Nasdaq Hits New Bear Market Low; What To Do Now

Dow Jones futures were higher ahead of Tuesday’s open after the Nasdaq hit a new bear market low Monday. Meanwhile, third-quarter earnings season will kick off this week, with results from Dow Jones stocks JPMorgan (JPM), UnitedHealth (UNH) and Walgreens Boots Alliance (WBA).

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Stock Market Today: Ford, GM Drop On Downgrades

On Monday, the Dow Jones Industrial Average declined 0.3% and the S&P 500 lost 0.75%. The tech-heavy Nasdaq composite sold off 1%. And the small-cap Russell 2000 shed 0.6%.

Among exchange traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) moved down 1% and SPDR S&P 500 (SPY) dropped 0.8%.

U.S. automakers Ford (F) and General Motors (GM) received downgrades from UBS. Ford skidded 6.8% after being downgraded from neutral to sell. GM stock declined 4%, and moved from a buy rating to neutral. A potential serious recession on the horizon has some analysts worried about shares of major automakers.

EV giant Tesla (TSLA) inched lower Monday after setting a record of electric-vehicle deliveries from its Shanghai factory in September. Among Dow Jones stocks, Apple (AAPL) traded up 0.2% and Microsoft (MSFT) slid 2.1% in today’s stock market.

Cardinal Health (CAH), ConocoPhillips (COP), Denbury (DEN) and Vertex Pharmaceuticals (VRTX) — as well as Dow Jones stocks Chevron (CVX) and UnitedHealth — 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. Chevron and Conoco were featured in this week’s Stock Near A Buy Zone column, along with two other top stock ideas.

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Dow Jones Futures Today: Treasury Yields, Oil Prices

Ahead of Tuesday’s opening bell, Dow Jones futures rose 0.15% vs. fair value, while S&P 500 futures moved up 0.2%. Nasdaq 100 futures gained 0.3% vs. fair value. Remember that overnight action in Dow Jones futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

The 10-year Treasury yield was on hold Monday, with bond markets closed for the Columbus Day holiday, after settling at 3.88% on Friday. Last week, the 10-year Treasury yield dropped as low as 3.56% before rebounding.

Meanwhile, U.S. oil prices gave up a part of last week’s rebound, falling around 2% Monday. West Texas Intermediate futures traded below $91 a barrel, around its highest level since late August.

Q3 Earnings Season

Third-quarter earnings season kicks off this week, with key reports coming from Dow Jones stocks JPMorgan, UnitedHealth and Walgreens Boots Alliance, along with a number of other high-profile companies.

Earnings reports cause many of the largest moves in stocks, and they require special care. Strong earnings can fuel top stocks to previously untouched levels — and above new buy points — while a less-than-impressive announcement can send shares tumbling.

The stock market’s reaction to an earnings release can often tell you more than the earnings themselves. If the results seem strong but the stock slides anyway, investors may be concerned about the sustainability of growth, rising costs or other potential negatives.

With the market in correction mode, investors should be tracking companies that handily beat earnings results and have strong upside reactions. They could be among the stock market’s leaders if the market is able to rebound.

What To Do In Today’s Stock Market

Amid the ongoing stock market volatility, IBD’s market trend remains “market in correction.” That means that investors are safer on the sidelines.

Monday’s losses on the Nasdaq saw the tech-heavy composite hit a new 2022 low and end its fledgling rally attempt, while the S&P 500 held just above its own recent lows. So, the S&P 500’s rally attempt remains intact, which means a potential follow-through day on that index is still possible.

To recap, Monday was Day 6 of the S&P 500’s rally attempt, while the Nasdaq is now searching for another Day 1.

Now is the ideal time 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.

One challenge to forming a watchlist during a correction is that as you wait for a follow-through day, stock charts may change. That means some bases among your watchlist stocks may deteriorate. So updating is important.

Friday’s The Big Picture column commented, “It’s tempting to buy stocks holding up well in a weak market, but a negative market tide makes it difficult to make meaningful headway. Individual investors should still favor a heavy cash position until the stock market goes back to a “confirmed uptrend.”

Five Dow Jones Stocks To Watch Now

Dow Jones Stocks To Watch: Chevron, UnitedHealth

Dow Jones stock UnitedHealth declined 1.2% Monday, giving up support at its long-term 200-day moving average line. Despite the recent losses, shares are still building a flat base that has a 553.23 buy point, according to IBD MarketSmith chart analysis. UnitedHealth reports its third-quarter results on Friday.

Energy giant Chevron decisively reclaimed its 50-day line last week as U.S. oil prices recovered. Shares are building a consolidation with a 182.50 buy point. Chevron stock fell 1.8% Monday, trending lower 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.

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

Top Stocks To Watch: Cardinal, Conoco, Denbury, Vertex

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 are also in buy range amid a first test of its 10-week moving average, per Leaderboard commentary. Earnings are due Nov. 4.

Energy giant ConocoPhillips fell below a 118.49 buy point in a cup with handle during Monday’s 1.4% slide. The stock’s RS line hit a new high last week, illustrating strong stock market outperformance.

Denbury surged 6.6%, breaking out past a cup base’s 94.05 buy point, following reports that Exxon Mobil (XOM) is considering a takeover. Shares are already out of the 5% chase zone that ran up to 98.75.

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 Monday, a sign of big stock market outperformance.

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

Tesla Stock

Tesla stock edged lower Monday, extending a three-day losing streak. Shares are at their lowest level since early July and about 46% off their 52-week high.

On Monday, Tesla set a record of electric-vehicle deliveries from its Shanghai factory in September, but they came in well below views. The report on Tesla deliveries may reinforce demand concerns, especially in China, as Elon Musk’s EV giant ramps up production capacity.

Dow Jones Leaders: Apple, Microsoft

Among Dow Jones stocks, Apple shares reversed from losses to rally 0.2% Monday, halting a two-day slide. Still, shares are more than 20% off their 52-week high and below their 50- and 200-day lines.

Microsoft slid 2.2%, extending a losing streak to three sessions and hitting another 52-week low price. The software giant is about 34% off its 52-week high.

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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