Dow Jones futures rose a few hours later, along with S&P 500 futures and Nasdaq futures. The stock market started 2023 much like the end of last year, with flashes of strength followed by reversals in major indices and blue-chip stocks.
Shares of Apple on Tuesday slid to bear market lows and fell below the $2 trillion valuation based on reports of it. an Apple (AAPL) has cut supplier orders for MacBook, AirPod and Apple Watch products.
Tesla (TSLA) slumped to market lows after record deliveries last quarter still misses low views, with concerns about larger demand concerns in 2023.
Investors should wait for clear signs of a continued rally in the stock market before making new purchases.
LLY, giant Dow Jones Larva (CAT) and its most recent IPO Mobileye (MBLY) Three stocks to watch. MBLY stock is at IBD 50. Eli Lilly was Tuesday’s stock of IBD.
The video embedded in the article discussed Tuesday’s market action and analyzed CAT, Eli Lilly and Mobileye stocks.
Dow jones futures today
Dow futures advanced 0.1% against fair value. S&P 500 futures rose 0.2% and Nasdaq 100 futures rose 0.35%.
The 10-year Treasury yield fell 5 basis points, to 3.74%.
At 10 a.m. ET Wednesday, investors will get the ISM manufacturing index for December as well as the available job openings from the November JOLTS survey. This is the introduction to the December jobs report released on Friday.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable shares in the bullish stock market on IBD Live
stock market tuesday
The stock market opened higher on Tuesday but quickly headed south before paring losses sharply in late afternoon trading.
The Dow Jones Industrial Average closed down only a fraction of Tuesday’s trading in the stock market. The S&P 500 fell 0.4%, with Tesla stock being the worst performer by far. The Nasdaq Composite fell 0.8%. Small-cap Russell 2000 shed 0.6%.
US crude oil prices fell 4.2% to $76.93 a barrel, after three consecutive weekly gains. Natural gas prices fell 10.9%, extending a major sell-off in recent weeks.
The 10-year Treasury yield fell 9 basis points to 3.79%, although it was down on the day at 3.72%.
Exchange Traded Funds
Among the top exchange-traded funds, the Innovator IBD 50 ETF (FFTY) sank 1.1%, while the Innovator IBD Breakout Opportunities ETF (BOUT) sank 0.8%. The iShares Expanded Tech-Software ETF (IGV) rose 0.2%. The VanEck Vectors Semiconductor Index (SMH) declined 0.8%.
The SPDR S&P Metals & Mining ETF (XME) was down 1.4%, while the US ETF Global X Infrastructure Development (PAVE) was flat. The US Global Jets Index (JETS) fell 0.6%. The SPDR S&P Homebuilders ETF (XHB) jumped 1.3%. The Energy Select SPDR ETF (XLE) was down 3.5% and the Financial Select SPDR ETF (XLF) was up 0.35%. The SPDR Healthcare Sector Selection Fund (XLV) fell 0.3%.
Reflecting more speculative story stocks, the ARK Innovation ETF (ARKK) lost 2.5%, not far from last week’s lowest level in five years. ARK Genomics ETF (ARKG) fell 2.1%. Tesla stock is a major holding across Ark Invest’s ETFs.
Top five Chinese stocks to watch now
Apple stock fell 3.7% to $125.07 on Tuesday, breaking below last week’s bear market low to the worst levels since June 2021.
AAPL stock, which topped a $3 trillion valuation on the day at the start of 2022, fell below $2 trillion for the first time since March 2021. Apple stock closed Tuesday with a market value of $1.988 trillion. It is still the most valuable company in the world.
Bloomberg reports that a giant Foxconn iPhone factory in China will be back at 90% of capacity. But Apple has reduced orders for AirPods, MacBooks and Apple Watch products, according to a report.
Tesla stock fell 12.2% to 108.10, off last week’s bear market low, marking its worst since August 2020. It was the electric car giant’s worst one-day loss in more than two years. TSLA stock has already collapsed, down 37% in December and 65% for the full year of 2022.
Tesla deliveries hit a record high in the fourth quarter, but fell well short of lower estimates and actual production for the second straight quarter. This was despite significant incentives at the end of the year, especially in China and the United States, to increase sales.
The outlook could be bleak for 2023, with new Tesla EV orders well below the current pace of deliveries.
“Tesla’s annual order run rate in the fourth quarter including deep discounts was only about 1 million units,” Bernstein’s Toni Sacconaghi wrote Sunday, “and the company’s goal is to sell approximately 2 million units in 2023, with no new models.”
With a lower backlog, Tesla may need much higher price cuts or incentives than year-end offerings just to maintain the pace of fourth-quarter deliveries in 2023. But that could mean significant damage to Tesla’s profit margins.
Tesla vs. BYD: EV Giants Vy for the Crown, But Which One is a Better Buy?
Stock market analysis
The stock market kicked off strong for 2023 – for 12 minutes. After that, the major indexes fell quickly, although they came off their lows for the day.
The Dow reversed lower after briefly crossing the 50-day and 21-day lines. The S&P 500 and Russell 2000 reversed lower from the 21-day line.
The NASDAQ has reversed after approaching the 21-day line.
Tesla and Apple stocks were the two biggest draws on the major indices. But there has been a widespread decline. Energy stocks were big losers along with the underlying prices.
A lot of interesting stocks opened higher but then fell back with major indices, such as Mobileye, Celsius (CELH) f midpiece (MEDP).
Eli Lilly and Caterpillar, along with related defensive growth names, held up relatively well. LLY stock is testing the 50 day/10 week lines.
Stocks focused on China, particularly the Internet like binduodu (PDD) The Macau Casino plays like Las Vegas Sands (LVS), bucked the trend, but it also came from the highs.
Major indices eventually limited their losses, but reversals from key technical levels were not encouraging. Many stocks fell hard and never recovered. The stock market is trying to rally thanks to last Thursday’s gains, but this looks like a one-day bounce.
The market is in a correction, with the Nasdaq not far from the bear market’s lows. Even if the rally attempt gains momentum and plans a follow-up day over the next week or two, there are still a number of technical hurdles that need to be cleared.
It’s time to market with IBD’s ETF Market Strategy
What are you doing now
This is not the time to take on new positions. It is a market correction as major indices, sectors and individual sectors tend to reverse.
Don’t be tempted by intraday market impulses that push stocks into overbought territory. For a few minutes on Tuesday, a number of stocks flashed buy signals, but they quickly faded away. Although the major indexes ended with modest losses, an investor who jumps into MBLY stock near Tuesday’s open could now face a 10% loss.
Bottom line: Don’t act like the market is in an uptrend until the market is in fact in an uptrend.
However, many good stocks continue to trade near overbought points, while an attempt to rally in the market may follow up in the coming days. So build your watchlists and keep participating.
Read the big picture every day to stay in sync with market trend, leading stocks and sectors.
Please follow Ed Carson on Twitter at @tweet For stock market updates and more.
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