Dow Jones Falls 250 Points After Key Economic Data, Set For Losing Week; Tesla Stock Downgraded To Sell

After key economic data on Friday, the Dow Jones Industrial Average dropped by more than 250 points. The major stock indices are preparing for a week of losses as investors prepare themselves for rate hikes in the future from the Federal Reserve. DZ Bank downgraded Tesla stock to sell.

S&P Global released its preliminary June Purchasing Managements' Index (PMI), which includes the manufacturing and service indexes. The manufacturing index dropped to 46.3. This was below the estimates of a reading of 48.5. The services index rose to 54.1 from 53.5, which was the expected reading.

Fed Chair Jerome Powell has set the stage for rising interest rates over the next few months. Powell said on Wednesday that more interest rates are likely to be needed to lower inflation. He added that "nearly all FOMC members expect that it will appropriate to increase interest rates slightly further by the end the year."

CME FedWatch Tool shows that investors now expect a chance of more than 74% for a quarter point hike at the Fed meeting in July. This is up from 67% a week ago.

Stock Market Today

Chipotle Mexican Grill, McKesson, MongoDB and Roku are all good stocks to watch or buy in this current stock market downturn.

Tesla is an IBD Leaderboard Stock. McKesson, an IBD SwingTrader Stock, is also featured in this week's.

Dow Jones Today: Oil prices, Treasury Yields

The Dow Jones Industrial Average dropped 0.5% after Friday's opening, while the S&P 500 fell by 0.7%. The tech-heavy Nasdaq Composite fell 1% on Friday morning.

The Nasdaq-100 tracker Invesco QQQ Trust, (QQQ), traded lower by 1% early Friday, while the SPDR S&P500 ETF, (SPY), fell 0.8%.

The 10-year U.S. Treasury Yield ticked down to 3.69% on Friday. The yield fluctuated between 3.57% to 3.85% in recent weeks, but settled higher on Thursday at 3.79%.

The oil prices fell again Friday morning. West Texas Intermediate futures dropped nearly 3% to below $68 per barrel.

Stock Market Action

The Dow Jones Industrial Average closed Thursday essentially flat, reversing its initial losses. Boeing (BA), at a buy point of 221.33, triggered the Dow 30's 7% loss rule. The stock of BA fell by more than 3%, extending a losing streak that now spans three sessions.

The performance of the market varied according to index. The Nasdaq composite gained nearly 1%, while the S&P 500 rose 0.4%. The Russell 2000, a small-cap index, fell 0.8%.

The Big Picture column of Thursday warned that despite the market's pullback, IBD still recommends a market exposure between 60% and 80%. The market has pulled back as expected, but watch for signs of more institutional selling. "If distribution days begin to accumulate, it is prudent to reduce exposure."

Dow Jones Stocks to Buy and Watch: JPMorgan Salesforce

After Thursday's 1,9% decline, JPMorgan is now just below the 143.37 buy-point. JPM's stock dropped 0.9% on Friday morning.

Salesforce has managed to stabilize itself following a slump in earnings. The company is testing the support of the 21-day moving exponential average. According to IBD Leaderboard, the megacap tech had previously surpassed two new alternative entries at a 194.01 and a 200.10 according to IBD Analystboard analysis.

In recent weeks shares have reached the 20% profit area from a cup with handle entry of 178.94 and are now trying bounce off support at the 10-week level. The CRM stock fell 1.6% on Friday morning.

Chipotle Stocks to Buy and Watch: McKesson MongoDB Roku

IBD MarketSmith's pattern recognition shows that Chipotle, the stock on IBD Leaderboard Watchlist, is bouncing back from its 10-week low and moving towards a buy point of 2,139.88 at a flat-base. IBD Stock Of The Day was Chipotle on Wednesday. CMG stock fell 0.6% Friday morning.

IBD SwingTrader McKesson stock is now in a buy range after a cup with handle entry of 401.53. The 5% zone of buy goes up to 421.61. The stock market was up 0.3% on Friday.

MongoDB's recent earnings-driven gap up has tightened the market, allowing for a new entry. The tight formation of three weeks shows a buying point at 398.89. Aggressive investors can use trendline entry around 386. MDB stock lost 1.7% Friday morning.

According to IBD MarketSmith pattern identification, streaming giant Roku has built a cup with handle base at a 75.45 purchase point. This is despite the fact that Thursday's stock loss streak reached six sessions. Roku's stock dropped 0.8% in the early hours of Friday.

Stocks to Buy and Watch in Stock Market Rally

Roku (ROKU 75.45 cup with handle)

Source: IBD Data As Of June 22, 2023

Tesla Stock

IBD Leaderboard's Tesla stock rose 2% on Thursday, despite a Morgan Stanley rating downgrade. The stock reversed higher after initial losses. The shares remain sharply extended over the 207.79 purchase point of a double bottom base. The stock closed at a 16% discount to its 52-week high on Thursday.

TSLA's stock fell 4.1% on Friday, threatening to erase all the gains made Thursday. DZ Bank downgraded TSLA stock twice, from Buy to Sell, early Friday morning.

Dow Jones Leaders - Apple and Microsoft

Apple, a Dow Jones stock, reached a new high Thursday, rising 1.65% in the session. Shares traded up to 187.04 on Thursday. Stock continues to hold strongly above the 157.38 purchase point. AAPL's stock fell 0.7% on Friday morning.

Microsoft shares recovered 1.8% on Thursday, ending a losing streak of three days. The stock reached a record high of 351.47 last week. MSFT is still in the 20-25% profit zone, despite the recent losses. The stock was bought at a flat base of 276.76. Investors can take some profits despite the recent losses. Microsoft's shares fell 1.5% on Friday morning.