Dow Jones dives as investors fear rate hikes into 2023; Tesla shares plummet

Dow Jones futures were higher before Tuesday’s open after the Dow Jones Industrial Average sold off more than 480 points on Monday. Tesla shares plunged after several reports said Tesla plans to cut production of electric cars in China as demand appears to be faltering.


The EV giant refuted the reports, calling claims that it is cutting production in China untrue. Still, investors sent the stock down more than 6% and near today’s lows.

More Fed rate hikes into 2023?

The stock market headed south on Monday as stronger-than-expected economic data sparked fears that the Federal Reserve will continue to aggressively raise interest rates into next year due to a strong labor market. Early Monday, the ISM services report came in better than expected, with a reading of 56.5 in November versus 54.4 in October. The ISM services are a barometer of US business conditions in the services sector; a reading above 50 indicates expansion and a reading below 50 is contraction.

Monday’s economic data came directly on the heels of Friday’s strong jobs report that showed employers added 263,000 payroll positions while the unemployment rate held at 3.7% and wages jumped.

According to Nick Timiraos at the Wall Street Journal, “Federal Reserve officials have signaled plans to raise the benchmark interest rate by 0.5 percentage point at their meeting next week, but increased wage pressures could lead them to continue raising it to higher levels than investors for the moment expect.”

Timiraos continued, “policymakers expect price pressures to ease meaningfully next year, but rapid wage growth or higher inflation in labor-intensive service sectors of the economy could lead more of them to support raising the benchmark interest rate next year above the 5% currently expected by investors .”

The 10-year Treasury yield jumped to 3.59% on Monday, recovering from last week’s sharp losses.

Earnings reports this week include Academy sports + outdoor life (ASO), AutoZone (AVOID), Broadcom (AVGO), Respect (ONE HUNDRED), Lululemon Athletica (LULU), Ollie’s Bargain Outlet (OLLI) and Toll Brothers (TOLLS).

The stock market today

On Monday, the Dow Jones Industrial Average lost 1.4%, or 482 points, and the S&P 500 fell 1.8%. The technology-heavy Nasdaq composite sold 1.9 percent. Among exchange-traded funds, Nasdaq 100 tracker Invesco QQQ Trust ( QQQ ) fell 1.7% and the SPDR S&P 500 ( SPY ) fell 1.8%.

Electric car giant Tesla (TSLA) traded down 6.4% on Monday. Among Dow Jones stocks, apple ( AAPL ) fell 0.8% and Microsoft (MSFT) fell 1.2% in today’s stock market.

Celsius (CELH), Chubb (CB), Dexcom (DXCM) and CLOTHES (KLAC)— as well as Dow Jones names larva (CAT), Chevron (CVX) and Home Depot (HD) — is among the best stocks to buy and watch.

Dexcom is an IBD Leaderboard stock. Caterpillar and Home Depot were featured in this week’s Stocks Near a Buy Zone column. Celsius was a recent IBD 50 Stocks To Watch pick and a New America stock. Caterpillar was Thursday’s stock of the day.

4 top growth stocks to buy and watch nowra stock market rally

Dow Jones Futures Today: Oil Prices

Ahead of Tuesday’s opening bell, Dow Jones futures rose 0.2% versus the real value, while S&P 500 futures rose 0.25%. The technology-heavy Nasdaq 100 futures rose 0.3% in relation to fair value. Keep in mind that overnight action in Dow Jones futures and elsewhere does not necessarily translate into actual trading in the next regular session.

US oil prices reversed from early gains to fall more than 3%. West Texas Intermediate futures traded just above $77 a barrel. Crude oil prices only rose after the EU’s sanctions against Russian crude oil took full effect.

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What to do in the stock market rally

Now is an important time to read IBD’s The Big Picture column with the stock market trending back in a “confirmed uptrend.”

While it’s certainly true that the S&P 500 and Nasdaq Composite remain in confirmed uptrends, the crop of actionable stocks has been disappointing. It has not been easy to increase exposure.

When it comes to new purchases, what kind of feedback do you get? Do new purchases carry over from purchase points? In this case, it’s okay to give them some space. But don’t be afraid to take partial profit if a gain reaches at least 10%. If new purchases go the wrong way, cut your losses when the stock is down 3% to 4%, rather than waiting for the 7% rule to trigger.

Light, flexible trading is the best course of action at the moment. If the uptrend begins to gain traction again, there will be many opportunities to increase exposure. And don’t be afraid to look for early entries, rather than waiting for a stock to reach a common buy point.

(Check out IBD stock lists like the IBD 50 and Stocks Near a Buy Zone for more stock ideas.)

Five Dow Jones Stocks to Buy and Watch Now

Dow Jones stocks to buy and watch: Caterpillar, Chevron, Home Depot

Dow Jones member Caterpillar is close to reclaiming the cup base’s 238 buy points, according to IBD MarketSmith pattern recognition, and is about 2% below the entry. CAT shares fell 1.5% on Monday.

CAT stock has a solid 94 out of a perfect 99 IBD Composite Rating, according to IBD Stock Checkup.

Energy giant Chevron fell 2.5% on Monday, falling further below its 182.50 buy point in a consolidation base.

Home improvement retailer Home Depot ended Monday about 4% below a cupbase’s 333.08 buy point after its stock fell 2.4%.

Top stocks to buy and watch: Celsius, Chubb, Dexcom, KLA

Energy drink maker Celsius fell 3.5% on Monday, snapping a three-day winning streak. Shares are trying to break out past a cup base buy point at 118.29 but are about 4% below the entry, according to IBD MarketSmith pattern recognition.

Insurance giant Chubb is trading just below a cup-with-handle 216.10 buy point on Monday after the session’s loss of 1.7%. The 5% buy range tops out at 226.91.

IBD Leaderboard stock Dexcom is nearing an alternative entry of 123.46 despite Monday’s 1.3% drop. Shares are about 5% off their last buy point.

New IBD long-term leader KLA continues to hold just below a cup-with-handle buy point of 392.60 amid a three-day losing streak, as shares fell 0.25% Monday. The RS line continues to hold true to new heights, a sign of leadership in the stock market.

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

Tesla shares

Tesla shares slid 6.4% on Monday, snapping a three-day winning streak and giving up all of last week’s gains.

In recent weeks, the stock has hit its lowest level since November 23, 2020, hitting a new 52-week low of 166.19. Since then, the stock has rebounded, but remains well below its 50- and 200-day moving average lines. Shares are around 55% of their 52-week high.

Dow Jones Leaders: Apple, Microsoft

Among the Dow Jones stocks, Apple fell 0.8% on Monday, but remains above its 50-day mark. The stock is more than 20% off its 52-week high.

Microsoft wobbled 1.2% on Monday, as shares continue to hold above the 50-day mark. The software giant is still about 27% off its 52-week high.

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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