The Dow Jones Industrial Average dropped Wednesday following a two-day advance, as Treasury yields climbed. On the heels of Tuesday’s constructive stock market action, top stocks to buy and watch include cosmetics leader Ultra Beauty (ULTA) and Vertex Pharmaceuticals (VRTX).
Ahead of Wednesday’s open, key earnings reports include Lovesac (LOVE), Ollie’s Bargain Outlet (OLLI)and Thor Industries (THO). Lovesac shares dived 20%. Ollie’s stock rose 1%, while Thor shares gained 2%. Late Wednesday, Five Below (FIVE) will report its earnings results.
Hard drive maker Western Digital (WDC) rallied around 4%, on news that the company reached an agreement with investor Elliott Management. The deal reportedly requires Western Digital to weigh strategic alternatives, including a possible business split.
Amid the ongoing stock market rally, Dow Jones leaders Chevron (CVX), Merck (Mrk) and Travelers (TRV) — along with Vertex, Albemarle (ALB), Eli Lilly (LLY), Northrop Grumman (NOC), Ultra Beauty (ULTA) and Zim Integrated Shipping (ZIM) — are among IBD’s top stocks to watch for Wednesday.
Dow Jones Today: Treasury Yields, Oil Prices
After Wednesday’s open, the Dow Jones Industrial Average dropped 0.3%, while the S&P 500 moved down 0.15%. The tech-heavy Nasdaq composite turned 0.3% higher.
The 10-year Treasury yield looked to rebound from Tuesday’s losses, rising to 3.02% Wednesday morning. Meanwhile, oil stocks crowded the top of the S&P 500 in early trade, as US oil prices rose about 1%, with West Texas Intermediate trading above $120 a barrel.
Stock Market Rally
The major stock indexes posted positive action Tuesday, as the Nasdaq composite and S&P 500 rallied around 0.9% apiece. The Dow Jones industrials followed with a 0.8% rise.
Tuesday’s The Big Picture column commented, “There was something else to cheer besides the positive reversals. The Nasdaq, S&P and Dow dipped below the 21-day exponential moving averages early Tuesday. But indexes bounced back above those lines. Thus, the support the 21-day lines have provided since the May 26 follow-through held up.”
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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 Tuesday’s 1.9% gain. The 5% buy zone tops out at 183.60. CVX shares traded 0.1% higher Wednesday.
CVX stock boasts a 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.
Merck, a Dow Jones and IBD Big Cap 20 stock, is still in buy range past a cup-with-handle’s 89.58 buy point after snapping a five-day win streak Tuesday, as shares rose 0.7%. The 5% buy area goes up to 94.06. MRK shares extended higher Wednesday morning.
The stock’s relative strength line hit a new high in mid-May, but is now pulling back sharply.
Insurance giant Travelers is building a flat base with a 188.08 buy point. Shares are back above their 50-day line after Tuesday’s 0.9% rise. Travelers stock lost 0.7% early Wednesday.
Stocks To Buy And Watch: Albemarle, Eli Lilly, Northrop, Ulta, Vertex, Zim
IBD Leaderboard stock Albemarle is about 6% 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. ALB shares were down 0.8% Wednesday morning.
Pharmaceutical giant Eli Lilly jumped 2.9% Tuesday and is nearly back above a flat base’s 314.10 buy point following a May 27 breakout. LLY shares traded up 0.5% Wednesday.
Northrop Grumman broke out last week past a cup-with-handle’s 477.36 buy point and moved further above the entry Tuesday. NOC shares showed a 0.7% loss Wednesday morning.
Ulta Beauty finished Tuesday just 1% away from a cup with handle’s 426.93 buy point. ULTA shares traded down nearly 1% Wednesday morning.
Vertex Pharmaceuticals is tracing a cup with handle with a 276.10 buy point. For now, shares are seeing some support around their 50-day line. A strong bounce from this area would likely lead to a breakout. Conversely, a sharp break of the 50-day line would mean the basing process needs more time. Vertex shares gained 0.1% Wednesday, after the company announced new drug approvals from US and European agencies.
IPO Leader Zim Integrated is tracing a cup with handle that has a 68.80 buy point. Shares are within striking distance of the correct buy point after Tuesday’s 1.9% advance. ZIM shares tumbled 8% early Wednesday.
Tesla stock inched 0.25% higher Tuesday, adding to Monday’s 1% rise. Shares looked to extend their rebound, moving up 3% Wednesday morning, following news of a battery supply deal with Warren Buffett-based BYD (BYDDF).
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 43% off that record high.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares rose 1.8% Tuesday. The stock remains far below its long-term 200-day line. AAPL stock traded down 0.1% Wednesday.
Software leader Microsoft gained 1.4% Tuesday, and remains sharply below its 50- and 200-day lines. The stock closed more than 20% off its 52-week high. MSFT shares were down 0.5% Wednesday.
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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