Dow Jones futures extended their losses, falling more than 375 points Friday morning after a higher-than-expected inflation report, with the early release of the personal consumption expenditure price index. Square parent Block (SQ) rose 7% even after reporting fourth-quarter earnings that missed estimates, while sales and gross profit beat Wall Street’s targets.
The Department of Commerce’s PCE price index rose 0.6% in January at an annual rate of 5.4%, hotter than estimates calling for a monthly increase of 0.4% and an annual rate of 4.9% . The core PCE price index rose 0.6% month over month, at an annual rate of 4.7%, exceeding Wall Street estimates for a 0.4% monthly increase and a 4.3% annual increase . Personal income rose less than expected, by 0.6% versus the 1% estimate. Consumer spending rose by 1.8% in January, more than estimated at 1.2%.
Meanwhile, new data on home sales and consumer confidence rounds out economic data at 10 a.m
Among other companies reporting earnings, Auto desk (ADSK), Booking (BKNG), caravan (CVNA), EOG Resources (EOG) and Free market (MELI) were on the move.
Autodesk beat Wall Street’s targets for the fiscal fourth quarter, but disappointed with earnings guidance for the current quarter and year ahead. ADSK shares fell more than 4% in the early morning action.
Bookings fell less than 1% in premarket trading, while Carvana narrowed a 6% slip to less than 2%. EOG Resources fell 4%. And IBD Leaderboard shares of MercadoLibre soared 5.6% on better-than-expected Q4 results.
Electric vehicle leader Tesla slipped nearly 3% Friday morning. Dow Jones tech giants Apple (AAPL) and Microsoft (MSFT) shifted lower before the stock market opened.
IBD Leaderboard stock Airbnb (ABNB), Deere (BY), Inspire medical systems (INSP) and Wing stop (WING) — as well as Dow Jones stocks Cisco systems (CSCO) and JPMorgan Chase (JPM) – are among the top stocks to watch, with the recent weakness in the stock market.
Airbnb is an IBD Leaderboard stock. Inspire and Deere were recent IBD Stock Of The Day picks. Cisco Systems and Wingstop were featured in this week’s Stocks Near a Buy Zone section.
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Dow Jones Today: Oil Prices, Treasury Yields
Prior to the market opening on Friday, Dow Jones futures were down 1.1% from fair value, while S&P 500 futures were down 1.3%. Tech-heavy Nasdaq 100 futures lost 1.8% in the morning action.
Among US exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) fell 1.3% and the SPDR S&P 500 ETF (SPY) fell 1.1% early Friday.
The 10-year US Treasury yield ticked lower to 3.87% on Thursday and fell for a second session. Then the 10-year rate ticked higher Friday morning to 3.93% — on track for a fifth consecutive weekly increase — following the inflation report.
Oil prices appeared to support Thursday’s recovery, with West Texas Intermediate futures rising nearly 1% Friday morning. WTI was trading around $76 a barrel.
Stock market rally struggles
On Thursday, the Dow Jones Industrial Average crept 0.3% higher and the S&P 500 gained 0.5%. The Nasdaq led the way with an increase of 0.7%.
Thursday’s Big Picture column noted, “As more and more breakouts begin to fade and your portfolio’s progress slows, then you need to be proactive and reduce your exposure even further to match the market action. Keep a close eye on sell signals , such as breaks of the 50-day line and 7%-8% sell signals, to avoid bigger losses.”
Five Dow Jones stocks to buy and watch now
Dow Jones Stocks to Buy and Watch: Cisco, JPMorgan
Banking giant JPMorgan reclaimed its 138.76 flat-base buy point during Thursday’s 0.8% gain, according to IBD MarketSmith chart analysis. Stocks are also recovering from their key 50-day line. JPM shares traded 0.5% lower early Friday.
JPM shares show a solid 94 out of a perfect 99 IBD Composite Rating, according to the IBD Stock Checkup. The Composite Rating is designed to help investors easily find top growth stocks.
Featured in this week’s Stocks Near a Buy Zone column, Cisco Systems is attempting to break past a flat base with a buy point of 50.81. But the breakout continued to sputter Thursday, with stocks falling another 0.2%. Cisco shares lost 0.1% early Friday.
4 Top Growth Stocks to Buy and Watch in the Stock market rally
Top stocks to buy and watch: Airbnb, Inspire
Airbnb’s IBD Leaderboard shares rallied last week, rising past a buy point of 121.50 from a handle cup. After four consecutive losses, the stock falls back into the 5% buy range rising to 127.58. But investors should wait for support before considering a stock purchase. Meanwhile, the breakout gap placed an alternative entry at 135. ABNB shares fell 1.2% Friday morning.
backstory: The company operates an online marketplace for accommodation. The primary offering is homestays for vacation rentals. Although tourism was hit hard by the coronavirus pandemic, it continues to roar back after strict lockdowns.
Recent day IBD shares Inspire Medical Systems broke a four-day losing streak on Thursday, rising 0.5%. The medical leader remains above the 262.64 buy point of its flat base, according to IBD MarketSmith pattern recognition. The buy zone comes in at 275.77. INSP shares show a modest 86 IBD Composite Rating. INSP shares were inactive early Friday.
backstory: The company sells an implantable device to treat sleep apnea through electrical stimulation of the nerves — a process called neurostimulation.
Deere, Wingstop Eye Latest points of sale
Deere shares fell 0.3% on Thursday, still testing support around their 50-day line. Shares are just 5% away from a buy point of 448.50 in a flat base. DE shares fell a fraction on Friday morning.
backstory: Deere, an industry benchmark, has shaken off fears of recession and inflation to post solid earnings. In the past year, higher raw material prices enabled farmers to purchase both new and improved machines. In the fiscal first quarter ended Jan. 29, the tractor maker posted a 124% increase in earnings per share on total revenue growth of 32.2%, both ahead of estimates. Earnings growth accelerated for the second quarter in a row.
Wingstop is back in the 5% chase zone past a 169.04 cup-with-handle entry coming in at 177.49 after Thursday’s drop of 2.7%. WING shares fell 1.8% early Friday.
backstory: The Dallas-based restaurant chain has more than 1,900 locations in the U.S. and international markets, according to Dow Jones Newswires. The international locations are Mexico, Colombia, Panama, Singapore and the United Kingdom. Wingstop added 61 new locations in the fourth quarter, bringing Wingstop’s total footprint to 1,959 restaurants worldwide.
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Stocks to buy and watch in Stock Market Rally
Here are six top stocks to buy and watch in the current stock market, including two Dow Jones leaders.
|Company Name||Symbol||Correct point of purchase||Point of sale type|
|Inspire medical systems||(INSP)||262.64||Flat base|
|Cisco systems||(CSCO)||50.81||Flat base|
|Wing stop||(WING)||169.04||Cup with handle|
Source: IBD data as of February 24, 2023
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Shares of Tesla rose 0.6% on Thursday and climbed for a second day. Despite their strong recovery since Jan. 6, stocks are still below the 200-day line, and that key level looms as a potential area of resistance. Shares closed around 48% of their 52-week high on Thursday.
Shares threatened to give up Thursday’s gains, falling 2.8% Friday morning.
Dow Jones leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares rose 0.3% on Thursday, still seeking decisive support at their 200-day line. Shares are down about 17% from their 52-week high. Apple shares fell 0.9% on Friday.
Microsoft shares ended a five-day losing streak, rising 1.3% on Thursday. Stocks regained their 200-day line, but are still about 20% off their 52-week high after recent losses. MSFT shares fell 0.8% Friday morning.
Follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more information on growth stocks and the Dow Jones Industrial Average.
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