Dow Jones futures were down 425 points on Friday morning ahead of Fed Chairman Jerome Powell’s comments at a Federal Reserve event in Washington DC. drop in the last seven weeks.
European indexes also fell on Friday after business surveys showed economic activity in Europe slowed sharply in September, raising the risk of a recession. “A recession in the eurozone is on the cards as companies report worsening trading conditions and intensifying price pressures linked to rising energy costs,” said Chris Williamson, chief economist at S&P Global Market Intelligence.
London’s FTSE 100 was down 2.2%. Frankfurt’s DAX sold off 2.7% and Paris’s CAC 40 fell 2.2% in afternoon trade.
Costco Wholesale ( COST ) was a key driver of gains on Friday morning. Costco reported better-than-expected fiscal fourth-quarter earnings and flat sales results Thursday afternoon, but COST shares fell more than 2% in morning trading. In early September, Costco stock triggered the 7% to 8% stop loss rule of a cup with the 552.81 handle buy point.
Head of electric vehicle Tesla ( TSLA ) traded more than 2% lower on Friday. Among the industrialists of the Dow Jones, the titans of technology apple (AAPL) and Microsoft (MSFT) were much lower before the stock market opened today.
Top stocks to watch amid recent market weakness include Continental resources (CLR), DoubleVerify (DV), Neurocrine Biosciences (NBIX) and Vertex Pharmaceuticals (VRTX), as well as Dow Jones stocks Chevron (CVX). Note that the new stock market correction is a good reason for investors to be mostly, if not completely, on the sidelines.
DoubleVerify is an IBD-rated stock, but its position size shrank during last week’s losses. Tesla appeared in the Stocks column near a buy zone this week. Neurocrine was the stock pick to watch on Wednesday’s IBD 50.
Dow Jones today: Treasury yields, oil prices
Before the opening bell on Friday, Dow Jones futures were down 1.4% from fair value, while S&P 500 futures were down 1.45%. Nasdaq 100 futures fell 1.4% in morning action. Remember that overnight activity in Dow Jones futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.
Among exchange-traded funds, Nasdaq 100 tracker Invesco QQQ Trust ( QQQ ) fell 1.25% and the SPDR S&P 500 ETF ( SPY ) fell 1.2%.
The yield on the 10-year Treasury rose to 3.76% on Friday, hitting its highest level since April 2010. Meanwhile, fears of a loss of demand due to European data helped pushing US oil prices down more than 3%. West Texas Intermediate futures sank to near $80 a barrel, their lowest level since February.
Stock market correction
On Thursday, the Dow Jones Industrial Average fell 0.4%, testing the 30,000 level, above where the index rallied in June and July. Dow futures pointed to a break of that support in premarket trading. The S&P 500 closed 0.8% lower on Thursday. The Nasdaq composite fell 1.4%. The small-cap Russell 2000 was a laggard, falling 2.3%.
All four major stock indexes hit new lows since IBD’s market outlook changed to “correcting market” on September 16.
Thursday’s The Big Picture column commented, “Top growth stocks underperformed Thursday as the Innovator IBD 50 ETF ( FFTY ) fell 3.1% to a new low of 52 weeks. the lows of the Covid bear market.”
To prepare for another rally in the stock market, investors should watch for two things: an attempted rally and then a follow-through day.
In a market correction, the first day the index closes higher counts as day 1 of its recovery attempt. The action on day 2 and day 3 is irrelevant as long as the index does not go below its last low. If this low is lowered, the recovery attempt is over and the market must try again. Thursday’s action hit further correction lows, so let’s look for a 1 again.
On the 4th and beyond, you’re looking for the Nasdaq or S&P 500 to rise sharply on higher volume than the previous session. This is a tracking day. It gives investors the green light to start buying major stocks by beating the correct buy points. You should synchronize your portfolio and mindset with the action of the stock market, gradually committing capital to the leading stocks.
During the stock market correction, do not disconnect. Instead, create watch lists to find emerging stock market leadership 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.
Five Dow Jones Stocks to Watch Now
Dow Jones stocks to watch: Chevron
Dow Jones Chevron shares edged lower on Thursday, still barely holding on to crucial support around its 50-day line. Shares are trading about 6% off their last buy point at 166.93 a cup with a handle, according to IBD MarketSmith chart analysis, amid a strong performance by energy stocks so far of year Shares sold off more than 2% as oil prices fell early Friday.
CVX stock scores a strong 98 out of a perfect 99 IBD Composite Rating, according to IBD’s 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 correction
Top stocks to watch: Continental, DoubleVerify, Neurocrine, Vertex
Oil explorer and producer Continental Resources is building a cup with a handle with a buy point of 72.80, according to IBD MarketSmith chart analysis. The relative strength line hit a recent high last week, but remains just off its 52-week high. Shares of CLR were down nearly 3% early Friday.
Shares of IBD DoubleVerify Rating remain below their 28.07 buy point on a fund basis after losing 1.6% on Thursday. The stock is just above its 50-day line. DV shares lost 0.9% Friday morning.
Wednesday’s IBD 50 Stocks To Watch pick, Neurocrine Biosciences, is building a flat base that has a 109.36 buy point. The stock’s RS line hit a new high on Wednesday, signifying a strong stock performance. Shares were unchanged on Friday.
Vertex Pharmaceuticals is close to retrieving its 50-day line after Thursday’s 2.1% rally. The stock has held up well during the ongoing market weakness, as indicated by an RS line approaching new highs. A new flat base has a buy point at 306.05 and the stock’s resistance makes it an excellent idea to watch. Vertex shares were flat on Friday.
Join IBD experts as they analyze the top stocks in the current stock market correction on IBD Live
Tesla shares fell 4.1% on Thursday, testing support around the 50-day line. The stock continues to form a short base that has a buy point at 314.74. In the meantime, keep an eye out for additional buy points if the stock can rally further to the right of its largest consolidation dating back to January. Shares were down another 2.1% Friday morning.
Optimistically, the stock’s RS line hit its highest level since April this week. Shares are about 30% off their 52-week high.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares fell 0.6% on Thursday, adding to Wednesday’s 2% drop. Shares are trading near recent lows. Apple shares lost 1.6% Friday morning.
Microsoft gained 0.85% on Thursday, reversing after hitting another 52-week low. The software giant is roughly 32% off its 52-week high. Microsoft shares fell 1.1% early Friday.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen to learn more about 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