The Dow Jones Industrial Average rallied as much as 600 points Monday, as Bank of America jumped on better-than-expected earnings results. Meanwhile, Apple stock climbed after Morgan Stanley called the tech titan a top pick.
Stock Market Today: Earnings Season Continues
Third-quarter earnings season continues Monday, with results from Bank of America (BAC) and Charles Schwab (SCHW). Next up, Dow Jones stocks Goldman Sachs (GS) and Johnson & Johnson (JNJ) will report early Tuesday, while Netflix (NFLX) will kick off tech earnings after the market close Tuesday. Tesla earnings are Wednesday.
Bank of America stock jumped more than 5%, while Charles Schwab shares were up about 1% after the company’s earnings results.
AutoZone (AZO), Cardinal Health (CAH), ConocoPhillips (COP) and Vertex Pharmaceuticals (VRTX) — as well as Dow Jones stocks Chevron (CVX) and Merck (MRK) — are among the top stocks to watch. Keep in mind that the ongoing stock market correction is a time for investors to sit on the sidelines and build watchlists of top growth stocks.
Cardinal Health and Vertex are IBD Leaderboard stocks. Cardinal was Friday’s IBD Stock Of The Day. Chevron and Conoco were featured in last week’s Stock Near A Buy Zone column, along with two other top stock ideas. Merck was Tuesday’s IBD 50 Stocks To Watch pick.
Dow Jones Today: Treasury Yields, Oil Prices
After Monday’s opening bell, the Dow Jones Industrial Average rallied 1.7%, while the S&P 500 gained 2.5%. The tech-heavy Nasdaq composite rose 3.1% in morning action.
The 10-year Treasury yield declined Monday, retreating to 3.93% following Friday’s close above 4%.
U.S. oil prices rose more than 1% Monday, looking to rebound from Friday’s tumble. West Texas Intermediate futures traded above $86 a barrel. Meanwhile, natural gas futures dived as the European Union considered ways to lower energy prices.
Stock Market Weakness Continues
On Friday, the major stock market indexes reversed from a positive open on Friday, sending the Dow Jones Industrial Average to finish down 1.3%, the S&P 500 2.4% and the Nasdaq a miserable 3.1%.
Friday’s The Big Picture cautioned, “S&P 500 Q3 earnings growth expectations have dropped to 4.5% while energy stocks should contribute 6.3% to profits. As a result, the rest of the index may post negative Q3 growth.”
Despite Friday’s big losses, the Nasdaq and S&P 500 held above their recent lows, so their rally attempts remain intact. Thursday was Day 1 of the stock market’s latest rally attempt, so investors now await a follow-through day, which can occur as early as Tuesday. A follow-through day confirms the beginning of a new uptrend.
Psychologically, watching the market work through repeated rally attempts can be a challenging process. Investors want to keep watchlists handy, in order to jump on follow-through day breakouts. But not all follow-throughs work, so buying too soon or with too much conviction can lead to frustration.
This is why it’s important to raise exposure slowly and methodically, as the uptrend proves itself.
Dow Jones Stocks To Watch: Chevron, Merck
Energy giant Chevron continues to hold above support at its 50-day line and is consolidating below a 182.50 buy point ahead of the company’s Oct. 28 earnings release. Chevron shares rose 2.1% early Monday, tracking higher with oil prices.
CVX stock boasts a strong 98 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.
Dow Jones member and IBD 50 stock Merck is trying to break out past a double bottom‘s 93.12 buy point, according to IBD MarketSmith pattern recognition. The relative strength line hit a new high last week. Third-quarter earnings results are due Oct. 27 before the opening bell.
Merck shares added 0.4% Monday morning.
Top Stocks To Watch: AutoZone, Cardinal, Conoco, Vertex
Auto parts leader and recent IBD Stock Of The Day, AutoZone, is about 5% away from a cup base’s 2,362.34 buy point. Keep an eye out for a potential handle to offer a lower entry. AutoZone shares rose 0.3% Monday.
IBD Leaderboard stock and medical leader Cardinal Health is shaping a flat base that has a 72.38 buy point, according to IBD MarketSmith chart analysis. Shares of the drug distribution heavyweight are again testing support around their key 10-week moving average, per Leaderboard commentary. Earnings are due Nov. 4. Shares traded up 1.3% Monday.
Energy giant ConocoPhillips continues to waver above and below a 118.49 buy point in a cup with handle amid the stock market volatility. The stock’s RS line hit a new high last week, illustrating strong stock market outperformance. Earnings are due Nov. 3. Shares gained 2.1% Monday.
Biotech leader Vertex Pharmaceuticals continues to build a flat base with a 306.05 buy point and an early entry at 296.90. Its RS line made a new high last week, confirming the biotech leader as a key stock to watch. VRTX stock found support at its 50-day line Thursday. Earnings are due Oct. 27. Shares traded up 0.5% Monday.
Tesla stock skidded 7.55% Friday, closing at its lowest level since June 2021. Shares are more than 50% off their 52-week high. Tesla stock climbed 5.5% Monday morning.
The EV giant’s third-quarter results are late Wednesday. Tesla is expected to earn an adjusted $1.01 per share on sales of $22.1 billion.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares sold off 3.2% Friday, erasing Thursday’s gains and closing back near recent lows. Shares are around 25% off their 52-week high and below their 50- and 200-day lines. Apple stock moved up 2.8% Monday after Morgan Stanley called it a top pick in the event of a U.S. economic downturn. The analyst kept the overweight rating, though reduced the price target from 180 to 177.
Microsoft lost 2.4% Friday, but is still holding above last week’s 52-week low price. The software giant is about 35% off its 52-week high. Microsoft shares gained 4.2% early Monday.
Apple earnings are expected Oct. 27, while Microsoft’s are due out Oct. 25.
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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