Dow Jones futures skidded lower Thursday after another hot inflation report came out before the market open. Key earnings movers were banking giants JPMorgan Chase (JPM) and Morgan Stanley (MS), along with Taiwan Semiconductor Manufacturing (TSM).
Shares of both JPMorgan and Morgan Stanley dropped in early trade after weaker-than-expected results. Chip manufacturer TSMC stock moved up almost 2% after beating second-quarter estimates and offering a better-than-expected forecast for the current period.
Chip giant Advanced Micro Devices (AMD) rose 1% after BMO Capital upgraded the stock from market perform to outperform with a raised price target of 115. Tesla (TSLA) declined about 1% early Thursday.
Elsewhere, Dow Jones tech leaders Apple (AAPL) and Microsoft (MSFT) were down around 1% each ahead of today’s stock market open. Dow Jones stock Cisco Systems (CSCO) fell more than 2% following an analyst downgrade.
In a volatile stock market environment, Dow Jones leaders Johnson & Johnson (JNJ), Merck (MRK) and UnitedHealth (UNH) — as well as BJ’s Wholesale Club (BJ), Dollar Tree (DLTR), Northrop Grumman (NOC) and Quanta Services (PWR) — are among the stocks to watch. Keep in mind that ongoing stock market volatility is a reason to stay defensive.
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Northrop and UnitedHealth are IBD Leaderboard stocks. BJ’s is an IBD 50 stock. Quanta was an IBD Stock Of The Day last week. Northrop was featured in this week’s Stocks Near A Buy Zone column.
Dow Jones Today: Treasury Yields, Oil Prices, Inflation Report
Before Thursday’s open, Dow Jones futures sold off 1.4%, S&P 500 futures dropped 1.25% and Nasdaq 100 futures were down 0.9% vs. fair value. Remember that overnight action in Dow 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 0.9%. The SPDR S&P 500 ETF (SPY) fell 1.3%.
The 10-year Treasury yield ticked higher to 2.95% Thursday morning, looking to halt a three-day skid. Meanwhile, U.S. oil prices extended this week’s losses, sliding more than 2% in early action. West Texas Intermediate traded near $94 per barrel — its lowest level since April 11.
The Labor Department’s Producer Price Index showed prices up 1.1% in June, higher than estimates that called for a 0.8% rise. Producer inflation jumped 11.3% year-over-year, much hotter than the 10.4% estimates and higher than May’s 10.8% increase. The producer price index is a measure of pricing strength based on selling prices received by domestic producers for their output.
Meanwhile, first-time unemployment claims rose to 244,000 vs. 235,000 in the prior week.
Stock Market Rally
On Wednesday, the Dow Jones Industrial Average fell 0.7%, while the S&P 500 moved down 0.45%. The tech-heavy Nasdaq composite pared heavy losses to 0.15%.
Wednesday’s The Big Picture column commented, “The S&P 500 marked its fourth straight decline. Thus, it gutted nearly all of the nice gains of 3% achieved during a four-day upswing. NYSE volume, meanwhile, rose slightly. That marks a third day of distribution since the market outlook changed to a confirmed uptrend with the June 24 follow-through day.”
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Dow Jones Earnings: JPMorgan
Dow Jones banking giant JPMorgan reported weaker-than-expected second-quarter results early Thursday, sending shares down almost 3% in early trade.
JPM shares finished Wednesday about 35% off its 52-week high.
Four Dow Jones Stocks To Watch Now
Dow Jones Stocks To Watch: Johnson & Johnson, Merck, UnitedHealth
Dow Jones leader Johnson & Johnson remains about 4% below a double-bottom base’s 181.84 buy point, according to IBD MarketSmith chart analysis. The company reports earnings on July 19. JNJ shares inched lower Thursday morning.
Drug giant Merck rose 0.2% Wednesday, and is right below its flat base’s 95.02 buy point. Medical stocks in general, and biotechs in particular, have shown rising strength in recent stock market action. Merck shares traded down 0.5% early Thursday.
Health insurance giant and IBD Leaderboard stock UnitedHealth gave up its double bottom’s 507.36 buy point during Wednesday’s 2.6% fall. UNH reports second-quarter results Friday morning. The stock was down 0.6% Thursday morning.
UNH stock shows a strong 96 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.
3 Top Growth Stocks To Watch In The Current Stock Market Rally
Top Stocks To Watch: BJs, Dollar Tree, Northrop, Quanta
IBD 50 stock BJ’s Wholesale is still in the 5% buy range above a 67 buy point from a cup-with-handle base after Wednesday’s 0.2% rise. The stock’s relative strength line is at new highs, which is a sign of big stock market outperformance. Shares were unchanged early Thursday.
Dollar Tree is still below its cup-with-handle’s 166.45 buy point Wednesday, despite rising 1.1%. On a positive note, the discount retailer’s RS line is right at a new high. Dollar Tree stock shows a strong 97 out of a best-possible 99 IBD Composite Rating, per the IBD Stock Checkup. Dollar Tree shares were flat Thursday morning.
IBD Leaderboard stock Northrop Grumman is building a new flat base that has a 492.40 buy point. NOC shares are now trying to find support around their key 50-day line. The stock was flat Thursday.
Quanta Services is putting the finishing touches on a cup-with-handle base that has a 138.56 buy point, according to IBD MarketSmith chart analysis. Shares are about 5% away from the latest entry after Wednesday’s 0.1% rise. Shares traded unchanged in morning trade.
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Tesla stock rallied 1.7% Wednesday, ending a two-day losing streak. Shares threatened to give up a bulk of those gains, skidding 1% in morning trade Thursday.
Shares are beneath their 50-day line and even further below their 200-day line ahead of the company’s July 20 earnings report date. Tesla stock traded as high as 1,243.49 on Nov. 4. Shares are about 44% off that record high.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares fell 0.25% Wednesday, but are still holding above the 50-day line after last week’s bullish gains. Shares remain far below their long-term 200-day line and are about 20% off their 52-week high. Apple earnings are due out July 28. Apple shares fell 1% Thursday.
Microsoft lost 0.4% Wednesday, dropping further below the 50-day line. The stock closed about 28% off its 52-week high. The software giant will report quarterly results on July 26. Microsoft shares lost 0.8% early Thursday.
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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