Dow Jones bounces back as stock market sell-off worsens; Microsoft rises on earnings

The Dow Jones Industrial Average rose 270 points Wednesday morning after falling to its lowest level in more than a year. Alphabet (GOOGL) and Microsoft (MSFT), as well as Dow Jones stocks Boeing (BA) and Visa (V), reported quarterly earnings.

Alphabet, the parent company of Google, fell 4% early Wednesday after its March-quarter earnings and revenue fell short of Wall Street expectations. Teck Resources (TECK) and Spotify (SPOT) were also among the top earnings movers on Wednesday morning.

Despite better-than-expected first-quarter results, Spotify shares fell 9 percent. Teck Resources increased by about 8%.

Twitter (TWTR) fell nearly 2% after falling 3.9 percent on Tuesday. And Tesla (TSLA), the electric-vehicle behemoth, rose around 4% Wednesday morning.

Apple (AAPL) was slightly higher among the Dow Jones leaders, while Microsoft (MSFT) gained 4% in today’s stock market.

In the midst of a new stock market correction, Dow Jones leader American Express (AXP), Expedia (EXPE), Palo Alto Networks (PANW), and IBD Leaderboard watchlist stock World Wrestling Entertainment (WWE) are among the top stocks to watch on Wednesday.

IBD Leaderboard stocks include Microsoft and Tesla. This week’s Stocks Near A Buy Zone column featured Expedia and Palo Alto Networks.

Treasury Yields, Oil Prices

The Dow Jones Industrial Average gained 0.8 percent after the market opened on Wednesday, while the S&P 500 gained 1.1 percent. The Nasdaq rose 1.4 percent in early trading.

The Nasdaq 100 tracker Invesco QQQ Trust (QQQ) rose 0.8 percent among exchange-traded funds. The SPDR S&P 500 ETF (SPY) gained 0.5 percent.

The 10-year Treasury yield was trading near 2.76 percent on Wednesday, after closing at 2.77 percent on Tuesday. The 10-year Treasury yield reached its highest level since December 2018 last week. Meanwhile, oil prices in the United States rose, with Texas Intermediate crude trading above $102 per barrel.

Stock Market Correction Worsens

The major stock indexes fell sharply on Tuesday. The Nasdaq and S&P 500 fell back below their Monday lows as a result of the disappointing trading. That was the end of a brief rally attempt. It also pushed the Nasdaq back below its mid-March lows, the index’s lowest level since March 2021. The S&P 500 has remained above its mid-March lows.

It’s unclear what will happen next. As the market enters the final few sessions of April, a rebound could spark a new rally attempt. As the stock market continues to fall, investors should be on the defensive, taking profits and raising cash. Keeping a watchlist of stocks that have performed well in a down market is also a good way to prepare for the next uptrend.

Finding the leaders of the next rally while the market is still correcting is difficult. Using a stock’s relative strength line is one useful method. The RS line compares a stock’s price performance to that of the S&P 500. When a stock outperforms the market, the RS line angles upward. If a stock lags behind the rest of the market, the line will slant downward.

Tuesday’s The Big Picture column commented, “As noted among the panelists in Tuesday’s IBD Live show, many market technicians had been waiting to see if the key indexes would undercut their March near-term lows. By doing so, the increasingly weakening action could trigger a spike in fear and climactic selling action that could lead to a new bounce in equities.”

If you’re new to IBD, consider learning about its stock trading system and the fundamentals of CAN SLIM. Recognizing chart patterns is one of the investment guidelines’ key components. IBD provides a wide range of growth stock lists, including Leaderboard and SwingTrader.

At IBD MarketSmith, investors can also create watchlists, find companies nearing a buy point, and create custom screens.

Boeing, Visa

Dow Jones indices Boeing and Visa both reported their quarterly earnings results before the market opened on Wednesday.

Boeing missed first-quarter earnings estimates, causing a 6% drop in early trading. Boeing shares closed Tuesday about 35% lower than their 52-week high and below their 50- and 200-day moving averages.

Visa’s stock jumped 8% early Wednesday after the company exceeded Wall Street’s expectations. Visa shares are down 20% from their 52-week high.

American Express

After a 3 percent drop on Tuesday, Dow Jones financial stock American Express finished Tuesday further below its 50-day moving average and about 8% away from a cup-with-194.45 handle’s buy point. AXP shares fell 0.3 percent in early trading on Wednesday.

Keep an eye on the relative strength line of the stock. During its recent rise, the RS line is beginning to approach its old highs, indicating that it is once again outperforming the broader market.

Expedia, Palo Alto, WWE

According to IBD MarketSmith chart analysis, Expedia, Thursday’s IBD Stock Of The Day, is continuing to build a cup with a handle with a 204.08 buy point. Following Tuesday’s 4.4 percent drop, stocks are falling further below their 50-day moving average. According to the IBD Stock Checkup, EXPE stock has a 92 out of a perfect 99 IBD Composite Rating. Wednesday morning, shares were up nearly 3%.

After triggering a round-trip sell signal from a 572.77 buy point, top cybersecurity stock Palo Alto Networks is still trading above much-needed support at the 50-day line. The stock dropped 3.2 percent on Tuesday. PANW’s stock increased by more than 1% early Wednesday.

Stock on the IBD Leaderboard watchlist Wrestling Entertainment also remained above its 50-day moving average, falling only 0.3 percent on Tuesday. In a cup with a handle, shares are just below a 60.94 buy point. Wednesday morning, WWE stock was down 1.3 percent.

Tesla Stock

Tesla stock rose around 4% Wednesday morning after breaking through its 50- and 200-day moving averages during Tuesday’s 12.2 percent drop.

Shares of the EV behemoth closed Tuesday about 24% below a cup-with-1,152.97 handle’s buy point. The stock reached an all-time high of 1,243.49 on November 4 and is now down about 30% from that level.

Apple, Microsoft

Among Dow Jones stocks, Apple shares fell 3.7 percent Tuesday after losing support at their long-term 200-day line. The stock market rose a smidgeon Wednesday morning.

Microsoft fell 3.7 percent on Tuesday, falling further below its 50- and 200-day moving averages. The stock finished about 23% below its 52-week high.

Microsoft beat analyst expectations for its fiscal third quarter on the strength of its cloud computing business late Tuesday. It also provided sales guidance for the current quarter that was in line with expectations. MSFT shares were up 4% in early trading.

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