Dow Jones Reverses Lower After Key Economic Data; Pfizer, Uber Jump On Earnings

The Dow Jones Industrial Average briefly rallied more than 200 points Tuesday morning before reversing lower after a heavy slug of economic reports. Later, investors will shift their attention to the Federal Reserve’s two-day meeting, with an interest rate decision due Wednesday.


The Purchasing Managers’ Manufacturing index, or PMI, came due at 9:45 a.m. ET. Manufacturing PMI measured 50.4, above estimates for a 49.9 reading for the month of October. Meanwhile, the ISM manufacturing index — out at 10 a.m. — slowed to 50.2 in October, down from September’s 50.9 reading, but above 50.0 consensus estimates.

The Fed’s two-day meeting kicks off Tuesday, with an interest-rate decision Wednesday afternoon. Investor sentiment shows an 88% probability of a 75 basis-point hike, according to the CME.

Key earnings movers Tuesday were Arista Networks (ANET), Eli Lilly (LLY), NXP Semiconductors (NXPI), Uber Technologies (UBER) and Dow Jones stock Pfizer (PFE).

Arista shares rose more 1% in morning trading, while Eli Lilly shares dropped 4.5% after trimming its full-year earnings outlook. NXPI stock moved up 3%. Uber stock raced more than 12% higher. And Pfizer stock jumped 2.4% on strong quarterly earnings and sales results. Pfizer also raised its 2022 earnings guidance.

China-based stocks rallied on U.S. markets in early trade, on chatter that authorities could be exploring ways to ease the country’s restrictive zero-Covid policy. (TCOM), Li Auto (LI) and Pinduoduo (PDD) each traded up around 9%. (JD) and Baidu (BIDU) rallied in the 7% range.

Electric-vehicle giant Tesla (TSLA) traded up almost 2% Tuesday morning, as China-based EV makers also rallied on their home nation’s Covid news. Meanwhile Dow Jones tech leaders Apple (AAPL) and Microsoft (MSFT) were squarely lower after today’s stock market open.

Among the top stocks to buy and watch, Dycom (DY), IBD Leaderboard stock Cheniere Energy (LNG), IBD SwingTrader stock Dollar General (DG) and Pure Storage (PSTG) — as well as Dow Jones stocks Chevron (CVX) and UnitedHealth (UNH) — are among the top stocks to buy and watch. Keep in mind that the ongoing stock market rally is the perfect time for investors to look for stocks in their buy zones.

Cheniere is an IBD Leaderboard stock. Dollar General is an IBD SwingTrader stock. Pure Storage was featured in this week’s Stocks Near A Buy Zone column, along with three other top stock ideas. Pure Storage was also an IBD Stock Of The Day on Friday.

Dow Jones Today: Treasury Yields, Oil Prices

After Tuesday’s opening bell, the Dow Jones Industrial Average turned 0.25% lower, while the S&P 500 traded down 0.2% after erasing early gains. The tech-heavy Nasdaq composite reversed 0.3% lower in morning action.

Among exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) traded down 0.4%, and the SPDR S&P 500 ETF (SPY) fell 0.2%.

The 10-year Treasury yield swung lower to 4.04% Tuesday morning, threatening to erase the last two days of gains. Meanwhile, U.S. oil prices rose 2%, looking to rebound from Monday’s loss. West Texas Intermediate futures held above their 50-day moving average, just above $88 a barrel.

Stock Market Rally Continues

On Monday, the Dow Jones Industrial Average dropped 0.4%, while the S&P 500 declined 0.75%. The tech-heavy Nasdaq composite lost 1%.

Monday’s The Big Picture commented, “Increasing distribution days in the stock market — especially when they start to cluster — usually causes problems for an uptrend. But they’ve been kept at bay so far, and the action in individual stocks has been improving as more money comes in from the sidelines. If you’re still lightly invested — say below 50% like IBD Leaderboard — that’s fine.”

Now is an important time to read IBD’s The Big Picture column. Following recent gains, investors have the green light to buy top stocks breaking out past correct buy points. But not all follow-throughs work, so it’s important to raise exposure slowly and methodically, as the new uptrend proves itself.

But not every follow-through results in a sustained uptrend, which is why investors need to gauge their level of exposure in the days and weeks that come after this signal, especially with the extra risk from the upcoming Fed meeting. You want to buy in sync with the market so that you don’t overcommit to an uptrend that may reverse on you.

And if the stock market starts to break down again, you can reduce exposure without losing too much capital.

Five Dow Jones Stocks To Buy And Watch Now

Dow Jones Stocks To Buy And Watch: Merck, UnitedHealth

Dow Jones member and IBD 50 stock Merck is out of buy range past a 93.12 buy point out of a double-bottom base, according to IBD MarketSmith pattern recognition. Merck shares fell 0.9% Tuesday.

Health care giant UnitedHealth is breaking out past 553.23 buy point out of a a cup with handle, according to IBD MarketSmith. Shares rallied 0.75% Monday, closing just above the stock’s latest entry. UNH stock lost 0.3% Tuesday morning.

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

Top Stocks To Watch: Cheniere, Dollar General, Dycom, Pure Storage

IBD Leaderboard stock Cheniere Energy is just shy of a 178.69 buy point out of a cup with handle, according to IBD MarketSmith chart analysis. LNG stock moved up 0.5% Tuesday morning.

IBD Swing Trader stock Dollar General is trying to break out past a 259.75 buy point in a cup base. DG shares lost 2.1% Monday, ending below the entry. If the stock retakes this critical level, the 5% chase zone will go up to 272.74. DG shares were up 0.2% early Tuesday.

Dycom is trying to break out past a cup base’s 120.55 buy point. Shares slipped 1.85% Monday, falling below the buy point and out of the 5% buy zone that goes up to 126.58. Dycom shares were up almost 1% Tuesday,

Friday’s IBD Stock Of The Day, Pure Storage, is approaching a 31.62 buy point following three days of gains. The stock rose 2% Tuesday.

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

Tesla Stock

Tesla stock dropped 0.4% Monday, snapping a four-day win streak. The stock is rebounding after hitting a new 52-week low last week. Still, shares are about 45% off their 52-week high and sharply below their 50- and 200-day moving average lines.

Shares of the EV giant moved up almost 2% Tuesday morning.

Dow Jones Leaders: Apple, Microsoft

Among Dow Jones stocks, Apple shares declined 1.5% Monday and are about 16% off their 52-week high. Last week, the stock bullishly regained its 50-day line. Now, shares are testing resistance at their long-term 200-day line. Apple stock fell another 1.6% Tuesday.

Microsoft fell 1.6% Monday, giving up a part of Friday’s 4% rebound. Shares are near their Oct. 13 52-week low. The software giant remains more than 30% off its 52-week high. Microsoft shares declined 1.4% Tuesday morning.

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


Top Growth Stocks To Buy And Watch

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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

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