Stocks Mixed As ECB Raises Interest Rates

The Dow Jones Industrial Average briefly dropped 150 points in the wake of the European Central Bank rate hike — the bank’s first increase in more than a decade. Tesla stock surged on strong Q2 earnings results.


Alcoa (AA), AT&T (T), CSX (CSX), Discover Financial (DFS), Las Vegas Sands (LVS), Steel Dynamics (STLD), Travelers (TRV) and United Airlines (UAL) were other key earnings movers after Thursday’s open.

Alcoa and Steel Dynamics shares climbed 4% and 1%, respectively, in early trade. AT&T stock dived 7%. CSX stock gained 3%. Discover Financial tumbled 7%. Las Vegas Sands jumped 1.6%. Travelers inched lower. And United Airlines slid 7%.

Chevron (CVX) led the declines among Dow Jones stocks, swinging more than 2% lower as oil prices fell sharply on inventories news.

Tesla (TSLA) rallied around 6% early Thursday. Elsewhere, Dow Jones tech leaders Apple (AAPL) rose 0.6% and Microsoft (MSFT) traded down 1% after today’s stock market open.

In a volatile stock market uptrend, Dow Jones leaders Merck (MRK) and UnitedHealth (UNH) — as well as Dollar Tree (DLTR), Lantheus (LNTH), Quanta Services (PWR) and Verra Mobility (VRRM) — are among the stocks to watch. Keep in mind that, while the market has flashed rising signs of strength, ongoing volatility is a reason to stay cautious.

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Lantheus and UnitedHealth are IBD Leaderboard stocks. Dollar Tree is an IBD SwingTrader stock. Verra was featured in this week’s Stocks Near A Buy Zone column and was IBD’s Stock Of The Day on Monday.

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After Thursday’s open, the Dow Jones Industrial Average fell 0.25%, while the S&P 500 moved down 0.1%. The tech-heavy Nasdaq composite rose 0.2% in morning trade.

Among exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) added 0.2%. And the SPDR S&P 500 ETF (SPY) fell 0.1%.

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Markets in Europe sifted lower after the European Central Bank raised rates by 50 basis points. Expectations were for a 25 to 50 basis point increase, though bankers had reportedly considered a larger-than-50-point hike. The increase is the bank’s first in 11 years. The ECB’s target deposit rate had been in negative territory since 2014.

The U.S. 10-year Treasury yield ticked higher to 3.07% Thursday morning, looking to add to a three-day win streak that saw the 10-year yield close at 3.03% Wednesday. Meanwhile, U.S. oil prices retreated sharply, sliding more than 4% in early action. West Texas Intermediate futures dropped to around $95 per barrel after data on Wednesday showed U.S. gasoline stockpiles rising, suggesting consumers were fatigued with high prices.

Early Thursday, the Labor Department said first-time jobless claims rose to 251,000 vs. 244,000 in the previous week. Econoday estimates had expected initial jobless claims to fall to 240,000.

Stock Market Rally

On Wednesday, the stock market posted solid action, as the Nasdaq fared best with a 1.6% move higher.

Wednesday’s The Big Picture column commented, “The major indexes all closed higher Wednesday as the current stock market comeback maintained its momentum. Meanwhile, the bulls finally caught up to the bears in a key investor sentiment gauge.”

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: Travelers

Dow Jones insurance giant Travelers initially jumped more than 4%, then faded to a 0.4% decline after reporting better-than-expected earnings and sales results early Thursday.

Shares finished Wednesday about 15% off their 52-week high.

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Dow Jones Stocks To Watch: Merck, UnitedHealth

Drug stock Merck fell nearly 3% Wednesday, giving up support around its 50-day line. Shares are getting closer to triggering the 7%-8% loss-cutting rule from a flat base’s 95.02 buy point, according to IBD MarketSmith chart analysis. Merck shares traded down almost 1% early Thursday.

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Health insurance giant and IBD Leaderboard stock UnitedHealth is just above its double-bottom-with-handle base’s 518.80 buy point after Wednesday’s 2.6% decline. Shares were down 0.8% Thursday.

UNH stock shows a strong 96 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.

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Top Stocks To Watch: Dollar Tree, Lantheus, Quanta, Verra

IBD SwingTrader stock Dollar Tree is gaining ground above its cup-with-handle’s 166.45 buy point and is at the top of the buy range. Another positive note is the discount retailer’s RS line, which hit a new high last week. Dollar Tree stock shows a strong 97 out of a best-possible 99 IBD Composite Rating, per the IBD Stock Checkup. Dollar Tree shares lost 0.8% Thursday.

IBD Leaderboard stock Lantheus is breaking out past a 73.88 buy point, as it rebounds from support around its 50-day line. Per Leaderboard commentary, Lantheus has proven itself one of the strongest stocks in the market currently after soaring out of a double-bottom base in February. Lantheus shares were down 0.7% early Thursday.

Quanta Services is putting the finishing touches on a cup-with-handle base that has a 138.56 buy point, according to IBD MarketSmith chart analysis. Shares are about 5% away from the latest entry after Wednesday’s 0.9% rise. Shares inched lower in morning trade.

Verra Mobility is trying to break out past a cup with handle’s 16.83 buy point, but closed below the buy point Wednesday amid a 2.65% decline. The stock’s RS line continues to show tremendous strength as it hit a another new high this week. Verra shares were down 0.1% Thursday morning.

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

Tesla Stock

Tesla stock rose 0.8% Wednesday, extending a win streak to six sessions. Shares rallied more than 6% Thursday morning after the company reported better-than-expected second-quarter earnings late Wednesday.

Tesla said adjusted earnings climbed 57% to $2.27 per share. Revenue soared 42% year over year to $16.934 billion. The company’s presentation deck pointed out a Bitcoin impairment, but did not give details. It said as of the end of Q2, it had converted approximately 75% of its Bitcoin purchases into fiat currency, adding $936 million of cash to its balance sheet.

Dow Jones Leaders: Apple, Microsoft

Among Dow Jones stocks, Apple shares added 1.35% Wednesday and closing in on their long-term 200-day lines. Shares reclaimed their 50-day line after bullish action in recent weeks. Apple earnings are due out July 28. The stock traded up 0.6% Thursday morning.

Microsoft rose 1.1% Wednesday, trying to top resistance around its 50-day line. The stock closed about 26% off its 52-week high. The software giant will report quarterly results on July 26. Microsoft shares fell 1% early Thursday after Bloomberg reported the company is cutting open jobs, including in its Azure cloud business due to a weakening economy.

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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