Dow Jones Dives On Hot Inflation Report; Apple, Tesla Sell Off

The Dow Jones Industrial Average sold off sharply after a hotter-than-expected inflation report — the consumer price index — which came immediately following Thursday’s stock market sell-off.




X



Key earnings reports include DocuSign (DOCU) and Stitch Fix (SFIX). DOCU shares plunged 23%, while Stitch Fix shares tumbled 15%.

Netflix (NFLX) slipped more than 5% Friday morning after Goldman Sachs downgraded the stock from neutral to sell, citing recession concerns and rising competition that will impact demand. Electric-vehicle giant Tesla (TSLA) traded 2% lower Friday.

China-based stocks were rebounding sharply, sending the iShares MSCI China ETF (MCHI(and the Xtrackers Harvest CSI 300 China A-Shares ETF)ASHR) up about 1% apiece in early trade.

Elsewhere, Dow Jones tech leaders Apple (AAPL) and Microsoft (MSFT) were sharply lower after today’s stock market open.

Amid a struggling stock market rally, Dow Jones leaders Chevron (CVX), Merck (Mrk) and Travelers (TRV) — along with Vertex Pharmaceuticals (VRTX), Albemarle (ALB), Eli Lilly (LLY), Northrop Grumman (NOC) and Ultra Beauty (ULTA) — are among IBD’s top stocks to watch for Friday.

Albemarle is an IBD Leaderboard stock. Vertex was featured in this week’s Stocks Near A Buy Zone column.

Dow Jones Today: Treasury Yields, Oil Prices, Inflation Report

After Friday’s open, the Dow Jones Industrial Average sold off 1.95%, while the S&P 500 was down 2.1%. The Nasdaq dived 2.6%, but China-based names were trying their best to hold up.

Among exchange-traded fundsthe Nasdaq 100 tracker Invesco QQQ Trust (QQQ) dropped 2.6%. The SPDR S&P 500 ETF (SPY) lost 2% in early trade.

The 10-year Treasury yield ticked higher to 3.09% Friday morning after Thursday’s gains. Meanwhile, US oil prices lost nearly 1%, with West Texas Intermediate trading around $121 a barrel. In early March, WTI briefly topped out above $130 a barrel. The national average price of gasoline in the US surpassed $5 per gallon for the first time ever Thursday, according to GasBuddy.

Oil prices could see some impact from the weekly rig count census from Baker Hughes (BKR) due out at 1 pm ET.

The Labor Department’s Consumer Price Index showed that consumer prices rose 1% in May, hotter than the 0.7% estimate. Inflation surged 8.6% in May from a year ago, up from April’s 8.3% year-over-year rise and higher than estimates that called for a 8. rise.

Struggling Stock Market Rally

The stock market posted more disappointing action Thursday, as the major stock indexes finished with heavy losses.

Thursday’s The Big Picture column commented, “Another key aspect of market health — besides the amount of distribution — is the performance of market leadership. Bearishly, many recent breakouts are struggling or have failed entirely.”

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 listssuch as Leaderboard and SwingTrader.

Investors also can create watchlists, find companies nearing a buy pointor develop custom screens at IBD MarketSmith.


Five Dow Jones Stocks To Watch Now


Dow Jones Stocks To Watch: Chevron, Merck, Travelers

Dow Jones leader and energy giant Chevron is making progress above a flat base‘s 174.86 buy pointaccording to IBD MarketSmith chart analysis, following Thursday’s 2% decline. The 5% buy zone tops out at 183.60. CVX shares dropped 1.6% Friday.

CVX stock boasts 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.

Merck, a Dow Jones and IBD Big Cap 20 stock, fell further below its cup-with-handle’s 89.58 buy point Thursday, as shares dropped another 1.65%. The stock is now fighting for support around its key 50-day line. MRK shares inched slid more than 1% Friday morning.

Insurance giant Travelers continues to build a flat base with a 188.08 buy point. Shares are further below their 50-day line after Thursday’s 2.5% fall. Travelers stock traded down 1.5% early Friday.


Five Top Growth Stocks To Watch In The Current Stock Market Rally


Stocks To Buy And Watch: Albemarle, Eli Lilly, Northrop, Ulta, Vertex

IBD Leaderboard stock Albemarle is about 12% away from a cup-with-handle’s buy point at 273.78, according to IBD MarketSmith chart analysis. In recent weeks, Albemarle passed an early buy point near 248, but the stock is now below that entry as well. ALB shares dipped 2% Friday morning.

Pharmaceutical giant Eli Lilly tumbled 3.3% Thursday and is about 3% below a flat base’s 314.10 buy point. LLY shares traded down 1.5% Friday.

Northrop Grumman is further under its cup-with-handle’s 477.36 buy point after sliding another 2% Thursday. NOC shares were down nearly 2% Friday morning.

Ulta Beauty finished within striking distance of a cup with handle’s 426.93 buy point after briefly topping the entry Wednesday and again Thursday. ULTA shares traded down 1.55% Friday.

Vertex Pharmaceuticals is below a cup with handle’s 276.10 buy point after Thursday’s 5.4% decline. The stock is close to triggering the 7%-8% loss-cutting rule and is also below the 50-day line. Vertex shares were down 2% Friday morning.


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


Tesla Stock

Tesla stock fell 0.9% Thursday, snapping a three-day win streak. Shares threaten to add to those losses, trading 2% lower Friday morning.

The stock is still sharply below its 50- and 200-day moving averages. Tesla stock traded as high as 1,243.49 on Nov. 4. Shares are about 42% off that record high.

Dow Jones Leaders: Apple, Microsoft

Among Dow Jones stocks, Apple shares sold off 3.6% Thursday. The stock remains far below its long-term 200-day line. AAPL stock traded down 3% Friday.

Software leader Microsoft lost 2.1% Thursday, and remains sharply below its 50- and 200-day lines. The stock closed more than 20% off its 52-week high. MSFT shares lost 3.2% Friday.

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