Dow Jones Futures: What To Do After Today’s Stock Market Plunge; Key Inflation Report Next

Dow Jones futures were higher following Monday’s stock market plunge. The major stock indexes sold off with heavy losses to hit new 2021 lows, as Treasury yields surged to their highest level since 2011.

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Up next, more inflation data is due out with the Labor Department’s producer price index Tuesday, while the Federal Reserve’s highly-anticipated two-day meeting will also kick off.

Dow Jones Futures Today: Treasury Yields, Oil Prices, Inflation, Fed Meeting

After Monday’s close, Dow Jones futures rose 0.3% vs. fair value, and S&P 500 futures moved up 0.35%. Nasdaq 100 futures gained 0.45% vs. fair value. Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

The 10-year Treasury yield surged higher to 3.36% Monday, its highest level since April 2011. Meanwhile, U.S. oil prices remain near recent highs, with West Texas Intermediate trading around $121 a barrel. In early March, WTI briefly topped out above $130 a barrel.

Producer prices are expected to rise 0.8% in May after moving up 0.5% in April, according to Econoday. Producer inflation is expected to jump 11% year-over-year. The producer price index is a measure of pricing strength based on selling prices received by domestic producers for their output.

The Fed will begin its latest two-day policy meeting Tuesday, and it is widely believed that the central bank will raise its benchmark interest rate by half a percentage point on Wednesday. But expectations that the Fed will be forced to move even more aggressively this year are on the rise since Friday’s hot inflation report.

Stock Market Today

On Monday, the Dow Jones Industrial Average dived 2.8%, while the S&P 500 moved down 3.9%. The tech-heavy Nasdaq composite tumbled 4.7%. Among exchange traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) dropped 4.65%, and the SPDR S&P 500 ETF (SPY) declined 3.8%.

Oracle (ORCL) reported earnings after the close Monday. Oracle shares jumped 12% in extended trade after the company reported better-than-expected earnings and sales results.

Tesla (TSLA) stock skidded more than 7% Monday. Among Dow Jones leaders, Apple (AAPL) sold off 3.8% and Microsoft (MSFT) traded 4.2% lower in today’s stock market.

As the stock market correction worsens, Dow Jones leaders Chevron (CVX), Merck (MRK) and Travelers (TRV) — along with Carlisle (CSL), HealthEquity (HQY), Northrop Grumman (NOC) and World Wrestling Entertainment (WWE) — are among IBD’s top stocks to watch for Tuesday.

WWE is an IBD Leaderboard stock. World Wrestling Entertainment was featured in this week’s Stocks Near A Buy Zone column.

What To Do After Today’s Stock Market Plunge

On Monday, the Dow Jones industrials, Nasdaq and S&P 500 hit new correction lows, as the stock market plunged. Investors should be on the lookout for an up day to signify the start of a new rally attempt.

Amid the deepening stock market correction, investors should be mostly — if not entirely — on the sidelines. New purchases are off limits. Also, keeping a watchlist of stocks holding up well in a down market is a good way to be prepared for the next stock market uptrend.

Keep in mind that leading stocks of the past may not be the leaders of the future. To help pinpoint stock leaders that emerge in a new market uptrend, use the relative strength line to see which stocks are outperforming the general market.

During a stock market correction, investors should identify companies whose stock prices are fighting the stock market downtrend. A strong RS line will be pointing sharply higher, either during the basing period or soon after a breakout.

Monday’s The Big Picture column commented, “After gapping down at the open, indexes remained weak into the close. The four-day losing streak in the main indexes is now the largest since March 2020, according to Dow Jones Market Data. The precipitous drop rivals that year’s Covid market crash. Except this time, we’re already at least five months into a market decline.”

If you’re new to IBD, consider taking a look at its stock trading system and CAN SLIM basics. Recognizing chart patterns is one key to the investment guidelines. IBD offers a broad range of growth stock lists, such as Leaderboard and SwingTrader.

Investors also can create watchlists, find companies nearing a buy point, or develop custom screens at IBD MarketSmith.

Five Dow Jones Stocks To Watch Now

Dow Jones Stocks To Watch: Chevron, Merck, Travelers

Dow Jones leader and energy giant Chevron gave up its flat base‘s 174.86 buy point, according to IBD MarketSmith chart analysis, following Monday’s 4.6% decline. CVX stock boasts a perfect 99 IBD Composite Rating, per the IBD Stock Checkup. Investors can use the IBD Composite Rating to easily gauge the quality of a stock’s fundamental and technical metrics.

Merck, a Dow Jones and IBD Big Cap 20 stock, fell further below its cup-with-handle’s 89.58 buy point Monday, as shares dropped another 2.5%. The stock gave up support around its key 50-day line Friday, which is a sell signal.

Insurance giant Travelers continues to build a flat base with a 188.08 buy point. Shares are further below their 50-day line after Monday’s 0.9% fall.

Two Top Growth Stocks To Watch In The Current Stock Market Correction

Stocks To Watch: Carlisle, HealthEquity, Northrop, WWE

Recent IBD Stock Of The Day Carlisle shows a flat base with a 275.23 buy point, even as the stock tumbled 4.6% Monday to give up its 50-day line.

HealthEquity is tracing a cup with handle with a 66.23 buy point, as shares reversed 0.9% higher Monday. The stock is finding support around its key 50-day line and is just 2% away from the latest entry. Keep in mind the weak market environment should keep you on the sidelines.

Northrop Grumman found much-needed support at its 50-day moving average Friday, but remains about 3% below its cup-with-handle’s 477.36 buy point. NOC shares dipped 0.7% Monday.

IBD Leaderboard stock World Wrestling Entertainment is testing a flat base’s 63.81 buy point, according to IBD MarketSmith chart analysis, as WWE shares edged higher Monday. On May 25, the stock staged a strong breakout past the entry. But shares are just above the latest entry in the new wave of market selling.

Per Leaderboard commentary, the relative strength line for WWE stock is at highs and has been gaining ground since January. The base is first stage, a bonus for the chart.

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

Tesla Stock

Tesla stock skidded 7.1% Monday, adding to Friday’s 3.1% decline The stock is far below its 50- and 200-day moving averages.

Shares traded as high as 1,243.49 on Nov. 4. Shares are about 48% off that record high.

Dow Jones Leaders: Apple, Microsoft

Among Dow Jones stocks, Apple shares sold off 3.8% Monday, hitting their lowest level since June 2021. The stock is far below its long-term 200-day line and is about 28% off its 52-week high.

Software leader Microsoft lost 4.2% Monday, and remains sharply below its 50- and 200-day lines. The stock closed more than 30% off its 52-week high.

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

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