The Dow Jones Industrial Average briefly rose 350 points on Monday, hoping to add to Friday’s strong stock market gains ahead of a week of significant earnings reports. Tesla shares plunged more than 5% after slashing the prices of Model 3 and Model Y in China by as much as 9%.
The Purchasing Managers’ Index, known as PMI, for the manufacturing and services sectors came out at 9:45 a.m. ET. The manufacturing index fell in a contraction, measuring 49.9 and below estimates at 51.2. The services index continued to contract to 46.6, also lower than forecasted 49.3, according to Econoday estimates.
Stock market today: earnings season continues
Another round of notable third-quarter results is expected to come in this week, with key reports from Dow Jones stocks Apple (AAPL), Boeing (BA), Chevron (CVX), Merck (MRK), Microsoft (MSFT). ) and Visa. (V), ao. Tech giants Alphabet (GOOGL) and Meta Platforms (META) will also report.
Shipping giant FedEx (FDX) fell 0.5% Monday morning after Wells Fargo lowered its stock from overweight to equal weight with a lowered price target of 160.
Electric-vehicle giant Tesla (TSLA) slipped more than 4%, while Dow Jones tech leaders Apple and Microsoft moved slightly higher after today’s stock market open. Software heavyweight ServiceNow (NOW) rose more than 1% after Guggenheim Securities upgraded its stock to buy.
AutoZone (AZO), Cardinal Health (CAH), Molina Healthcare (MOH) and Texas Roadhouse (TXRH) — as well as Dow Jones stocks Chevron and Merck — are among the top stocks to buy and watch. Keep in mind that the new stock market rally is the perfect time for investors to get their watchlists into action and hone their pyramiding technique.
Young rallies, especially those fighting bear markets, often fail. Pyramiding provides a method of taking new equity positions incrementally to minimize risk to capital.
Cardinal and Texas Roadhouse are IBD Leaderboard stocks. Merck and Molina Healthcare were featured in the Near Buy Zone Equities column last week, along with two other top stock ideas. AutoZone has been the IBD Share Of The Day for the past few weeks.
Dow Jones Today: Treasury Yields, Oil Prices
After Monday’s opening bell, the Dow Jones Industrial Average rose 0.7%, while the S&P 500 rose 0.3%. The Nasdaq composite fell 0.7% in morning action.
Among exchange-traded funds, the Nasdaq 100-tracker Invesco QQQ Trust (QQQ) fell 0.7% and the SPDR S&P 500 ETF (SPY) fell 0.3%.
China’s Hang Seng index fell 6.4% on Monday, closing at its lowest level since April 29, 2009. Chinese leader Xi Jinping continued to consolidate his power, appointing a number of supporters to the party’s most powerful decision-making body after he convention-defying third term.
Meanwhile, markets in the UK and Europe moved higher, fueling Friday’s optimism in the US about a potential shift in the Federal Reserve’s mood. Frankfurt’s DAX and Paris CAC-40 were trading more than 1.5% higher just after noon.
Yields on 10-year Treasuries recovered Monday morning, tapping further to 4.22% after Friday’s fall to 4.21%. Last week, 10-year government bond yields hit their highest level since June 2008.
US oil prices have made up for early losses on Monday and have paused after a three-day winning streak. West Texas Intermediate futures traded near $85 a barrel.
New stock rally starts
On Friday, the Dow Jones Industrial Average closed 2.5% higher, while the Nasdaq composite posted a daily gain of 2.3%, ending the week with 5.2%. The S&P 500 posted a gain of 2.4% and rose nearly 4.8% for the week.
Friday’s The Big Picture commented: “As this is likely to be a bear market rally, the risk remains high. Now is not the time to jump back into stocks aggressively, but to take a considered approach. Exposure should be up to be capped at 20% for most investors. Aggressive investors should stay below 40% until the market starts to prove itself.”
This is an important time to read IBD’s The Big Picture column. After Friday’s gains, investors are looking to put their curated watchlists to work to jump on future breakthroughs. But not all follow-throughs work, so it’s important to increase exposure slowly and methodically, as the new uptrend proves itself.
Check out IBD stock lists, such as the IBD 50 and stocks near a buy zone, for stock ideas.
Five Dow Jones Stocks to Watch Now
Dow Jones Stocks to Watch: Chevron, Merck
Energy giant Chevron rose above an early entry at 166.93 last week and is approaching a buy point of 182.50 ahead of the release of the company’s Friday results. Chevron shares fell 0.2% Monday morning, falling with falling oil prices.
CVX stocks have a strong 98 out of a perfect 99 IBD Composite Rating, according to the IBD Stock Checkup. Investors can use the IBD Composite Rating to easily measure the quality of a stock’s fundamental and technical statistics.
Dow Jones member and IBD 50 stock Merck, according to IBD MarketSmith’s pattern recognition, after Friday’s 2.9% advance, is right in the buy range above the double bottom’s 93.12 buy point. The buying area of 5% increases to 97.78. The stock’s relative strength hit new highs in recent sessions, which is a positive sign. Third quarter results are expected before the opening bell on Thursday.
Merck shares climbed 1.1% Monday morning.
4 top growth stocks to watch in the current stock market rally
Top Stocks to Watch: AutoZone, Cardinal, Molina, Texas Roadhouse
Auto Parts Leader and Recent IBD Stock Of The Day AutoZone is approaching the buy point of 2,362.34 on a cup basis. Keep an eye out for a possible grab bar to provide a lower entry. AutoZone shares rose 1.2% early Monday.
IBD Leaderboard Shares Cardinal Health is in a buy range above 71.22 in a short handle cup, according to the IBD MarketSmith chart analysis. Stocks are also breaking past the 72.38 buy point from a flat base. CAH shares gained 1.2% early Monday.
Molina Healthcare closed just below the 361.35 buy point from a flat base on Friday. The stock’s RS line hit a new high in recent weeks, indicating that the healthcare stock is a leader to watch. Now look for a strong breakout to confirm the stock’s institutional support. Molina’s results are expected on Wednesday. MOH shares rose 1% on Monday morning.
Texas Roadhouse is trying to regain the 95.52 buy point from a flat base after a short breakout last week. Shares ended just below the entry Friday. The win will be announced on Thursday. Shares of TXRH fell by 0.4% on Monday.
Join IBD experts as they analyze leading stocks in the current stock market rally on IBD Live
Tesla stock climbed 3.45% on Friday and recovered from the new 52-week low from Thursday. Shares are down about 48% from their 52-week high.
Tesla shares slipped more than 5% Monday morning after slashing prices for its Model 3 and Model Y cars by as much as 9% in China.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares rose 2.7% on Friday and are about 19% off their 52-week high. Despite a recent rally, the stock remains below the 50 and 200 day limits. Apple earnings are after hours on Thursday. AAPL shares were up 0.2% Monday morning.
Microsoft rose 2.5% on Friday, ending a two-day slip. Stocks are still in rebound mode after the 52-week low on Oct. 13. The software giant remains about 31% of its 52-week high. Microsoft’s earnings are late Tuesday. Shares climbed 0.3% on Monday.
Follow Scott Lehtonen on Twitter at @IBD_SLehtonen to learn more about growth stocks and the Dow Jones Industrial Average.
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