Dow Jones futures sold off 300 points before paring losses Monday morning, but still threatened to add to Friday’s stock market plunge heading into the final few sessions of August. On Friday, Federal Reserve Chairman Jerome Powell delivered a brief, yet hawkish speech at the Fed’s annual confab in Jackson Hole, Wyo. Electric-vehicle leader Tesla stock skidded more than 2% Monday.
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Among the Dow Jones industrials, tech titans Apple (AAPL) and Microsoft (MSFT) declined 1.5% and 1.1%, respectively, ahead of today’s stock market open.
In the stock market’s current volatility, Arista Networks (ANET), Apple, Costco (COST) and GlobalFoundries (GFS) — as well as Dow Jones stocks Chevron (CVX) and McDonald’s (MCD) — are among the top stocks to buy and watch. Keep in mind the market’s increased volatility is a good reason for investors to be more defensive.
Costco is an IBD Leaderboard stock in the wake of a recent breakout, while Arista and GlobalFoundries were featured in last week’s Stocks Near A Buy Zone column. Arista was also Friday’s Stock Of The Day.
Dow Jones Today: Treasury Yields, Oil Prices
Early Monday, Dow Jones futures dropped 0.8% vs. fair value, while S&P 500 futures traded down 0.75%. Nasdaq 100 futures sold off 0.95% in morning trade. Peloton (PTON), MercadoLibre (MELI) and Tesla traded at the bottom of the Nasdaq 100, down around 2% apiece.
Remember that overnight action in Dow Jones futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Among exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) moved down 1.2%, and the SPDR S&P 500 ETF (SPY) was down 1% in early trade.
Global markets were also hit hard. In Europe, the United Kingdom’s FTSE 100 fell 0.7%, while Germany’s DAX 40 slid 1.1%. Japan’s Nikkei 225 dropped 2.7%, South Korea’s Kospi tumbled 2.2% and Hong Kong’s Hang Seng lost 0.7%. The Shanghai Composite rose 0.1%.
The 10-year Treasury yield ticked higher to 3.11% early Monday, following Friday’s rise to 3.03%. Last week, the 10-year Treasury yield topped the 3% level for the first time since July 21.
U.S. oil prices are on pace to extend last week’s gain, while still tracking toward a third straight monthly decline. West Texas Intermediate futures moved slightly higher, with futures trading near $94 a barrel.
Stock Market Pullback
On Friday, the Nasdaq plummeted 3.9% and the S&P 500 slumped 3.4%. The Russell 2000 small-cap index swooned 3.3% and the Dow Jones Industrial Average gave back 3%. Just like that, the major stock indexes looked poised for tests of their 50-day moving averages, which sit near round numbers for the Dow, S&P 500 and Nasdaq.
Friday’s The Big Picture column commented, “The stock market had been rallying in hopes for a soft landing for the U.S. economy. But Powell’s speech reminded Wall Street that more rate hikes are on the way so that inflation doesn’t stay stubbornly high. Fed funds futures traders put the chances at just over 60% that the Fed will raise its key lending rate by another 75 basis points in September. That would bring the Fed funds rate up to 3% to 3.25%.”
If you’re new to IBD, consider taking a look at its stock trading system and CAN SLIM basics. Recognizing chart patterns is one key to the investment guidelines. IBD offers a broad range of growth stock lists, such as Leaderboard and SwingTrader.
Investors also can create watchlists, find companies nearing a buy point, or develop custom screens at IBD MarketSmith.
Five Dow Jones Stocks To Watch Now
Dow Jones Stocks To Watch: Chevron, McDonald’s
Dow Jones stock Chevron is building a cup base that has a 182.50 buy point, amid a strong performance by energy stocks so far this year. An early entry at 164.76 is also in play. The stock was down 0.5% early Monday.
CVX stock shows a strong 97 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.
McDonald’s shares are now about 3% below a 265.56 cup-with-handle entry following Friday’s 2.1% drop, according to IBD MarketSmith chart analysis. MCD shares traded down 0.7% Monday morning.
4 Top Growth Stocks To Buy And Watch In The Current Stock Market Rally
Top Stocks To Watch: Arista, Costco
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 holding near recent highs despite the recent market weakness, a bullish sign. ANET shares fell about 1% early Monday.
IBD Leaderboard stock Costco fell further below its 552.81 buy point from a cup with handle, as shares declined 3.4% Friday. Wait for a bullish retake of the entry before buying shares. Shares traded down 0.8% early Monday.
GlobalFoundries fell back below a double bottom’s 61.98 buy point Friday, skidding 6%. An alternative entry, from a handle, is in play at 66.06. GFS stock moved down 1% Monday.
Join IBD experts as they analyze leading stocks in the current stock market rally on IBD Live
Tesla Stock
Tesla (TSLA) stock declined 2.3% Friday, adding to Thursday’s 0.3% loss. Shares of the electric-vehicle giant skidded another 2.1% Monday morning, threatening to extend the losing streak to three sessions.
Tesla stock continues to grapple with resistance around its 200-day line. Tesla is about 30% off its 52-week high.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares sold off 3.8% Friday, as they trade about 8% away from a cup with handle’s buy point at 176.25. Bullishly, the stock’s relative strength line is holding at new highs, indicating steady stock market outperformance. Shares fell 1.4% Monday morning.
Microsoft tumbled nearly 4% Friday, closing just below its 50-day line. Shares remain sharply below their long-term 200-day line and about 23% off their 52-week high. The stock lost 1.1% early Monday.
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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