Dow Jones futures, along with S&P 500 futures and Nasdaq futures, edged higher on Tuesday, along with key economic data. Treasury yields and crude oil fell.
The stock market began 2023 as it ended last year, with gains on Tuesday followed by reversals in major indexes and leading stocks.
Apple shares fell to fresh bear market lows on Tuesday, reportedly falling below $2 trillion. apple ( AAPL ) has reduced orders for suppliers for MacBook, AirPods and Apple Watch products.
Tesla ( TSLA ) fell to market lows after record fourth-quarter shipments that still missed bearish views on even bigger demand concerns in 2023.
Investors should wait for clear signs of a sustained stock market rally before making new purchases.
LLY shares, Dow Jones giant Caterpillar (CAT) and the recent IPO Mobile (MBLY) are three stocks worth watching. MBLY shares are in the IBD 50. Eli Lilly was the IBD stock on Tuesday.
A video embedded in the article discussed Tuesday’s market action and analyzed CAT stocks, Eli Lilly and Mobileye.
Dow Jones Futures today
Dow Jones futures were up 0.2% at fair value. S&P 500 futures advanced 0.2% and Nasdaq 100 futures advanced 0.5%.
Apple and Tesla rose slightly in premarket trading.
Lowering the UBS level Microsoft ( MSFT ) Azure and Office concerns have rocked the Dow software giant. UBS also gave a Dow component Honeywell Double dip to sell (HON). Another Dow component, Salesforce.com (CRM), rose modestly in a restructuring plan that will cut 10% of its workforce.
The 10-year Treasury yield fell 11 basis points to 3.68%.
Crude oil futures fell 3%. Natural gas tried to hold steady after a big selloff.
At 10 a.m. ET on Wednesday, investors will get December’s ISM manufacturing index as well as jobs from the November JOLTS survey. Minutes from the Fed’s December policy meeting are due at 2 a.m. ET. These are the news from Friday’s December jobs report.
Hong Kong’s Hang Seng rose 3.2%, continuing to bounce back on hopes of gains from Covid infections. Chinese internet stocks have soared, partly on signs that regulators are easing up Alibaba (BABA) and its affiliate Ant Group.
Remember that an overnight move in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.
Join IBD’s experts as they analyze the stocks that made the most of the stock rally on IBD Live
Stock market on Tuesday
The stock market opened higher on Tuesday, but quickly headed south before paring significant losses in afternoon trading.
The Dow Jones Industrial Average closed up only a fraction in stock trading on Tuesday. The S&P 500 lost 0.4%, with Tesla shares the worst performer ever. The Nasdaq lost 0.8%. The small-cap Russell 2000 yielded 0.6%.
The price of crude oil in the United States fell 4.2% to $76.93 per barrel after three consecutive weekly increases. Natural gas prices fell 10.9%, extending a big selloff in recent weeks.
The 10-year Treasury yield fell 9 basis points to 3.79%, but hit an intraday low of 3.72%.
Among the top ETFs, the Innovator IBD 50 ETF ( FFTY ) lost 1.1%, while the Innovator IBD Breakout Opportunities ETF ( BOUT ) lost 0.8%. The iShares Expanded Tech-Software Sector ETF ( IGV ) rose 0.2%. VanEck Vectors Semiconductor ETF ( SMH ) fell 0.8%.
The SPDR S&P Metals & Mining ETF ( XME ) was up 1.4%, while the Global X US Infrastructure Development ETF ( PAVE ) was flat. The US Global Jets ETF ( JETS ) fell 0.6%. The SPDR S&P Homebuilders ETF ( XHB ) rose 1.3%. The Energy Select SPDR ETF (XLE) gained 3.5%, while the Financial Select SPDR ETF (XLF) gained 0.35%. The Healthcare Select Sector SPDR Fund ( XLV ) fell 0.3%.
Reflecting more speculative story stocks, the ARK Innovation ETF ( ARKK ) lost 2.5%, not far from last week’s five-year low. ARK Genomics ETF ( ARKG ) lost 2.1%. Tesla stock is a major holding in Ark Invest’s ETFs.
Five Best China Stocks to Watch Now
Apple shares fell 3.7% to $125.07 on Tuesday, falling from last week’s bear market to its worst level since June 2021.
AAPL stock, which was worth $3 trillion intraday in early 2022, has now fallen below $2 trillion for the first time since March 2021. Apple shares closed on Tuesday with a market value of $1.988 trillion. It is still the most valuable company in the world.
Bloomberg reports that the giant Foxconn iPhone factory in China has restored up to 90% capacity. But according to a report, Apple is reducing orders for AirPods, MacBooks and Apple Watch products.
Tesla shares fell 12.2% to 108.10, off last week’s bear market lows and hitting their worst level since August 2020. It was the EV giant’s worst one-day loss in more than two years. TSLA stock is already down 37% in December and 65% for 2022.
Tesla deliveries hit a record high in Q4, but for the second quarter in a row they were well short of lower estimates and actual production. This was despite big year-end promotions, particularly in China and the US, to boost sales.
With new Tesla EV orders well below the current delivery rate, the outlook for 2023 could be bleak.
Bernstein’s Toni Sacconaghi wrote on Sunday that “Tesla’s 4Q annual order rate was just ~1 million units including significant discounts, and the company aims to sell close to 2 million units in 2023 without any new models.”
With a shrinking backlog, Tesla may need price cuts or incentives well above year-end offerings to maintain its Q4 2023 delivery pace.
Tesla Vs. BYD: EV giants vying for the crown, but which one is better to buy?
Stock market analysis
The stock market started strong in 2023 – 12 minutes. After that, the major indices pulled back sharply, though they hit intraday lows.
The Dow Jones edged lower after briefly crossing above its 50-day and 21-day lines. The S&P 500 and Russell 2000 fell below 21-day lines.
The Nasdaq bounced back after nearing its 21-day line.
Tesla shares and Apple were the big drags on the major indexes. But there was a broad-based pushback. Energy stocks were the big losers in key prices.
Many interesting stocks opened higher but then fell with the major indices, such as Mobileye, Celsius (CELH) and Medpace (MEDP).
Eli Lilly and Caterpillar, along with related defensive growth names, held up relatively well. LLY stock is testing its 50-day/10-week lines.
China-based stocks, especially internet stocks Pinduoduo (PDD) and play as Macau casino Las Vegas Sands (LVS), bucked the trend, but they also hit highs.
The major indices eventually pared their losses, but returns from key technical levels were not encouraging. Many stocks fell hard and did not come back. The stock market is trying to rally thanks to last Thursday’s gains, but it looks like a one-day bounce.
The market is in a correction, not far from the Nasdaq bear market low. Even if the rally attempt gains momentum and lasts a day in the coming week or two, there will still be a number of technical hurdles to overcome.
Market Timing with IBD’s ETF Market Strategy
What to do now
It is not a good time to take new positions. This is a market correction with major indices, sectors and individual sectors prone to reversals.
Don’t be fooled by sudden market bursts that push stocks into buy zones. A number of stocks gave buy signals within minutes on Tuesday, but most quickly faded. While major indexes ended with modest losses, an investor who jumped into MBLY shares near Tuesday’s open could now be sitting on 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 buy points, while an attempted market rally could lead to a follow-up in the coming days. So create your watch lists and get busy.
Read The Big Picture daily to stay in sync with market direction and leading stocks and sectors.
Follow Ed Carson on Twitter @IBD_ECarson for stock updates and more.
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