The Dow Jones Industrial Average reversed higher after another key inflation report – the Producer Price Index – arrived on Wednesday following a stock market tumble after a hot reading of the consumer price index. Meanwhile, the 10-year Treasury yield is poised to hit June’s 11-year high.
The US Department of Labor 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, down from July’s 9.8% rise and in line with Econoday estimates.
On Tuesday, the CPI inflation rate fell to 8.3%, down from July’s 8.5% and June’s 9.1%, amid falling oil prices. essence. The consumer price index rose 0.1% over the month. But Wall Street economists expected the CPI to post a monthly decline 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 estimate there is a 38% chance of a full one percentage point hike at the next Federal Reserve meeting. Before Tuesday, Wall Street had not bet on this possibility.
Meanwhile, the electric vehicle leader You’re here (TSLA) traded up 2% on Wednesday. Among the industrialists of the Dow Jones, the titans of tech Apple (AAPL) and Microsoft (MSFT) were higher after today’s stock market open. Merck (MRK) rose 0.7% after Berenberg upgraded the stock to buy.
In the current market volatility, Arista Networks (A NET), DoubleVerify (DV), Palo Alto Networks (PANW) and Pure storage (PSTG) – as well as Dow Jones stocks Chevron (CVX) – are among the best stocks to buy and watch. Keep in mind that increased market volatility is a good reason for investors to be more defensive, especially after Tuesday’s market drop.
DoubleVerify is an IBD ranking action. Chevron and Palo Alto were featured in this week’s Stocks Near A Buy Zone column.
Dow Jones Today: Treasury Yields, Oil Prices
After Wednesday’s opening bell, the Dow Jones Industrial Average rose 0.25% after reversing from early losses, while the S&P 500 rose 0.4%. The tech-heavy Nasdaq composite gained 0.35% in morning action.
Among exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) rose 0.4% and the SPDR S&P 500 ETF (SPY) rose 0.3% in early trading.
The 10-year Treasury yield rose to 3.43% on Wednesday morning. On Tuesday, the 10-year Treasury yield hit its highest closing level since June 14 and is just below 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 fell back below $87 a barrel.
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Stock market rally under pressure
On Tuesday, all three major equity indices fell below their 50-day moving averages, leading back to their September 6 lows. The Dow Jones Industrial Average fell 3.9%, while the Nasdaq plunged 5.2%.
Ahead of the inflation report, Tuesday’s The Big Picture column commented: “It’s best to stay out of the market at this point. Evaluate your current holdings. If you have names that are profitable and holding above short-term support levels, you can hold. In the Ranking portfolio, for example, we always hold Invesco Solar (TAN) as it is slightly above our entry and is holding above its converged 10 and 21 day lines.”
The best way to find leadership in emerging stock markets is to use the relative strength line. The RS line measures a stock’s price performance relative to the S&P 500. If the stock is outperforming the broader market, the RS line slopes up. If a stock is lagging the general market, the line will point down.
The RS line is drawn on all IBD and MarketSmith charts. Additionally, the IBD Stock Screener includes a list of top rated stocks with relative strength lines to new highs. MarketSmith also has the “RS Blue Line Dot” listing, which filters RS lines to new highs. (IBD MarketSmith offers free access for a full week.)
If you are new to IBD, consider taking a look at its stock trading system and CAN SLIM basics. Recognizing chart patterns is one of the keys to investing guidelines. IBD offers a wide range of growth stock listings, such as Leaderboard and SwingTrader.
Investors can also create watchlists, find companies close to a buy point, or develop custom screens at IBD MarketSmith.
Five Dow Jones stocks to watch now
Dow Jones Stocks to Watch: Chevron
Dow Jones Chevron stock fell 1.9% on Tuesday, but still holds above support at the key 50-day line. The stock is approaching its latest buy point at 166.93 – according to IBD MarketSmith’s chart analysis – amid strong performance by energy stocks so far this year. The stock was up 1% on Wednesday morning.
The CVX stock is posting a solid 97 out of a perfect IBD Composite Rating of 99, according to the IBD Stocks Balance Sheet. Investors can use the IBD Composite Rating to easily assess the quality of a stock’s fundamental and technical metrics.
3 most important growth stocks to buy and watch in the currentrStock 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’s chart analysis. Arista’s relative strength line is close to the highs. ANET shares gained 0.1% early Wednesday.
IBD Leaderboard DoubleVerify stock is holding above a buy point of 28.07 in a lower base. The shares are in the 5% buy zone which rises to 29.47. DV stock was down 0.1% on Wednesday morning.
Cybersecurity leader Palo Alto Networks is approaching a buy point of 578.89 in a mug with handle despite falling 3.4% on Tuesday. An early entry around 560 is also in play due to a trendline, according to the IBD rankings commentary. Shares rose 0.5% on Wednesday.
Pure Storage is approaching a buy point of 31.62 in a mug with handle. Meanwhile, an early entry is also in play after the stock broke above a downtrend line in this handle. Shares fell 0.3% on Wednesday.
Join IBD experts as they analyze the top stocks of the current stock market rally on IBD Live
Tesla stock slipped 4% on Tuesday, ending a five-day winning streak. The stocks gave up their 200-day line, which they had just regained. The electric vehicle giant rose 2% on Wednesday morning.
The shares are down about 30% from their 52-week high.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares fell 5.9% on Tuesday, falling back below their 50- and 200-day lines. The stock is around 14% off a buy point at 176.25 on a mug with handle. Apple stock 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 and 200 day lines. Shares are around 28% off their 52-week high. Microsoft shares edged up 0.1% on Wednesday morning.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen to learn more about growth stocks and the Dow Jones Industrial Average.
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