Stock Market Update: Dow Jones Rises Despite Weak ADP Jobs Data

ADP Jobs Report Shows Slower Payroll Growth

The ADP employment report for September revealed that payrolls increased by 89,000, falling short of expectations for a growth of 150,000 jobs. This marked a slowdown compared to the 177,000 jobs added in August. Notably, the ADP report serves as a precursor to the more comprehensive September jobs report from the Labor Department, scheduled for release later in the week.

Anticipation for Friday’s Jobs Report

Investors are eagerly awaiting Friday’s jobs report, which is the focal point of this week’s economic releases. Wall Street anticipates moderate strength in the report, with expectations of 150,000 new jobs, a slight drop in the jobless rate from 3.8% to 3.7%, and a 0.3% increase in average hourly wages.

Apple Faces Stock Downgrade

Dow Jones tech giant Apple (AAPL) experienced a nearly 1% decline in its stock value following a downgrade by KeyBanc. The downgrade, which shifted the stock from “overweight” to “sector weight,” also removed the previous price target of 200. The brokerage expressed concerns that sales of Apple’s new iPhone 15 may be soft in the near term.

Mixed Day in the Markets

Following the opening bell on Wednesday, the Dow Jones Industrial Average saw a 0.1% increase, while the S&P 500 posted a 0.2% gain. The tech-heavy Nasdaq composite outperformed, rising by 0.3% during morning trading.

Market Factors: Oil Prices and Treasury Yields

Early trading witnessed a decline in the 10-year U.S. Treasury yield to 4.76%, alleviating some concerns after it hit long-term highs of 4.88% overnight. In the commodities market, oil prices continued their recent descent, falling over 2% in Wednesday morning trading. West Texas Intermediate futures dipped below $88 per barrel. Simultaneously, the OPEC+ meeting began, with expectations that the group would maintain its current oil output. Saudi Arabia also confirmed its commitment to a per-day supply cut of 1 million barrels until year-end.

Stock Market Correction and Potential Rally

In Tuesday’s trading, the Dow Jones Industrial Average experienced a 1.3% decline, while the S&P 500 dropped 1.4%. The Nasdaq composite, dominated by tech stocks, faced a more substantial setback, losing nearly 2%.

Despite these losses, Wednesday marked the sixth day of a potential rally attempt on the Nasdaq, suggesting the possibility of a follow-through day, which would indicate the start of a new uptrend. As the stock market remains in a correction phase, it is crucial to stay informed about market developments and strategies to navigate ongoing weakness and prepare for a potential uptrend.

Key Stocks to Watch

Several stocks are in focus during this period of market volatility:

• Electric-vehicle giant Tesla (TSLA) and tech company Nvidia (NVDA) both saw modest gains in Wednesday’s morning trading.
• Dow Jones tech icon Microsoft (MSFT) experienced a slight uptick after the market opened.
• Leading companies such as Arista Networks (ANET), Duolingo (DUOL), DraftKings (DKNG), and Zscaler (ZS) are closely monitored amid the ongoing market correction.
• Dow Jones leaders Caterpillar (CAT) and Chevron (CVX) continue to be of interest to investors. Caterpillar is forming a flat base with a 293.88 buy point, while Chevron is consolidating within a larger pattern, featuring a 172.88 buy point.
• IBD Leaderboard member Arista Networks (ANET) is observed as it maintains its position above the key 50-day line.
• DraftKings is building a cup with handle pattern with a 32.65 buy point, while IPO Leader Duolingo is forming a new entry point.
• Recent IBD Stock of The Day Zscaler experienced a rebound from its 50-day line and saw an increase in Wednesday morning trading.

Best Stocks in Today’s Stock Market Action

These are four best stocks to buy and watch in today’s stock market, including a Dow Jones leader.

Source: IBD Data as Of Oct. 3, 2023

Tesla stock skidded 2% Tuesday, snapping a three-day win streak. Shares continue to see stout resistance around their 50-day line. TSLA stock has an official cup-with-handle base with a buy point at 278.98, but shares are about 13% away from that entry.