lower after the market opened today.
As the stock market continues to wait for a reversal day, Cummins (CMI), Murphy USA ( MUSA ), Neurocrine Biosciences ( NBIX ), Vertex Pharmaceuticals ( VRTX ), and World Wrestling Entertainment ( WWE ), as well as shares of Dow Jones UnitedHealth ( UNH ), are among the top stocks to watch. Amidst this week’s volatility, the state of the market remains “in correction” and investors should remain on the defensive.
Vertex is a recent addition to the IBD Leaderboard. Cummins is an IBD SwingTrader stock. 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 September 29th. Neurocrine was a Stock of the Day on September 26.
Dow Jones today: Treasury yields, oil prices
After the opening bell on Friday, the Dow Jones Industrial Average fell 1.7%, while the S&P 500 lost 2.2%. The Nasdaq tech composite fell 2.8%, with AMD, Nvidia ( NVDA ), Intel ( INTC ) and ASML ( ASML ) leading decliners.
Among exchange-traded funds, Nasdaq 100 tracker Invesco QQQ Trust ( QQQ ) fell 2.6% and the SPDR S&P 500 ETF ( SPY ) fell 2%.
The 10-year Treasury yield rose to 3.9% Friday morning. The 10-year Treasury yield fell to 3.56% this week before rallying. Last week, the 10-year Treasury yield briefly topped 4%, which it hadn’t done in more than a decade.
Meanwhile, US oil prices continued this week’s rally, rising more than 1% on Friday. West Texas Intermediate futures rose near $90 a barrel. Last week, oil fell to its lowest level of the year, around $76 a barrel, before recovering.
Attempt to recover the stock market
On Thursday, the Dow Jones Industrial Average fell 1.1%, while the S&P 500 closed up 1%. The Nasdaq composite lost 0.7%, and the small-cap Russell 2000 fell 0.6%. The S&P 500 and Nasdaq remain above their recent lows, so their recovery attempts remain intact.
Monday’s market advance started a new recovery attempt, which was your Day 1. However, if the major indexes were to break down from the September 30 lows, that would nullify the recovery attempt and leave the market still looking for a fund.
Thursday’s The Big Picture commented: “Thursday was Day 4 of the stock market’s attempted recovery, so investors are now patiently waiting for a follow-up day, which will mark the start of a new uptrend. Note that not all follow-throughs work, so it’s important to increase exposure slowly and methodically as the uptrend proves itself.”
Now, before a potential tracking day, is the perfect time to build a solid watchlist of top-performing stocks. Many long-term leaders tend to break out at or near the follow-through, the market bottom signal. Missing this early opportunity can be a costly mistake.
A challenge in forming a watch list during a correction is that while you wait for a tracking day, stock charts can change. This means that some fundamentals among the stocks on your watchlist may deteriorate. So the update is important.
Check out IBD stock lists, such as the IBD 50 and stocks near a buy zone, for additional stock ideas.
Five Dow Jones Stocks to Watch Now
Dow Jones stocks to watch: UnitedHealth
Dow Jones UnitedHealth shares fell 1.5% on Thursday, snapping a three-day winning streak and touching resistance at the key 50-day line. Shares are building a flat base that has a buy point at 553.23, according to IBD MarketSmith chart analysis. Shares of UNH were down 1.55% Friday morning.
UNH stock scores a solid 94 out of a 99 IBD Composite Rating, according to the IBD Stock Review. Investors can use the IBD Composite Rating to easily measure the quality of a stock’s fundamental and technical metrics. UnitedHealth reports its third-quarter results on October 14.
4 Biggest Growth Stocks to Watch in the Current Stock Market Correction
Top acts to watch: Cummins, Murphy USA, Neurocrine, Vertex, WWE
Cummins is moving quickly on the right side of a cup base that has a buy point of 233.95. The stock has retook its 50-day line this week on heavy volume, a positive sign. The company’s next earnings results are on November 4th. Cummins shares were down 0.7% Friday morning.
Gas station and convenience store leader Murphy USA is building a flat base with a buy point of 303.19. The stock fell 1.5% on Thursday, continuing its decline after Tuesday’s bearish reversal. The stock is finding strong resistance at its 50-day line. A decisive recovery from this level would be optimistic for the stock’s base-building prospects. Q3 results are due on October 26. Shares were down 1.4% on Friday.
Neurocrine Biosciences is in 5% buy territory beyond the 109.36 buy points of a flat base, according to IBD MarketSmith chart analysis. The RS line hit a new high on Thursday, a bullish signal. Shares were up 0.7% early Friday.
Shares of the IBD-rated Vertex Pharmaceuticals are quickly approaching the 306.05 buy point from a flat base and above an early entry at 296.24. While the weak state of the market may keep you on the sidelines, the stock’s resistance makes it an excellent idea. Its RS line is approaching new highs, a potential sign of strong stock performance. Shares of VRTX fell 0.3% on Friday.
World Wrestling Entertainment is trying to top the 75.33 cup base entry, but closed about 3% below the entry after Thursday’s 0.7% drop. The RS line hit a new high this week. Shares of WWE rose 0.1% on Friday.
Join IBD’s experts as they analyze the top stocks in the stock market’s current bid for recovery on IBD Live
Tesla stock
Tesla shares fell 1.1% on Thursday, closing at their lowest level since July 13. Shares were down 3.1% Friday morning as CEO Musk tweeted, “Excited to announce the start of Tesla Semi Truck production with deliveries to @Pepsi on December 1st!”. He added: “500 mile range and a lot of fun to drive.”
The stock is about 40% off its 52-week high and well below its 50- and 200-day lines. The electric vehicle giant’s third-quarter results are due on October 19.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares fell 0.7% on Thursday, ending a three-day winning streak. The stock is still 21% off its 52-week high and below its 50- and 200-day lines. The third quarter results are on October 27. Apple shares fell 2.6% Friday morning.
Microsoft fell 1% on Thursday, snapping a three-day winning streak. Shares are still rallying from last week’s 52-week low. The software giant is still 30% off its 52-week high. Microsoft shares fell 4% early Friday.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more growth stocks and the Dow Jones Industrial Average.
YOU MAY ALSO LIKE:
The best growth stocks to buy and watch
Learn how to time the market with IBD’s ETF Market Strategy
Find the best long-term investments with IBD’s long-term leaders
MarketSmith – Research, Charting, Data and Training all in one place
How to Research Growth Stocks: Why This IBD Tool Makes Finding Top Stocks Simple