Futures Fall As 2 Blue Chips Post Earnings Beats

Dow Jones futures dropped Tuesday, as the index sits atop a solid four-day advance. Blue chip stocks Home Depot (HD) and Walmart (WMT) were mixed following earnings beats ahead of Tuesday’s open. Early trade was generally muted, as markets looked toward Fed minutes from the central bank’s latest policy meeting and U.S. retail sales, both due out Wednesday.

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Contract manufacturer Fabrinet (FN) staked out an early lead, up more than 10% after delivering a solid second-quarter report and strong guidance late Monday. Zoom Video Communications (ZM) dropped to the bottom of the Nasdaq 100, after it was downgraded to sell by Citi.

Electric-vehicle leader Tesla (TSLA) traded up about 1% Tuesday morning. Elsewhere, Dow Jones tech leaders Apple (AAPL) and Microsoft (MSFT) both inched lower ahead of today’s stock market open.

In the healthy stock market environment, Dow Jones stocks Coca-Cola (KO) and Merck (MRK) — as well as Albemarle (ALB), Costco (COST), Monolithic Power Systems (MPWR) and Ollie’s Bargain Outlet (OLLI) — are among the top stocks to buy and watch.

Albemarle is an IBD Leaderboard stock. Albemarle and Costco were featured in this week’s Stocks Near A Buy Zone column.

Dow Jones Today: Treasury Yields, Oil Prices

Early Tuesday, Dow Jones futures lost 0.2% vs. fair value. The Dow industrials rallied 3.5% in the four sessions through Monday. S&P 500 futures moved down 0.3%. Nasdaq 100 futures also traded down 0.3% in morning trade.

Remember that overnight action in Dow Jones futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

Among exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) and the SPDR S&P 500 ETF (SPY) were both slightly lower in premarket trade.

The 10-year Treasury yield ticked higher to 2.81% early Tuesday, recovering a bit of Monday’s fall to 2.79%. The 10-year Treasury yield is rebounding after hitting its lowest level since early April in recent weeks.

Meanwhile, U.S. oil prices erased early losses Tuesday morning after undercutting recent lows on Monday. West Texas Intermediate futures inched higher, trading above $90 a barrel.

The Federal Reserve’s minutes from its latest meeting are due out Wednesday morning. The minutes are expected to reveal clues into the central bank’s thoughts on potential interest-rate hikes at the September meeting. At the most recent Fed meeting, the central bank delivered a 75-basis-point rate hike for the second straight meeting, and Fed chair Jerome Powell indicated a third such hike “could be appropriate” in September.

Stock Market Rally

On Monday, the Nasdaq composite once again fared best out of the major indexes. It finished just off highs for the day as it rose 0.6%. It remains down more than 17% so far in 2022.

Monday’s The Big Picture column commented, “The stock market rally showed resilience even as it took a well-earned breather Monday. Indexes battled back after coming under early pressure amid new data and managed to end marginally higher.”

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.

Dow Jones Earnings: Home Depot, Walmart

Home improvement retailer Home Depot reported its second-quarter results early Tuesday. The company earned $5.05 per share on sales of $43.79 billion, topping analyst estimates. HD shares fell less than 1% in early morning trade.

Discount retailer Walmart extended a win streak to seven sessions Monday, rising 0.3%. Walmart’s second-quarter earnings came in at $1.77 per share on revenue of $152.9 billion, beating estimates. WMT shares jumped 4% ahead of the open.

Five Dow Jones Stocks To Watch Now

Dow Jones Stocks To Watch: Coca-Cola, Merck

Dow Jones soda giant Coca Cola is building a flat base that has a 67.30 buy point. A handle entry at 65.14 is also in play. Shares are rebounding from their 50-day line and nearing the early entry amid Monday’s 1.3% rally. The stock inched higher 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% decline, according to IBD MarketSmith chart analysis. Merck shares were flat Tuesday.

MRK stock shows a solid 94 out of 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.

4 Top Growth Stocks To Buy And Watch In The Current Stock Market Rally

Top Stocks To Watch: Albemarle, Costco, Monolithic, Ollie’s

IBD Leaderboard stock and lithium producer Albemarle is in buy range following Friday’s breakout past a large cup with handle with a 273.78 buy point. The 5% buy zone goes up to 287.47. Earlier last week, shares topped a smaller cup with handle with a 250.25 buy point. Shares moved up 0.9% Monday, extending a win streak to four sessions. The stock was unchanged Tuesday morning.

Retail giant Costco is building a cup with handle that shows a 552.81 buy point. The stock rose 1.6% Monday and is about 3% away from the latest entry. Shares gained 0.5% early Tuesday.

Recent IBD Stock Of The Day Monolithic Power Systems added a handle to a cup base last week, moving the correct buy point from 580.10 to 541.49. Meanwhile, shares remain above a 514.80 entry. The stock was flat Tuesday.

Ollie’s Bargain Outlet is rebounding from its 10-week line — a critical support level — placing the top discount retailer in a new buy zone. Shares are also carving a handle after a large cup base, putting the latest buy point at 72.37. Current price action is about 10% away from that entry. Shares edged higher Tuesday morning.

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

Tesla Stock

Tesla stock climbed 3.1% Monday, closing at its highest level since May 4. Shares are trying to again decisively rise above resistance around their 200-day line, which is a key level to watch. Tesla stock rose 0.5% Tuesday morning.

The stock is about 25% off its 52-week high. The 3-for-1 stock split will occur on Aug. 24.

Dow Jones Leaders: Apple, Microsoft

Among Dow Jones stocks, Apple shares rose 0.6% Monday, as the stock is continues to build the right side of a cup base that has a 179.71 buy point. Another interpretation could be a large double bottom that spans back to January. Either way, the buy point is identical. Keep an eye out for a potential handle to form and offer a lower entry.

Bullishly, the stock’s relative strength line is already at new highs, indicating big stock market outperformance. Shares inched lower Tuesday morning.

Microsoft gained another 0.5% Monday, ending just shy of the long-term 200-day line, which is a key resistance area to watch. The stock moved down 0.2% early Tuesday.

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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