The Dow Jones Industrial Average reversed lower after another key inflation report, the producer price index, came on Wednesday in the wake of a stock market drop from a hot reading of the price index in consumer Meanwhile, the 10-year Treasury yield is poised to hit an 11-year high in June.
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The US Labor Department said the producer index, or PPI, fell 0.1% in August from the previous month, matching estimates. Wholesale inflation rose 8.7% from a year ago, below July’s 9.8% increase and in line with Econoday estimates.
On Tuesday, the CPI inflation rate fell to 8.3%, down from 8.5% in July and 9.1% in June, amid falling gas prices. The consumer price index increased by 0.1% in the month. But Wall Street economists had expected the CPI to show a monthly drop of 0.1%, bringing the CPI inflation rate down to 8%. Worse, core inflation accelerated more than expected to 6.3%.
As a result, markets now believe there is a 38% chance of a full percentage point hike at the next Federal Reserve meeting. Before Tuesday, Wall Street did not place any odds on that possibility.
Meanwhile, electric vehicle leader Tesla ( TSLA ) rose 2% on Wednesday. Among the Dow Jones industrials, tech titans Apple ( AAPL ) and Microsoft ( MSFT ) were higher after the market opened today. Merck ( MRK ) rose 0.7% after Berenberg upgraded the stock to buy.
In the current market volatility, Arista Networks (ANET), DoubleVerify (DV), Palo Alto Networks (PANW), and Pure Storage (PSTG), as well as Dow Jones stocks Chevron (CVX) – These are among the best stocks to buy and watch. Note that increased market volatility is a good reason for investors to be more defensive, especially after Tuesday’s market decline.
DoubleVerify is an IBD ranked stock exchange. Chevron and Palo Alto were featured in this week’s Stocks Near A Buy Zone column.
Dow Jones today: Treasury yields, oil prices
After the opening bell on Wednesday, the Dow Jones Industrial Average reversed 0.25% after giving up early gains, while the S&P 500 fell 0.2%. The Nasdaq tech composite lost 0.1% in morning action.
Among exchange-traded funds, Nasdaq 100 tracker Invesco QQQ Trust ( QQQ ) fell 0.1% and the SPDR S&P 500 ETF ( SPY ) lost 0.2% in early trade.
The 10-year Treasury yield rose to 3.43% Wednesday morning. On Tuesday, the 10-year Treasury yield hit its highest closing level since June 14 and is well off the 11-year high of 3.48% set on June 14.
US oil prices edged lower on Wednesday as they continue to consolidate after recent gains. West Texas Intermediate futures traded below $87 a barrel again.
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Collection of the stock market under pressure
On Tuesday, all three major stock indexes fell below their 50-day moving averages, prompting a trip back to the Sept. 6 lows. The Dow Jones Industrial Average fell 3.9%, while the Nasdaq fell 5.2%.
Ahead of the inflation report, Tuesday’s The Big Picture column commented, “Best to stay out of the market right now. Evaluate your current holdings. If you have some names that are profitable and holding above short-term support levels. , it is good to hold. In the ranking portfolio, for example, we still have Invesco Solar (TAN) because it is slightly above our entry and above its lines convergent 10 and 21 days”.
The best way to find emerging market leadership is by using the relative strength line. The RS line measures the price performance of a stock compared to the S&P 500. If the stock outperforms the broader market, the RS line slopes upward. If a stock lags the broad market, the line will point lower.
The RS line is plotted on all IBD and MarketSmith charts. In addition, the IBD Stock Screener includes a list of the best-valued stocks with lines of strength relative to new highs. MarketSmith also has the “RS Blue Line Dot” chart, which looks for RS lines at new highs. (IBD MarketSmith offers free access for an entire week.)
If you are new to IBD, consider checking out their Stock Trading System and CAN SLIM Basics. Recognizing chart patterns is a key to investment guidelines. IBD offers a wide range of growth stock lists, including Leaderboard and SwingTrader.
Investors can also create watch lists, find companies near a buy point, or develop custom screens in IBD MarketSmith.
Five Dow Jones Stocks to Watch Now
Dow Jones stocks to watch: Chevron
Shares of Dow Jones Chevron fell 1.9% on Tuesday but still remain above support at the key 50-day line. Shares are nearing their latest buy point at 166.93, according to IBD MarketSmith chart analysis, amid a strong performance by energy stocks so far this year. Shares were up 1% early Wednesday.
CVX stock scores a strong 97 out of a perfect 99 IBD Composite Rating, according to IBD Stock Check. Investors can use the IBD Composite Rating to easily measure the quality of a stock’s fundamental and technical metrics.
3 most important growth stocks to buy and watch in the current stock market rally
Top Stocks to Watch: Arista, DoubleVerify, Palo Alto Networks, Pure Storage
Arista Networks added a handle to a double-bottom base, placing the correct entry at 132.97, according to IBD MarketSmith chart analysis. Arista’s relative strength line is near highs. ANET shares gained 0.1% early Wednesday.
Shares of the IBD DoubleVerify Rating are holding above a 28.07 buy point on a fund basis. Shares are in the 5% buy zone that rises to 29.47. DV shares were down 0.1% Wednesday morning.
Cybersecurity leader Palo Alto Networks is nearing a 578.89 buy point in a cup with a handle despite Tuesday’s 3.4% drop. An early entry around 560 is also in play due to a trend line, according to the IBD leaderboard commentary. Shares rose 0.5% on Wednesday.
Pure Storage is approaching a 31.62 buy point in a mug with handle. Meanwhile, there is also an early entry after the stock moved above a downtrend line within this handle. Shares fell 0.3% on Wednesday.
Join IBD’s experts as they analyze the top stocks in the current stock market rally on IBD Live
Tesla stock
Tesla shares slipped 4% on Tuesday, snapping a five-day winning streak. The stock gave up its 200-day line, which it had just recovered. The electric vehicle giant rose 2% Wednesday morning.
Shares are about 30% off their 52-week high.
Dow Jones Leaders: Apple, Microsoft
Among the Dow Jones stocks, Apple stock stumbled 5.9% on Tuesday, falling back below its 50-day and 200-day lines. Shares are 14% from a 176.25 cup-handled buy point. Apple shares rose 0.3% on Wednesday.
Microsoft fell 5.5% on Tuesday, ending a four-day winning streak. The software giant remains well below its 50-day and 200-day lines. The stock is about 28% off its 52-week high. Microsoft shares were up 0.1% Wednesday morning.
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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