The Dow Jones Industrial Average fell more than 700 points on Tuesday’s hot inflation report as data showed a key inflation gauge rose instead of making the expected decline last month.
Released early Tuesday, the Labor Department’s consumer price index, or CPI, showed that consumer prices rose 0.1 percent in August from the previous month. That came in hotter than forecasts for a 0.1% monthly decline. Inflation rose 8.3% in August from a year earlier, higher than the expected increase of 8.1%.
Meanwhile, a leader in electric vehicles Tesla (TSLA) lost about 3% on Tuesday. Avg Dow Jones Industrialstechnological titans An apple (AAPL) and Microsoft (MSFT) were both sharply lower thereafter today’s stock market open.
With the current market volatility, Arista Networks (NETWORK), DoubleVerify (DV), Palo Alto Networks (PANW) and Clean storage (PSTG) — as well as Dow Jones stocks Chevron (CVX) — are among the best stocks to buy and watch. Note that increased market volatility is a good reason for investors to be more defensive, although recent gains have been constructive.
DoubleVerify is IBD ranking availability. Pure Storage is IBD SwingTrader stocks, while Chevron and Palo Alto were featured in this week’s column Stocks Near Buy Zone.
Dow Jones today: Treasury yields, oil prices
Amid the unexpected inflation news, the Dow Jones Industrial Average sold off 2.3%, while the S&P 500 fell 2.7%. The tech Nasdaq composite traded down 3.4% in morning trade.
The yield on the 10-year Treasury note jumped to 3.44% after the hotter-than-expected inflation data. On Monday, the yield on the 10-year Treasury note hit its highest closing level since June 15.
U.S. oil prices gave up early gains, falling less than 1 percent on Tuesday morning. West Texas Intermediate futures traded back to $87 a barrel.
The producer price index, which measures wholesale inflation, will be released on Wednesday.
Stock market rally under pressure
On Monday, the Nasdaq Composite rose nearly 1.3%, adding some ground above its 50-day moving average. On Friday, the index closed just above the line.
Before the inflation report, The Big Picture column on Monday commented: “Surprising inflation report could rattle financial markets. With such a critical report looming, investors would do well to trade cautiously before the numbers are out. IBD’s market outlook remains ‘uptrend under pressure’, suggesting moderate exposure and an increase in cash.”
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Dow Jones stocks to watch: Chevron
Dow Jones Chevron shares rose 1.6% on Monday, continuing to rally from support at the key 50-day line. Shares are nearing their latest buy point at 166.93 – according to IBD MarketSmith chart analysis — amid a strong performance by energy stocks so far this year. Shares were down 0.8% early Tuesday.
CVX shares showing a strong 97 out of a perfect 99 IBD Composite Rating, according to IBD Stock Check. Investors can use the IBD Composite Rating to easily gauge the quality of a stock’s fundamental and technical indicators.
Top stocks to watch: Arista, DoubleVerify, Palo Alto Networks, Pure Storage
Arista Networks added a handle to a double-bottom base, putting the correct entry at 132.97, according to IBD MarketSmith graph analysis. Arista’s relative strength line is near highs as the stock has taken over its 200-day and 21-day lines. ANET shares were down 2.6% early Tuesday.
Stocks in the IBD Ranking DoubleVerify is crossing a buy point of 28.07 in the lower base. Shares are in a 5% buy zone that reached 29.47, although it is expanding from the moving averages. DV shares fell 5.5% on Tuesday morning. The company specializes in platforms to help advertisers gain better insight into the effectiveness of their ad spend and campaigns.
Cybersecurity leader Palo Alto Networks is closing in on a 578.89 buy point in a cup with a handle. An early entry around 560 is also underway due to a trend line, according to IBD Leaderboard commentary. Shares fell 2.6% on Tuesday.
IBD SwingTrader Stock Pure Storage closes in at 31.62 buy points in a mug with a handle. Meanwhile, an early entry is also in play after the stock moves above a downtrend line within this handle. Shares were down 3% on Tuesday.
Tesla shares rose 1.6% on Monday, extending its winning streak to five sessions and extending its bounce from its 50-day line. Shares of the electric vehicle giant fell about 3% on Tuesday morning.
Tesla shares have found resistance at their 200-day line in recent months, but are now back above that level. Shares remain about 28% off their 52-week high.
Dow Jones Leaders: Apple, Microsoft
Between Dow Jones Stocks, Apple shares rose 3.85% on Monday, decisively reclaiming its 200-day line. Shares are about 9% away from a 176.25 cup discount buy point. Apple shares fell nearly 2% on Tuesday.
Microsoft rose 0.8% on Monday, rising for a fourth straight day. The software giant remains sharply below its 50- and 200-day lines. Shares are about 24% off their 52-week high. Microsoft shares lost 2.6% on Tuesday morning.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more information on growth stocks and the Dow Jones Industrial Average.
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