Dow Jones Reverses After Economic Data; Oil Prices Climb On Surprise Production Cut
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The Dow Jones Industrial Average reversed lower Tuesday morning after the release of key economic data, as U.S oil prices rose after a surprise OPEC+ production cut.
IBD 50 stock Shockwave Medical (SWAV) dropped more than 6% after an Oppenheimer downgrade. Electric-vehicle leader Tesla (TSLA) rose almost 1% Tuesday. Among the Dow Jones industrials, tech titans Apple (AAPL) and Microsoft (MSFT) were both higher after today's stock market open.
In the market's current volatility, Arista Networks (ANET), Costco (COST) and Ulta Beauty (ULTA) — as well as Dow Jones stock Chevron (CVX) — are among the top issues 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 Chevron and Ulta Beauty were featured in last week's Stocks Near A Buy Zone column.
Dow Jones Today: Treasury Yields, Oil Prices, Key Data
After the opening bell Tuesday, the Dow Jones Industrial Average turned down 0.7%, while the S&P 500 fell 0.8%. And the tech-heavy Nasdaq composite lost 1.1% in morning trade.Among exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) fell 0.4% and the SPDR S&P 500 ETF (SPY) moved down 0.2% in early trade.
The 10-year Treasury yield ticked higher to 3.28% early Tuesday, recovering from Friday's losses. Last week, the 10-year Treasury yield notched its highest closing level since June 21.
U.S. oil prices slashed gains Tuesday, threatening to add to last week's sharp losses. West Texas Intermediate futures rallied 4% Monday morning after OPEC+ — which includes the Organization of the Petroleum Exporting Countries and key allies such as Russia — agreed to cut production quotas by 100,000 barrels per day, starting in October. But WTI futures erased early gains, trading back around $87 a barrel.
Early Tuesday, the U.S. Services Purchasing Managers' Index, known as Services PMI, measured 43.7, below Econoday estimates that called for a 44.1 reading. It was its lowest reading since May 2020. August survey data signaled a sharp decline in business activity across the U.S. service sector.
Next, the Institute For Supply Management services index reading measured 56.9, topping the 55.4 estimate.
Stock Market Rally Under Pressure
The stock market ended lower Friday, with the Nasdaq composite once again the worst performer out of the major indexes. It extended its losing streak to six sessions as it fell 1.3%.Friday's The Big Picture column commented, "The S&P 500 ended near session lows as it skidded 1.1%. It was turned away at its 50-day line following an early pop. It has now fallen in five of the past six trading days."
Dow Jones Stocks To Watch: Chevron
Dow Jones stock Chevron rallied 1.5% Friday, snapping a three-day losing streak. Shares continue to build a cup base with a 182.50 buy point — according to IBD MarketSmith chart analysis — amid a strong performance by energy stocks so far this year. An early entry at 164.76 is also in play. The stock rose 1.2% early Tuesday, as oil prices moved higher.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.
Tesla Stock
Tesla stock skidded 2.5% Friday, closing right at its 50-day line, which is a potential support level to watch. Shares of the electric-vehicle giant gained almost 1% Tuesday morning, as Wolfe Research upgraded the stock from peer perform to outperform, with a 360 price target.Tesla stock found resistance at its 200-day line in recent months and is about 35% off its 52-week high.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares declined 1.4% Friday, closing below support at their 50-day line. The stock is about 12% away from a buy point at 176.25 off a cup with handle. Despite the recent losses, the stock's relative strength line is holding near new highs, indicating steady stock market outperformance. Shares rose 0.65% Tuesday morning.Microsoft fell 1.7% Friday, extending a losing streak to six sessions and falling further below its 50-day line. Shares remain sharply below their long-term 200-day line and about 27% off their 52-week high. The stock gained 0.4% early Tuesday.