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Dow Jones Futures Dive On Hot Inflation Data

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Dow Jones Futures Dive On Hot Inflation Data


Dow Jones futures dived 400 points on Tuesday’s hot inflation reading — the Labor Department’s consumer price index — or CPI.




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Electric-vehicle leader Tesla (TSLA) lost 2% Tuesday. Among the Dow Jones industrials, tech titans Apple (AAPL) and Microsoft (MSFT) were both sharply lower ahead of today’s stock market open.

In the market’s current volatility, Arista Networks (ANET), DoubleVerify (DV), Palo Alto Networks (PANW) and Pure Storage (PSTG)  — as well as Dow Jones stock Chevron (CVX) — 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, although recent gains are constructive.

DoubleVerify is an IBD Leaderboard stock. Pure Storage is an IBD SwingTrader stock, while Chevron and Palo Alto were featured in this week’s Stocks Near A Buy Zone column.

Dow Jones Today: Treasury Yields, Oil Prices, CPI

Before the opening bell Tuesday, the Dow Jones futures sold off 1.2% below fair value, while S&P 500 futures dropped 1.2%. Nasdaq 100 futures traded down 2.1% in morning trade. 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) fell 2%, and the SPDR S&P 500 ETF (SPY) lost 1.2% in early trade.

The 10-year Treasury yield ticked higher to 3.42% early Tuesday. On Monday, the 10-year Treasury yield notched its highest closing level since June 15.

U.S. oil prices continued to rebound, climbing 1.4% Tuesday morning. West Texas Intermediate futures traded back to $89 a barrel.

The Labor Department’s CPI inflation rate came out Tuesday at 8:30 a.m. ET. Consumer prices rose 0.1% in August vs. the previous month, hotter than estimates that expected a 0.1% monthly fall. Inflation rose 8.3% in August from a year ago, hotter than the expected 8% rise. The Producer Price index, which measures wholesale inflation, will be out Wednesday.


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Stock Market Rally Under Pressure

On Monday, the Nasdaq composite climbed almost 1.3%, adding some space above its 50-day moving average. On Friday the index closed barely above the line.

Monday’s The Big Picture column commented, “A surprise inflation report could shake financial markets. With such a critical report looming, investors would have done well to trade cautiously before the numbers come out. IBD’s market outlook remains “uptrend under pressure,” which suggests moderate exposure and raising some cash.”

The best way to find emerging stock market leadership is by using the relative strength line. The RS line measures a stock’s price performance vs. the S&P 500. If the stock is outperforming the broader market, the RS line angles upward. If a stock lags the broad market, the line will point lower.

The RS line is plotted on all IBD and MarketSmith charts. In addition, the IBD Stock Screener includes a list of top-rated stocks with relative strength lines at new highs. MarketSmith also has the “RS Blue Line Dot” list, which screens for RS lines at new highs. (IBD MarketSmith provides free access for a full week.)

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

Dow Jones stock Chevron rose 1.6% Monday, continuing to rebound from support at the key 50-day line. The stock is approaching its latest buy point at 166.93 — according to IBD MarketSmith chart analysis — amid a strong performance by energy stocks so far this year. The stock tacked on 0.6% early Tuesday.

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.


3 Top Growth Stocks To Buy And Watch In The Current Stock Market Rally


Top Stocks To Watch: Arista, DoubleVerify, Palo Alto Networks, Pure Storage

Arista Networks has 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 close to highs, as the stock has retaken its 200-day and 21-day lines. ANET shares were up 0.3% early Tuesday.

IBD Leaderboard stock DoubleVerify is breaking out past a 28.07 buy point in a bottoming base. Shares are in the 5% buy zone that goes up to 29.47, though it’s getting extended from moving averages. DV shares were flat Tuesday morning. The company specializes in platforms to help advertisers get a better view on the effectiveness of their ad spending and campaigns.

Cybersecurity leader Palo Alto Networks is nearing a 578.89 buy point in a cup with handle. An early entry around 560 is also in play due to a trendline, according to IBD Leaderboard commentary. Shares inched higher Tuesday.

IBD SwingTrader stock Pure Storage is approaching a 31.62 buy point in a cup with handle. Meanwhile, an early entry is also in play after the stock moved above a downtrend line within that handle. Shares moved up 0.7% Tuesday.


Join IBD experts as they analyze leading stocks in the current stock market rally on IBD Live


Tesla Stock

Tesla stock rallied 1.6% Monday, extending a win streak to five sessions and continuing its rebound from the 50-day line. Shares of the electric-vehicle giant dropped 2% Tuesday morning.

Tesla stock found resistance at its 200-day line in recent months, but is now back above that level. Shares remain about 28% of their 52-week high.

Dow Jones Leaders: Apple, Microsoft

Among Dow Jones stocks, Apple shares rose 3.85% Monday, decisively regaining their 200-day line. The stock is about 9% away from a buy point at 176.25 off a cup with handle. Apple stock moved up 0.7% Tuesday.

Microsoft moved up 0.8% Monday, rising for a fourth straight day. The software giant remains sharply below its 50- and 200-day lines. Shares are about 24% off their 52-week high. Microsoft shares gained 0.6% Tuesday morning.

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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