Dow Jones Plunges 550 Points After Key Economic Data; Apple Stock Dives On Downgrade

The Dow Jones Industrial Average plunged 550 points Thursday morning after the release of key economic data — U.S. GDP and first-time unemployment claims. Apple stock sold off on a Bank of America downgrade.

X

CarMax (KMX) and Jefferies (JEF) were key earnings reporters Thursday. Micron Technology (MU) and Dow Jones stock Nike (NKE) will report after the close.

CarMax shares plunged 14% after a big profit miss, while Jefferies rose 0.5% on stronger-than-expected results.

Cryptocurrency exchange Coinbase (COIN) dived 8.6% after Wells Fargo started coverage with an underweight rating. Electric-vehicle leader Tesla (TSLA) traded 4.8% lower Thursday. Tech titan Apple (AAPL) declined more than 4% after Bank of America downgraded the stock from buy to neutral. Microsoft (MSFT) was also squarely lower after today’s stock market open.

In the ongoing stock market weakness, DoubleVerify (DV), Hostess Brands (TWNK), Neurocrine Biosciences (NBIX), Toro (TTC), Vertex Pharmaceuticals (VRTX) and World Wrestling Entertainment (WWE) — as well as Dow Jones stock UnitedHealth (UNH) — are among the top stocks to watch. Keep in mind that the deepening stock market correction is a time for investors to sit on the sidelines and map out watchlists.

DoubleVerify and Vertex are IBD Leaderboard stocks. Hostess and Toro were featured in this week’s Stock Near A Buy Zone column. Neurocrine Biosciences was Monday’s Stock Of The Day.

Dow Jones Today: Treasury Yields, Oil Prices

After Thursday’s opening bell, the Dow Jones Industrial Average fell 1.9%, while the S&P 500 dropped 2.4%. The tech-heavy Nasdaq Composite sold off 3% in morning action.

Among exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) was down 3%, and the SPDR S&P 500 ETF (SPY) fell 2.4%.

The 10-year Treasury yield jumped to 3.78% Thursday morning. On Wednesday, the 10-year Treasury yield briefly topped 4% before reversing sharply lower to close at 3.7%. The 10-year Treasury yield is still tracking toward its ninth straight weekly advance, marking its longest rally since 2004.

Meanwhile, U.S. oil prices were little changed. West Texas Intermediate futures were just above above $82 a barrel, after falling to their lowest level of the year on Monday.

GDP, Jobless Claims

The third estimate of second-quarter GDP showed that second-quarter gross domestic product is still expected to fall at a 0.6% annual rate. That is unchanged from the second estimate.

Meanwhile, the Labor Department’s first-time jobless claims also came out at 8:30 a.m. ET. Claims fell to 193,000, lower than estimates from Econoday that called for them to rise to 218,000 from the previous week’s 213,000.

Stock Market Correction

On Wednesday, the Dow Jones Industrial Average rallied 1.9%, while the Nasdaq and S&P 500 also climbed about 2% each.

Wednesday’s The Big Picture column commented, “Put another way, Friday does not qualify as the first day of a budding rally attempt. Thus, the Nasdaq has accomplished two up sessions in a row. That’s nothing to really crow about for the bulls, especially in a stock market that continues to flash bearish action. The S&P 500 just snapped a six-day losing streak. So, it’s only just begun a new rally attempt after undercutting its June 17 low of 3,636.”

The Nasdaq’s two-day rally attempt should have investors on the lookout for a potential follow-through day, which is when the Nasdaq or S&P 500 rises sharply in higher volume than the previous session on day 4 and later of a rally attempt. Friday will be day 4. It gives investors the green light to start buying leading stocks breaking out past correct buy points. It should put your portfolio and mindset in sync with the stock market action by gradually committing capital to leading stocks.

Nevertheless, it is important for investors to put this downtime to good use. Now is an ideal opportunity to study market bottoms and to build a strong watchlist of top-performing stocks. Many long-term leaders tend to break out at or near the follow-through day, the market bottoming signal. Missing that early opportunity can be a costly mistake.

Five Dow Jones Stocks To Watch Now

Dow Jones Stocks To Watch: UnitedHealth

Dow Jones stock UnitedHealth continues to hold above its long-term 200-day line. Shares are building a flat base that has a 553.23 buy point, according to IBD MarketSmith chart analysis. The stock’s resilience made it Tuesday’s IBD 50 Stocks To Watch pick. Shares lost 1.1% Thursday morning.

UNH stock shows a solid 94 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.

4 Top Growth Stocks To Watch In The Current Stock Market Correction

Top Stocks To Watch: DoubleVerify, Hostess, Neurocrine, Toro, Vertex, WWE

IBD Leaderboard stock DoubleVerify closed just below its 28.07 buy point in a bottoming base after Wednesday’s 2.9% climb. Per Leaderboard commentary, DoubleVerify found support near its 50-day line. Shares fell 1.7% Thursday.

Twinkie maker Hostess Brands is in the 5% buy area above a 23.23 buy point out of a cup with handle, according to IBD MarketSmith chart analysis. Bullishly, Hostess’ relative strength line is at new highs. Keep in mind that the weak market trend should keep you on the sidelines, but it is one of the top stocks to watch. The stock was down 2.2% Thursday.

Monday’s IBD Stock Of The Day, Neurocrine Biosciences, is still building a flat base that has a 109.36 buy point. Shares are right at their 50-day line Thursday following a 1.45% gain. The RS line hit a new high last week, so the stock has avoided much of the market’s drop. Shares were down 1.6% Thursday.

Toro stock is in a flat base and about 4% away from a 92.05 buy point. Shares are trading back above their 50-day line after Wednesday’s 2.4% rise. The RS line is at new highs. Toro shares traded down 1% Thursday.

Vertex Pharmaceuticals decisively regained its 50-day line following Wednesday’s 2.7% rally. It is forming a flat base with a 306.05 buy point. The stock’s resilience makes it a top idea to watch. Shares were off 1.6% Thursday.

World Wrestling Entertainment continues to build a flat base that has a 75.33 entry. Shares tried to recover their 50-day line Wednesday, but were again turned away. A decisive retake of that key level would be bullish for the stock’s base-building prospects. WWE shares lost 1.1% early Thursday.

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

Tesla Stock

Tesla stock rallied 1.7% Wednesday, rising for a third straight day. Still, shares are below their 50-day line despite the recent gains. Tesla stock nearly 5% early Thursday.

Last week, the stock’s relative strength line reached its highest level since April, but has fallen sharply in recent sessions. Shares are about 31% of their 52-week high.

Dow Jones Leaders: Apple, Microsoft

Among Dow Jones stocks, Apple shares slashed losses to 1.3% Wednesday, hitting recent lows. Apple stock slid more than 4% Thursday morning after Bank of America downgraded the stock from buy to neutral with a lowered price target of 160. BofA analyst Wamsi Mohan expects “material negative estimate revisions to be driven by weaker consumer demand.”

However, Rosenblatt Securities upgraded AAPL stock to a buy with a 189 price target.

Microsoft rallied 2% Wednesday, snapping a three-day losing streak and rebounding from Wednesday’s 52-week low. The software giant is more than 30% off its 52-week high. Microsoft shares lost 0.6% early Thursday.

Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.

YOU MAY ALSO LIKE:

Top Growth Stocks To Buy And Watch

Learn How To Time The Market With IBD’s ETF Market Strategy

Find The Best Long-Term Investments With IBD Long-Term Leaders

MarketSmith: Research, Charts, Data And Coaching All In One Place

How To Research Growth Stocks: Why This IBD Tool Simplifies The Search For Top Stocks