The Dow Jones Industrial Average fought back to close higher as 3M (MMM) lagged and Apple (AAPL) gained. Former President Donald Trump raised pressure on Republicans to trigger a government shutdown. Tesla (TSLA) moved higher despite a bearish call even as rival EV stock Li Auto (LI) dived.
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A number of noteworthy stocks are currently showing encouraging action despite the challenging market conditions. Encompass Health (EHC), Unum (UNM) and NOV (NOV) all look strong and are near buy points.
Treasury yields rose. The 10-year yield jumped 10 basis point to 4.54%, while the two-year yield inched higher but was essentially flat at 5.13%. The yield curve improved but remains inverted.
Trump Calls For Shutdown, Pressures McCarthy
House Speaker Kevin McCarthy is facing a tricky task to avert a government shutdown while also appeasing hard-line Republicans who oppose compromising with the Biden Administration.
Some House conservatives want the speaker to use the budget negotiations to force through measures on immigration and to cut spending. The government will shut down unless an agreement is reached before Oct. 1.
Former President Donald Trump raised the pressure on McCarthy by saying GOP members have to stay tough after they “lost big on (the) debt ceiling.”
“Unless you get everything, shut it down!” the GOP presidential front-runner said on his social media site Truth Social.
Oanda senior market analyst Edward Moya said worry about a government shutdown is one of a number of factors currently weighing on investors.
“Sticky inflation, which comes with renewed dollar strength risks, remains a risk on the table as oil prices appear poised to remain elevated all the way through the winter,” he said in a note to clients. “Also on the minds of traders is the rising risk of a government shutdown next week.”
Nasdaq Up As Small Caps Shine
The tech-heavy Nasdaq fared best out of the major indexes as it rose 0.5%, snapping a four-session losing streak. GE Healthcare Technologies (GEHC) stood out here with a lift of more 3.3%. Additionally, the firm announced a Q3 dividend of 3 cents per share on Friday.
The benchmark S&P 500 also broke a losing streak as it gained 0.4%. Sealed Air (SEE) was a top performer here as it rose 3.6%.
The S&P 500 sectors ended the day mainly higher. Materials and energy fared best in the stock market today. Utilities and consumer staples lagged the most.
Small caps saw gains fade into the close, with the Russell 2000 rising 0.3% and remaining well beneath its 200-day line. Growth stocks did better, with the Innovator IBD 50 ETF (FFTY) gaining 0.6%.
Dow Jones Dips As Apple Stock Gains
The Dow Jones Industrial Average reversed higher late, though it still lagged the other major indexes. It rose 43 points, or 0.1%.
Apple stock was among the best performers on the index as it gained 0.7%. It is trading tightly below its 50-day line, MarketSmith analysis shows.
But Dow Inc. (DOW) was the best performer on the Dow Jones today as it rose 1.7%. Chevron (CVX) followed closely behind with a 1.5% lift.
3M was the worst laggard as it skidded 2.3%, falling further below its 50-day and 200-day lines in the process.
Coca-Cola (KO) and McDonalds (MCD) were also lagging. KO fell 1% while MCD dipped 0.9%.
Tesla Stock Gains Despite Call; Li Auto Stock Craters
Tesla stock managed to shake off negative delivery commentary to inch higher Monday. It reversed higher and ended the session up 0.9%.
It rose despite Barclay’s analyst Dan Levy saying he thinks Q3 deliveries will come in at 455,000 units, lower than his previous estimate for 483,000 units. It was also lower than consensus views for 463,000 units.
Despite lowering his expectations, he still believes it will be “sufficient to draw down inventory.” He also said in a note to clients that he believes “bulls will be eager to look past the 3Q result in favor of what is shaping up to be better 4Q.”
Tesla stock is currently trading below a cup-with-handle entry of 278.98. This is a second stage base, which still counts as early stage.
Meanwhile, rival EV stock Li Auto cratered 10%. It gapped down away from its 50-day moving average in high volume, MarketSmith analysis shows.
The China stock was hit hard after electronics giant Huawei teased its first sedan and a new high-end SUV.
Outside Dow Jones: Three Stocks Hold Near Entries
With the market in the grip of a correction, investors should focus on building up their watchlists. Here are some candidates.
Encompass Health has formed a flat base with an ideal buy point of 72.06. The relative strength line is at fresh highs.
All-around performance is excellent, netting it an IBD Composite Rating of 90.
Health insurance play Unum is near a flat base buy point of 51.15. It is in the top 11% of stocks in terms of price performance over the past 12 months.
The stock ranks first in the highflying Accident and Health Insurance group, which ranks a strong No. 29 on IBD’s list of 197 industry groups.
Energy stock NOV is hanging tough just below a 20.98 buy point. The stock has a perfect 99 Composite Rating.
NOV is among the biggest diversified oilfield-services suppliers, after Schlumberger, Halliburton and Baker Hughes.
Please follow Michael Larkin on X, formerly known as Twitter, at @IBD_MLarkin for more analysis of growth stocks.
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