The Dow Jones Industrial Average rose on Tuesday as the index sits on top of a solid four-day advance. Blue chip stocks Home Depot (HD) and Walmart (WMT) were higher after earnings beat Tuesday’s pre-open. Early trading was generally muted as markets looked to Fed minutes from the central bank’s latest policy meeting and US retail sales, both due out on Wednesday.
Contract manufacturer Fabrinet (FN) staked an early lead of more than 10% after it reported a solid second-quarter report and strong guidance late Monday. Zoom Video Communications (ZM) fell to the bottom of the Nasdaq 100, falling more than 3% after being downgraded to sell by Citi.
A leader in electric vehicles Tesla (TSLA) was trading up about 1% on Tuesday morning. elsewhere Dow Jones Technology Leaders an apple (AAPL) and Microsoft (MSFT) both went downhill after that today’s stock market open.
In the healthy stock market environment, Dow Jones stocks Coke (KO) and Merck (MRK) – as well as Albemarle (ALB), Costco (PRICE), Monolithic energy systems (MPWR) and Ollie’s Bargain Outlet (OLLY) — are among the best stocks to buy and watch.
Dow Jones today: Treasury yields, oil prices
Early Tuesday, the Dow Jones Industrial Average was up 0.1 percent and the S&P 500 was down 0.1 percent. The tech Nasdaq lost 0.4% in morning trade.
The yield on the 10-year Treasury note rose to 2.81 percent early Tuesday, recovering some of Monday’s decline to 2.79 percent. The yield on the 10-year Treasury note has rebounded after hitting its lowest level since early April in recent weeks.
Meanwhile, U.S. oil prices erased early losses on Tuesday morning after hitting recent lows on Monday. West Texas Intermediate futures rose, trading above $89 a barrel.
Minutes from the Federal Reserve’s latest meeting are due to be released Wednesday morning. The minutes are expected to reveal clues into the central bank’s thinking on potential rate hikes at the September meeting.
At the last meeting of the FedThe central bank raised interest rates by 75 basis points for the second consecutive meeting, and Fed Chairman Jerome Powell indicated that a third such increase “could be appropriate” in September.
Stock market rallies
On Monday, the Nasdaq Composite was again the best performer of the major indexes. It ended slightly above the day’s highs, rising 0.6%. It remains down more than 17% so far in 2022.
The Big Picture column on Monday commented: “The stock market rally showed resilience despite taking a well-earned break on Monday. Indices struggled after coming under early pressure amid fresh data and managed to finish marginally higher.’
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Dow Jones Gains: Home Depot, Walmart
Home Improvement Retailer Home Depot reported its second quarter results early on Tuesday. The company earned $5.05 per share on sales of $43.79 billion, beating analysts’ estimates. Shares of HD rose more than 1 percent in early morning trading.
Discount retailer Walmart extended its winning streak to seven sessions on Monday, rising 0.3%. Walmart’s second quarter earnings came in at $1.77 a share on revenue of $152.9 billion, beating estimates. WMT shares jumped 5% after the open.
Dow Jones stocks to watch: Coca-Cola, Merck
Dow Jones soft drink giant Coca Cola is building a flat base that has a buy point at 67.30. A handle entry at 65.14 is also in play. Shares are pulling back from their 50-day line and closing in on the early entry amid Monday’s 1.3% rally. Stocks rose early Tuesday.
Merck is also building a flat base, a pattern that shows a 95.82 buy point. Shares are trying to hold above their 50-day line amid Monday’s 0.5% drop, according to IBD MarketSmith graph analysis. Merck shares fell 0.5% on Tuesday.
MRK shares showing a solid 94 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: Albemarle, Costco, Monolithic, Ollie’s
IBD ranking Shares and lithium producer Albemarle is in buy range after a breakout on Friday following a large cup handle at 273.78 point of purchase. The 5% buy zone rises to 287.47. Earlier last week, the stock broke above a smaller cup-handle with a buy point of 250.25. The stock rose 0.9% on Monday, extending its winning streak to four sessions. The stock was up 0.2% on Tuesday morning.
Retail giant Costco creates a mug with a handle that displays 552.81 purchase points. Shares rose 1.6% on Monday and are about 3% away from their last entry. Shares were up 1.4% early Tuesday.
Recent IBD Stock of the Day Monolithic Power Systems added a handle to the base of the bowl last week, moving the correct buy point from 580.10 to 541.49. Meanwhile, shares remain above an entry of 514.80. Shares fell 1% on Tuesday.
Ollie’s Bargain Outlet is recovering from its 10 week line — critical level of support — placing the best discount retailer in a new buying area. Stocks also carve a handle after large cup base, placing the last buy point at 72.37. The current price action is about 10% away from this entry. The stock was up 1.3% on Tuesday morning.
Tesla shares rose 3.1% on Monday, closing at their highest level since May 4. The stock is trying to reassert itself above resistance around its 200-day line, which is a key level to watch. Tesla shares were up nearly 1% Tuesday morning.
Shares are about 25% off their 52-week high. The 3-for-1 stock split will take place on August 24.
Dow Jones Leaders: Apple, Microsoft
Between Dow Jones StocksApple shares rose 0.6% on Monday as shares are continue to build the right side of the cup base which has 179.71 buy points. Another interpretation could be a major double bottom extending into January. Either way, the point of purchase is identical. Watch for a potential handle to form and suggest a lower entry.
On the upside, the relative strength line of stocks is now at new highs, indicating major stock market outperformance. Shares were down 0.4% on Tuesday morning.
Microsoft gained another 0.5% on Monday, finishing just short of the long-term 200-day line, which is a key resistance area to watch. Shares were down 0.4% early Tuesday.
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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