The Dow Jones Industrial Average trimmed sharp losses Friday morning on tepid inflation data, which came from the personal consumption expenditure price index, ahead of the final trading session of the quarter. Tesla shares rose ahead of the company’s AI Day, while Micron Technology and Nike were the main drivers of gains.
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Inflation data
The Federal Reserve’s preferred measure of inflation came out on Friday, with the personal consumption expenditure price index rising 0.3% in August, marking a 6.2% year-over-year increase. Both numbers were hotter than expected. Personal income rose 0.3% in August, in line with Econoday estimates.
The PCE price index is a measure of US inflation, which tracks the change in the prices of goods and services purchased by consumers throughout the economy.
Today’s stock: Micron, Nike Earnings
Micron Technology ( MU ) and Nike ( NKE ) were the top gainers overnight.
Shares of Micron rose more than 1 percent after the memory chip giant missed Wall Street’s already subdued sales expectations in its fiscal fourth quarter and guided much lower for the current quarter. It is also scaling back capital spending plans.
Nike shares fell 12% after the Dow Jones just beat Wall Street expectations for its first-quarter earnings report. But gross margins fell as inventories rose, and the sportswear giant said it would move aggressively to liquidate excess merchandise.
Electric vehicle leader Tesla ( TSLA ) traded up 1% on Friday. Tech titans Apple ( AAPL ) and Microsoft ( MSFT ) were mixed after the stock market opened today.
In today’s stock market weakness, DoubleVerify (DV), Hostess Brands (TWNK), Neurocrine Biosciences (NBIX), Toro (TTC), Vertex Pharmaceuticals (VRTX), and World Wrestling Entertainment (WWE), as well as shares of the Dow Jones UnitedHealth ( UNH ) – are among the top stocks to watch. Note that the deepening of the stock market correction is a time for investors to sit on the sidelines and make watch lists.
DoubleVerify and Vertex are IBD rated stocks. Hostess and Toro were featured in this week’s Stock Near A Buy Zone column. Neurocrine Biosciences was the stock of the day on Monday.
Dow Jones today: Treasury yields, oil prices
After the opening bell on Friday, the Dow Jones Industrial Average fell 0.2%, while the S&P 500 was down less than 0.1%. The tech-heavy Nasdaq Composite gained 0.2% in morning action.
Among exchange-traded funds, Nasdaq 100 tracker Invesco QQQ Trust ( QQQ ) rose 0.4% and the SPDR S&P 500 ETF ( SPY ) rose 0.2%.
The 10-year Treasury yield fell to 3.7% on Friday morning. Earlier this week, the 10-year Treasury yield briefly topped 4%, which it hadn’t done in more than a decade. The 10-year Treasury yield is racing for its ninth straight weekly advance, marking its longest rally since 2004.
Meanwhile, oil prices in the US fell slightly. West Texas Intermediate futures were below $81 a barrel, after falling to their lowest level of the year on Monday.
Stock market correction
On Thursday, the Dow Jones Industrial Average sold off 1.5%, while the S&P 500 closed up 2.1%. The Nasdaq composite fell 2.8%. The small-cap Russell 2000 lost nearly 2.4%. The S&P 500 and Nasdaq traded off their recent lows, ending the fledgling recovery attempt.
Thursday’s The Big Picture column commented, “Amid a stock market that continues to fall precipitously, IBD’s new ranked stock Vertex Pharmaceuticals is a stock market leader to watch.”
With the Nasdaq off its Sept. 23 lows, the tech composite’s two-day rally failed. Investors are now looking for another attempt at recovery. Amid the continued sell-off, investors should remain mostly, if not completely, on the sidelines.
However, it is important for investors to make good use of this downtime. Now is an ideal opportunity to study market funds and build a solid watchlist of top-performing stocks. Many long-term leaders tend to break out on or near the follow-up day, the signal of a market bottom. Missing this early opportunity can be a costly mistake.
Five Dow Jones Stocks to Watch Now
Dow Jones stocks to watch: UnitedHealth
Shares of Dow Jones UnitedHealth remain above their long-term 200-day line. Shares are building a flat base that has a buy point at 553.23, according to IBD MarketSmith chart analysis. Resilience in stocks made Tuesday’s IBD 50 the pick of stocks to watch. Shares were up 1.1% Friday morning.
UNH stock scores a solid 95 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.
4 Biggest Growth Stocks to Watch in the Current Stock Market Correction
Top stocks to watch: DoubleVerify, Hostess, Neurocrine, Toro, Vertex, WWE
Shares of the IBD DoubleVerify ranking closed just below its 28.07 buy point on a fund basis after falling 0.3% on Thursday. According to the leaderboard commentary, DoubleVerify found support near its 50-day line and has a relative strength line to new highs. Shares fell 0.4% on Friday.
Twinkie maker Hostess Brands is in the 5% chase zone above a 23.23 buy point on a mug with a handle, according to IBD MarketSmith chart analysis. Optimistically, the Hostess relative strength line continues to make new highs. Note that the weak trend in the market should keep you on the sidelines, but it is one of the best stocks to watch. Shares rose 0.1% on Friday.
Monday’s IBD Stock of the Day, Neurocrine Biosciences, is still building a flat base that has a 109.36 buy point. Shares are right at their 50-day line after Thursday’s 0.1% loss. The RS line hit a new high on Thursday, so the stock has avoided much of the market’s sharp decline in recent sessions. Shares rose 1.6% on Friday.
Toro shares are in a flat base and about 5% away from a 92.05 buy point. Shares are trading below their 50-day line after Thursday’s 1.2% drop. The RS line is at new highs. Toro shares rose 0.2% on Friday.
Vertex Pharmaceuticals decisively retook its 50-day line after Wednesday’s 2.7% rally. It is forming a flat base with a buy point at 306.05 and an early entry at 296.24. The resilience of the stock makes it an excellent idea to watch. Shares lost 0.2% on Friday.
World Wrestling Entertainment continues to build a flat base that has a 75.33 entry. The stock is still trying to recover its 50-day line. A decisive recovery from this key level would be bullish for the stock’s base-building prospects. WWE shares were up 2.3% early Friday.
Join IBD experts as they analyze the top stocks in the current stock market correction on IBD Live
Tesla stock
Tesla shares slipped 6.8% on Thursday, snapping a three-day winning streak and closing at their lowest level since July 26. The stock is well below its 50-day line. Tesla shares rose 1% ahead of the company’s AI Day.
AI Day is an event where Tesla showcases its latest technology. Chief executive Elon Musk said in a tweet on June 2 that the event, originally scheduled for August 19, would be delayed in the hope that a prototype of his Optimus robot would be operational at a later date.
The AI event will begin at 5pm PT, meaning any news will come after the end of extended trading. Over the weekend, Tesla will likely release third quarter delivery data. Thus, investors will not be able to intervene until early Monday.
Last week, the stock’s relative strength line hit its highest level since April, but has fallen sharply in recent sessions. Shares are about 35% off their 52-week high.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares fell 4.9% Thursday after an analyst downgrade. Apple shares fell 0.2% Friday morning, threatening to extend a losing streak to three sessions.
Microsoft fell 1.5% on Thursday, hitting a new 52-week low. The software giant is more than 32% off its 52-week high. Microsoft shares were up 0.6% early Friday.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more growth stocks and the Dow Jones Industrial Average.
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