Dow Jones futures dropped more than 350 points Thursday morning after key economic data — U.S. GDP and first-time unemployment claims. Apple stock sold off on a Bank of America downgrade.
CarMax shares plunged 19% after a big profit miss, while Jefferies inched higher on stronger-than-expected results.
Cryptocurrency exchange Coinbase (COIN) slipped 4% after Wells Fargo started coverage with an underweight rating. Electric-vehicle leader Tesla (TSLA) traded 1% lower Thursday. Tech titan Apple (AAPL) declined more than 2.5% after Bank of America downgraded the stock from buy to neutral. Microsoft (MSFT) was also squarely lower ahead of today’s stock market open.
In the ongoing stock market weakness, DoubleVerify (DV), Hostess Brands (TWNK), Neurocrine Biosciences (NBIX), Toro (TTC), Vertex Pharmaceuticals (VRTX) and World Wrestling Entertainment (WWE) — as well as Dow Jones stock UnitedHealth (UNH) — are among the top stocks to watch. Keep in mind that the deepening stock market correction is a time for investors to sit on the sidelines and map out watchlists.
Dow Jones Today: Treasury Yields, Oil Prices
Ahead of Thursday’s opening bell, Dow Jones futures fell 1% vs. fair value, while S&P 500 futures lost 1.3%. Nasdaq 100 futures sold off 1.6%, with Apple again trading at the bottom of the list.
The 10-year Treasury yield jumped to 3.83% Thursday morning. On Wednesday, the 10-year Treasury yield briefly topped 4% before reversing sharply lower to close at 3.7%. The 10-year Treasury yield is still tracking toward its ninth straight weekly advance, marking its longest rally since 2004.
Meanwhile, U.S. oil prices were little changed. West Texas Intermediate futures were just above above $82 a barrel, after falling to their lowest level of the year on Monday.
GDP, Jobless Claims
The third estimate of second-quarter GDP showed that second-quarter gross domestic product is still expected to fall at a 0.6% annual rate. That is unchanged from the second estimate.
Meanwhile, the Labor Department’s first-time jobless claims also came out at 8:30 a.m. ET. Claims fell to 193,000, lower than estimates that called for them to rise to 218,000 vs. 213,000 in the previous week, per Econoday.
Stock Market Correction
On Wednesday, the Dow Jones Industrial Average rallied 1.9%, while the Nasdaq and S&P 500 also climbed about 2% each.
Wednesday’s The Big Picture column commented, “Put another way, Friday does not qualify as the first day of a budding rally attempt. Thus, the Nasdaq has accomplished two up sessions in a row. That’s nothing to really crow about for the bulls, especially in a stock market that continues to flash bearish action. The S&P 500 just snapped a six-day losing streak. So, it’s only just begun a new rally attempt after undercutting its June 17 low of 3636.”
The Nasdaq’s two-day rally attempt should have investors on the lookout for a potential follow-through day, which is when the Nasdaq or S&P 500 rises sharply in higher volume than the previous session on day 4 and later of a rally attempt. Friday will be day 4. 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 day, the market bottoming signal. Missing that early opportunity can be a costly mistake.
Dow Jones Stocks To Watch: UnitedHealth
Dow Jones stock UnitedHealth continues to hold above its long-term 200-day line. Shares are building a flat base that has a 553.23 buy point, according to IBD MarketSmith chart analysis. The stock’s resilience made it Tuesday’s IBD 50 Stocks To Watch pick. Shares inched lower Thursday morning.
UNH stock shows a solid 94 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.
Top Stocks To Watch: DoubleVerify, Hostess, Neurocrine, Toro, Vertex, WWE
IBD Leaderboard stock DoubleVerify closed just below its 28.07 buy point in a bottoming base after Wednesday’s 2.9% climb. Per Leaderboard commentary, DoubleVerify found support near its 50-day line. Shares inched lower Thursday.
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 inactive Thursday.
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 Thursday following a 1.45% gain. The RS line hit a new high last week, so the stock has avoided much of the market’s drop. Shares were unchanged Thursday.
Toro stock is in a flat base and about 4% away from a 92.05 buy point. Shares are trading back above their 50-day line after Wednesday’s 2.4% rise. The RS line is at new highs. Toro shares traded flat Thursday.
Vertex Pharmaceuticals decisively regained its 50-day line following Wednesday’s 2.7% rally. It is forming a flat base with a 306.05 buy point. The stock’s resilience makes it a top idea to watch. Shares were unchanged Thursday.
World Wrestling Entertainment continues to build a flat base that has a 75.33 entry. Shares tried to recover their 50-day line Wednesday, but were again turned away. A decisive retake of that key level would be bullish for the stock’s base-building prospects. WWE shares were flat early Thursday.
Tesla stock rallied 1.7% Wednesday, rising for a third straight day. Still, shares are below their 50-day line despite the recent gains. Tesla stock lost over 1% early Thursday.
Last week, the stock’s relative strength line reached its highest level since April, but has fallen sharply in recent sessions. Shares are about 31% of their 52-week high.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares slashed losses to 1.3% Wednesday, hitting recent lows. Apple stock slid more than 2% Thursday morning after Bank of America downgraded the stock from buy to neutral with a lowered price target of 160. Analyst Wamsi Mohan expects “material negative estimate revisions to be driven by weaker consumer demand.”
However, Rosenblatt upgraded AAPL stock to a buy with a 189 price target.
Microsoft rallied 2% Wednesday, snapping a three-day losing streak and rebounding from Wednesday’s 52-week low. The software giant is more than 30% off its 52-week high. Microsoft shares lost 1.2% early Thursday.
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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