The Dow Jones Industrial Average fell more than 390 points before paring losses Wednesday morning after a hotter-than-expected report on inflation, the consumer price index. Key revenue drivers were Delta Air Lines ( DAL ) and Fastenal ( FAST ).
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Delta shares fell 6% after missing profit targets. Fastenal fell more than 5% after its results showed early signs of inflation taking a toll.
Tesla (TSLA) erased sharp losses on Wednesday. Elsewhere, Dow Jones technology leaders Apple ( AAPL ) and Microsoft ( MSFT ) reported declines after the market opened today.
In a volatile stock market environment, Dow Jones leaders Johnson & Johnson ( JNJ ), Merck ( MRK ) and UnitedHealth ( UNH ) — as well as BJ’s Wholesale Club ( BJ ), Evolent Health ( EVH ), Funko ( FNKO ) and Quanta Services ( PWR) — are among the stocks to watch. Keep in mind that continued volatility in the stock market is reason to remain defensive.
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Northrop and UnitedHealth are IBD’s top-ranked stocks. Dollar Tree is an IBD SwingTrader stock. BJ’s is an IBD 50 stock. Evolent Health was the stock of the day on Wednesday. Quanta was IBD’s Stock of the Day on Thursday. Northrop was featured in this week’s column on stocks near a buy zone.
Dow Jones today: Treasury yields, oil prices, inflation report
After Wednesday’s open, the Dow Jones Industrial Average sold off 1.1% and the S&P 500 lost 1.1%. The tech-heavy Nasdaq composite pared losses to 1% in morning trade.
Among exchange-traded funds, Nasdaq 100 tracker Invesco QQQ Trust ( QQQ ) fell 1%. The SPDR S&P 500 ETF ( SPY ) fell 1.1%.
The yield on the 10-year Treasury rose to 3.02% on Wednesday morning, trying to stop a two-day slide. Meanwhile, U.S. oil prices extended recent losses, falling another 1 percent in early action, with West Texas Intermediate trading just below $95 a barrel. WTI fell briefly below $94 a barrel in overnight trading.
The Labor Department’s consumer price index came out early Wednesday. Consumer prices rose 1.3% in June, beating forecasts for a 1.1% rise. Inflation rose 9.1% in June from a year earlier, hotter than the forecast of 8.8% and more than May’s rise of 8.6% year-on-year.
Stock market rallies
On Tuesday, the Dow Jones Industrial Average fell 0.6%, while the S&P 500 fell 0.9%. The tech Nasdaq Composite lost 0.95%.
Tuesday’s The Big Picture column commented, “Even if the number of spread days remains near minimal, that doesn’t mean the stock market is doing well. It is entirely reasonable to believe that volume is lower because institutional investors are reluctant to trade ahead of consumer inflation on Wednesday. Without this trading halt, volume could easily have increased on Monday and Tuesday and we would now be looking at a few days for distribution.”
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Four Dow Jones Stocks to Watch Now
Dow Jones Stocks to Watch: Johnson & Johnson, Merck, UnitedHealth
Dow Jones leader Johnson & Johnson remains about 2% below a buy point based on the 181.84 double bottom, according to IBD MarketSmith chart analysis. The company reports earnings on July 19. Shares of JNJ were flat on Wednesday morning.
Drug giant Merck fell 0.7% on Tuesday and is just below its flat base of 95.02 buy point. Medical stocks in general and biotech in particular have shown increasing strength in recent stock market action. Shares of Merck were trading a little lower early Wednesday.
Shares of health insurance giant and IBD Leaderboard UnitedHealth remained above a 507.36 buy point at its double bottom after falling 0.5% on Tuesday. The stock is in a buy range. UNH reports second-quarter results Friday morning. Shares were down 1% Wednesday morning.
UNH stock sports a strong 96 out of a perfect 99 IBD Composite Rating, according to IBD Stock Checkup. Investors can use the IBD Composite Rating to easily gauge the quality of a stock’s fundamental and technical indicators.
3 Biggest Growth Stocks to Watch in the Current Stock Market Rally
Top stocks to watch: BJs, Dollar Tree, Northrop, Quanta
IBD 50 stock BJ’s Wholesale is still in buy range 5% above the 67 cup-handled buy point despite Tuesday’s 0.8% decline. The relative strength line of stocks is at new highs, a sign of major stock market outperformance. Shares were down 1% early Wednesday.
IBD SwingTrader Dollar Tree shares fell further below their buy point of 166.45 a cup handle on Tuesday, losing 1.2%. On a positive note, the discount retailer’s RS line is right at a new high. Dollar Tree shares show a strong 97 out of the best possible 99 IBD Composite Rating, according to IBD Stock Checkup. Shares of Dollar Tree were flat on Wednesday morning.
Shares of the IBD Northrop Grumman ranking are building a new flat base that has a 492.40 buy point. Shares of NOC were up a bit on Wednesday.
Quanta Services is putting the finishing touches on a cup with a handle that has a 138.56 buy point, according to IBD MarketSmith chart analysis. Shares are about 5% off their last entry after falling 2.6% on Tuesday. Shares were trading down 1% in morning trading.
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Tesla stock
Tesla shares fell 0.5% on Tuesday, extending losses after Monday’s 6.55% drop. The stock erased heavy losses in morning trading on Wednesday.
Shares fell further below their 50-day line and remain well below their 200-day line ahead of the company’s July 20 earnings report date. Tesla shares traded as high as 1,243.49 on Nov. 4. Shares are about 44% below that record.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares rose 0.7% on Tuesday, recovering some of Monday’s 1.5% decline. Apple recovered its 50-day line last week, but is now testing this key level. The stock remains well below its long-term 200-day line and is about 20% off its 52-week high. Apple’s earnings are due to be released on July 28. Apple shares fell 0.5% on Wednesday.
Microsoft fell 4.1% on Tuesday, giving up its recently recovered 50-day line. The stock closed about 24% off its 52-week high. The software giant will report quarterly results on July 26. Microsoft shares lost 1.2% in early Wednesday trading.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on stock growth and the Dow Jones Industrial Average.
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