Dow Jones dives nearly 500 points on China Covid protests, Fed official comments

Dow Jones futures were little changed before Tuesday’s open after the Dow Jones Industrial Average sold off nearly 500 points on Monday. Investors will soon turn their attention to Fed Chair Jerome Powell’s Wednesday speech, while key inflation data is due on Thursday.


Monday’s weakness in the stock market was due to a combination of the widespread Covid-19 protests in major cities in China and St. Louis Federal Reserve President Jim Bullard’s comments on interest rates.

In a webcast interview with MarketWatch, Bullard responded to a question about how long he expects Fed rates to stay in the 5% to 7% range, saying “I think we’re going to have to stay there through 2023 and into 2024. “

Bullard believes that markets are still underestimating the extent to which the Fed will need to keep policy tight to curb inflation. Traders place a 72% chance of a 50 basis point rate hike, down from 80% a week ago, in the central bank’s upcoming meeting, according to CME’s FedWatch Tool.

Earnings reports this week include CrowdStrike (CRWD), Dollar General (DG) and Intuit (INTU). Also included is the Dow Jones stock Salesforce (CRM), along with Snowflake (SNOW), Ulta beauty (ULTA) and Workday (WDAG).

The stock market today

On Monday, the Dow Jones Industrial Average lost 1.45%, or 497 points, and the S&P 500 fell 1.5%. The technology-heavy Nasdaq composite sold 1.6 percent. Among exchange-traded funds, Nasdaq 100 tracker Invesco QQQ Trust ( QQQ ) fell 1.5% and the SPDR S&P 500 ( SPY ) fell 1.6%.

Solar shares sold off sharply on Monday, as an analyst downgrade of First Solar (FSLR) affected the rest of the industry. FSLR stock fell 3.4% after JPMorgan downgraded the stock from overweight to neutral due to the stock’s strong performance in recent weeks. Array technologies (ARRY) and Shoals Technologies (SHLS) fell 7.1% and 6.4% respectively. Array Technologies gave up a recent buy point, while SHLS stock fell back into buy territory above a 28.57 buy point.

Electric car giant Tesla (TSLA) traded a fraction higher on Monday. Among Dow Jones stocks, apple (AAPL) traded down 2.6% and Microsoft (MSFT) fell 2.3% in today’s stock market.

IPO Leader Array Technologies, IBD Leaderboard Stock Arista Networks (A WEB), Celsius (CELH) and Chubb (CB) – as well as Dow Jones names Boeing (BA), larva (CAT) and Chevron (CVX) — is among the best stocks to buy and watch.

Arista Networks is an IBD Leaderboard stock and was a recent IBD Stock Of The Day. Boeing is an IBD SwingTrader stock and was one of four managers featured in this week’s Stocks Near a Buy Zone column. Celsius was Monday’s IBD 50 Stocks To Watch pick.

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

Dow Jones Futures Today: Treasury Yields, Oil Prices

Ahead of Tuesday’s opening bell, Dow Jones futures, S&P 500 futures and tech-heavy Nasdaq 100 futures were little changed relative 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.

The 10-year Treasury yield ticked up to 3.7% on Monday, staying near recent lows. On Friday, the 10-year Treasury yield closed at 3.69%, the lowest close since Oct. 4. Meanwhile, US oil prices turned higher after hitting their lowest level since December 2021. West Texas Intermediate futures traded around $77 a barrel.

IBD’s latest newsletter, MarketDiem, brings you actionable ideas for stocks, options and crypto straight to your inbox.

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 okay to put money to work in the current stock market, keep your exposure on the conservative side with small positions to start. Just because the stock market is in a confirmed uptrend doesn’t mean you have to be 100% invested. And don’t be afraid to take a 10% profit if you have it, given the choppy nature of the market.

(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: Boeing, Caterpillar, Chevron

Aircraft maker Boeing fell 3.7% on Monday, falling back below a cup-base buy point of 173.95. Look for a decisive replay of this entry before considering a purchase of Boeing stock.

Dow Jones member Caterpillar is close to reclaiming the cup base’s 238 buy points, according to IBD MarketSmith pattern recognition, and is less than 2% below the entry. CAT shares, with heavy exposure to China, fell 1.4% on Monday.

CAT stock boasts an impressive 96 out of a perfect 99 IBD Composite Rating, according to IBD Stock Checkup.

Energy giant Chevron fell 2.9% on Monday, giving up its 182.50 buy point in a consolidation base.

Top stocks to buy and watch: Array, Arista, Celsius, Chubb

Solar leader and IPO Array Technologies gave up its 22.40 buy point in a cup with handles during Monday’s drop, according to IBD MarketSmith pattern recognition. Shares are about 3% below the listing. Further weakness will trigger the 7%-8% loss reducing sell rule.

IBD Leaderboard stock Arista Networks remains in buy territory above a choppy base’s 132.97 buy point despite Monday’s 1.5% loss.

Energy drink maker Celsius reversed down 1.3% on Monday, as the stock continues to form a cup base with a buy point at 118.29. Monday’s weakness could be the start of a potential handle that would offer a lower entry.

Chubb is trading just below a cup-with-handle 216.10 buy point on Monday after the session’s small losses. The 5% buy range will top out at 226.91.

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

Tesla shares

Tesla shares rose on Monday, but remain well below their 50- and 200-day moving average lines. Shares are around 55% of their 52-week high.

Last week, the stock hit its lowest level since November 23, 2020, hitting a new 52-week low of 166.19.

Dow Jones Leaders: Apple, Microsoft

Among Dow Jones stocks, Apple shares sold off 2.6% on Monday, falling below their 50-day support level. Apple iPhone Pro production could fall short by 6 million units due to civil unrest and Covid restrictions in China, according to reports. The stock is more than 20% off its 52-week high.

Bloomberg reported that unrest at the Foxconn plant in Zhengzhou could trigger a 6 million-unit shortage in iPhone Pro production in 2022. And that number could grow if Covid restrictions are extended a few more weeks, according to sources. The Zhengzhou factory produces the vast majority of iPhone 14 Pro and Pro Max smartphones.

Microsoft skidded 2.3% on Monday, falling for a second session in a row. Shares continue to hold above the 50-day mark. The software giant is still about 30% 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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