Dow Jones futures rose slightly early Wednesday, along with S&P 500 and Nasdaq futures, with key economic data at hand. Treasury yields and crude oil fell.
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The stock market started 2023 the way it ended last year, with flashes of strength on Tuesday followed by reversals in major indices and stocks.
On Tuesday, Apple stock skidded to new bear market lows and fell below a $2 trillion valuation on reports that Apple (AAPL) has reduce supplier orders for its MacBook, AirPods and Apple Watch products.
You’re here (TSLA) plunged to carry market lows after record fourth-quarter shipments still missed reduced views, with concerns of even greater demand in 2023.
Investors should wait for clear signs of a sustained stock market recovery before making further purchases.
Stock LLY, giant of the Dow Jones caterpillar (CAT) and recent IPO mobileye (MBLY) are three stocks to watch. MBLY stock is on the INN 50. Eli Lilly was Tuesday IBD stock of the day.
The video embedded in the article discussed Tuesday’s market action and analyzed CAT, Eli Lilly and Mobileye stocks.
Dow Jones Futures Today
Dow Jones futures were up 0.25% relative to fair value. S&P 500 futures climbed 0.3% and Nasdaq 100 futures advanced 0.6%.
Apple and Tesla rose slightly in the market.
A UBS downgrade of Microsoft (MSFT) to Concerns about Azure and Office knickknocked software giant Dow. UBS also donated the Dow component Honey (HON) a double downgrade for sale. Yet another Dow ingredient, Salesforce.com (RCMP), made slight progress on a restructuring plan which will reduce the workforce by 10%.
The 10-year Treasury yield fell 11 basis points to 3.68%.
Crude oil futures fell 3%. Natural gas stabilized after huge sell-offs.
At 10 a.m. ET on Wednesday, investors will get the ISM manufacturing index for December as well as job postings from the JOLTS survey for November. The Fed’s minutes from the December policy meeting are due at 2 p.m. ET. These are precursors to Friday’s December jobs report.
Hong Kong’s Hang Seng rose 3.2%, continuing to rebound on hopes that Covid infections have resumed. Chinese internets have surged, in part on signs that regulators relax Ali Baba (baba) and its subsidiary Ant Group.
Remember that overnight action in Make futures contracts and elsewhere does not necessarily translate into actual trading over the next stock Exchange session.
Join the experts at IBD as they analyze actionable stocks in the stock market rally on IBD Live
Stock market tuesday
The stock market opened higher on Tuesday but quickly headed south before paring losses significantly late in the afternoon.
The Dow Jones Industrial Average closed just a fraction on Tuesday stock market trading. The S&P 500 index fell 0.4%, with Tesla stock by far the worst performer. The Nasdaq composite lost 0.8%. Small cap Russell 2000 lost 0.6%.
U.S. crude oil prices fell 4.2% to $76.93 a barrel, following three straight weekly gains. Natural gas prices fell 10.9%, extending a selloff in recent weeks.
The 10-year Treasury yield slipped 9 basis points to 3.79%, although down 3.72% intraday.
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From best ETFsthe Innovator IBD 50 ETF (FFTY(fallen 1.1%, while Innovator IBD Breakout Opportunities ETF)FIGHT) lost 0.8%. The iShares Expanded Tech-Software Sector ETF (VIG) increased slightly by 0.2%. The VanEck Vector Semiconductor ETF (SMH) fell 0.8%.
SPDR S&P Metals & Mining ETF (XME(down 1.4% and the Global X US Infrastructure Development ETF)PAVE) was flat. US Global Jets ETF (JETS) fell 0.6%. ETF SPDR S&P Home Builders (XHB) climbed 1.3%. The SPDR Energy Select ETF (xle(3.5% slippage and the Financial Select SPDR ETF)XLF) increased slightly by 0.35%. SPDR Healthcare Sector Fund (XLVdecreased by 0.3%.
Reflecting more specific story actions, ARK Innovation ETF (ARKK) fell 2.5%, not far from last week’s five-year low. Genomic ARK ETF (ARKG) lost 2.1%. Tesla stock is a major holding in Ark Invest’s ETFs.
Five best Chinese stocks to watch now
Apple broth
Apple stock fell 3.7% to $125.07 on Tuesday, dropping below last week’s bear market low to the worst levels since June 2021.
AAPL stock, which topped an intraday valuation of $3 trillion at the start of 2022, has now fallen below $2 trillion for the first time since March 2021. Apple stock closed Tuesday with a market capitalization of $1.988 trillion. It’s still the most valuable company in the world.
A giant Foxconn iPhone factory in China is back at 90% capacity, Bloomberg reported. But Apple is cutting orders for AirPods, MacBooks and Apple Watch products, according to a report.
Tesla Stock
Tesla stock plunged 12.2% to 108.10, dipping below last week’s bear market low, hitting its worst levels since August 2020. It was the giant’s worst one-day loss electric vehicles in more than two years. TSLA stock has already crashed 37% in December and 65% for all of 2022.
Tesla’s deliveries hit a record high in the fourth quarter, but for the second straight quarter they were well below both discounted estimates and actual production. This is despite significant end-of-year incentives, particularly in China and the United States, to boost sales.
The outlook may be bleak for 2023, with new Tesla EV orders well below the current delivery rate.
Bernstein’s Toni Sacconaghi wrote on Sunday “Tesla’s annual order turnover in the fourth quarter, including deep discounts, was only about 1 million units, and the company’s goal is to sell nearly 2 million units in 2023, without new models.”
With backlogs low, Tesla may need price cuts or incentives far beyond year-end offers just to keep pace with Q4 deliveries in 2023. But that could mean big hits to profit margins. of Tesla.
Tesla vs. BYD: The EV giants are vying for the crown, but what’s the best buy?
Stock market analysis
The stock market started 2023 strong – for 12 minutes. After that, the major indices quickly retreated, although they hit intraday lows.
The Dow Jones reversed lower after briefly breaking above its 50- and 21-day lines. The S&P 500 and Russell 2000 reversed lower from the 21-day line.
The Nasdaq reversed after closing in on its 21-day line.
Tesla and Apple stocks were the big drags on major indices. But there has been a big setback. Energy stocks were the big losers with underlying prices.
Many interesting stocks opened higher but then reversed lower along with major indices, such as Mobileye, Celsius (CELH) and Medispace (MEDP).
Eli Lilly and Caterpillar, and associated defensive growth names, held up relatively well. LLY stock tests its ranges 50 days/10 weeks.
China-focused stocks, including internets such as Pinduo-duo (PDD) and the Macau casino plays like Las Vegas Sands (LVS), bucked the trend, but also made highs.
Major indices eventually limited their losses, but reversals from key technical levels were not encouraging. Many stocks fell hard and did not rebound. The stock market is in a bid to rally off last Thursday’s gain, but it looks like a one-day bounce.
The market is in a correction phase, with the Nasdaq not far off the bear market lows. Even if the rally attempt gains momentum and stages a follow-up day Over the next week or two, there would still be a number of technical hurdles to overcome.
Time the Market with IBD’s ETF Market Strategy
What to do now
This is not the right time to take new positions. It is a market correction with major indices, sectors and individual sectors subject to reversals.
Don’t be tempted by momentary market outbursts that push stocks into buy zones. For a few minutes on Tuesday, a number of stocks gave buy signals, but most quickly faded. Even though the major indexes ended with modest losses, an investor jumping into MBLY shares near Tuesday’s open could now be sitting with a 10% loss.
Conclusion: Don’t act like the market is in an uptrend until the market is actually in an uptrend.
Still, many good stocks continue to trade near the buy points, while the market’s attempted rally may continue in the coming days. So build your watchlists and stay engaged.
Read The big picture Every day to stay in tune with market direction and major stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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