Dow Jones falls after housing data; Tesla plunges into a reduced production plan

The Dow Jones Industrial Average turned lower on Tuesday, after an early dose of economic data launched the year’s short, final trading week. China-based stocks rose as the nation further eased its Covid restrictions. Tesla shares plunged more than 6% after Reuters reported that the electric car giant plans to run a reduced production schedule at its Shanghai factory in January.


Tuesday’s economic data includes two housing reports, with the Case-Shiller home price index and the FHFA home price index — both out at 9 a.m. ET — along with the Dallas Fed Manufacturing Survey out at 10:30 a.m. ET.

October’s Case-Shiller home price index came in better than estimates, but still fell 0.5% after September’s decline of 1.2%, and a year-over-year increase of 8.6%. Meanwhile, the FHFA’s home price index was flat for October, up 9.8% year-over-year.

Finally, the Dallas Fed Manufacturing Survey is expected to post -11.0 in December versus -14.4 last month.

On the earnings front, the schedule is bare this week heading into the final week of 2022, with Cal-Maine Foods (COOL) the only reporter on Wednesday after closing.

Southwest Airlines (LUV) fell more than 4% after the company canceled more than two-thirds of its flights Monday, with plans to cut schedule Tuesday and Wednesday due to winter storms.

EV giant Tesla ( TSLA ) plunged about 6% Tuesday. Dow Jones Technology Leaders apple (AAPL) and Microsoft (MSFT) traded lower after today’s market opening.

Medpace (MEDP), IBD Leaderboard stock Neurocrine Life Sciences (NBIX), O’Reilly Auto Parts (ORLY) and Texas Roadhouse (TXRH) – as well as Dow Jones names Amgen (AMGN) and larva (CAT) – is among the top stocks to consider for investor watchlists. Remember, the recent weakness in the market should keep investors on the defensive.

Neurocrine and Texas Roadhouse are IBD Leaderboard stocks. Caterpillar and Medpace were recent IBD Stock Of The Day companies.

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Dow Jones today: Oil prices, Treasury yields

After Tuesday’s opening bell, the Dow Jones Industrial Average was down 0.3%, while the S&P 500 lost 0.6%. The tech-heavy Nasdaq Composite fell 1.3% in morning action, with Tesla pulling hard to the downside as China names (TCOM), Pinduo duo (PDD) and (JD) recorded strong gains.

Among U.S. exchange-traded funds, Nasdaq 100 tracker Invesco QQQ Trust ( QQQ ) fell 1.3% and the SPDR S&P 500 ETF ( SPY ) fell 0.6% early Tuesday.

Chinese authorities said the country will end its mandatory quarantine requirement for incoming travelers starting January 8. Restrictions on the number of passengers and international flights will also be lifted. The latest step in China’s easing of strict Covid restrictions comes even as infections are reported to be spreading rapidly through the country.

China-based solar manufacturers posted some of the strongest early moves, with JinkoSolar (JKS) and Daqo New Energy (DQ) each up more than 4%. Among ETFs, KraneShares CSI China Internet (KWEB) rose 2.3%. iShares MSCI China (MCHI) gained 2.2%.

The 10-year Treasury yield ticked up to 3.82% on Tuesday morning, with the 10-year yield rising after last week’s strong rally. Meanwhile, US oil prices traded up less than 1% on Tuesday, as West Texas Intermediate futures traded just above $80 a barrel in morning trade.

Stock market rally under pressure

On Friday, the Dow Jones Industrial Average rose 0.5%, and the S&P 500 rose 0.6%. The tech-heavy Nasdaq composite climbed just 0.2%.

Friday’s The Big Picture column commented: “The Nasdaq Composite also fought back from negative territory, though its gain was a meager 0.2%. The tech-heavy index ended up down 1.9% for the week, and it has work to do to break the downtrend. . It’s far underperformed the S&P 500 this year, giving up nearly 34%.”

Now is an important time to read IBD’s The Big Picture column amid ongoing stock market volatility.

Five Dow Jones Stocks to Buy and Watch Now

Dow Jones stocks to watch: Amgen, Caterpillar

Drugmaker Amgen continues to track a flat base amid a three-week losing streak. And shares are below the 50-day mark after heavy losses. For now, the correct buy point is 296.77, but the stock needs to recover the 50 days first. AMGN shares traded 0.6% higher on Tuesday.

Dow Jones member Caterpillar broke out past a 239.95 buy point in a flat base last week, according to IBD MarketSmith pattern recognition, and just a few cents below the entry after Friday’s advance. Bullishly, the stock’s relative strength line, an important technical indicator, is at new heights. The CAT share rose 0.2 percent on Tuesday.

CAT stock scores a strong 98 out of a perfect 99 IBD Composite Rating, according to IBD Stock Checkup. The Composite Rating is designed to help investors easily find top growth stocks.

4 top growth stocks to watch right nowra stock market rally

Top stocks to watch: Medpace, Neurocrine, O’Reilly, Texas Roadhouse

Medpace bounced sharply from its 50-day line last week, with a gain of 3.3%. The stock rose 0.7% on Friday to extend a winning streak to four sessions. For now, the correct buy point is 235.82, but an earlier entry of 220.09 is also in play. The MEDP share fell 0.3 percent on Tuesday.

IBD Leaderboard stock Neurocrine fell 1.7% Friday, ending a five-day winning streak that saw the biotech leader find support at its 50-day level. A strong pullback is bullish for the stock’s immediate outlook, and the stock is likely forming the right side of a new base. The NBIX share fell 0.1 percent on Tuesday.

O’Reilly Auto Parts also found much-needed support at its 50-day line last week and remains just above a 750.98 flat-base entry. A big bounce off the 50-day line could provide a follow-on entry point, but the market rally is under pressure right now, increasing the risk of buying stocks. A new base is likely to form, which will offer a new entry in the near future. The ORLY share rose 0.5 percent on Tuesday.

Texas Roadhouse shows a new buy point at 101.85 in a flat base, but is now consolidating below its 50-day line. The IBD Leaderboard stock will try to recover the main benchmark in the coming sessions, and the current two-day winning streak is a promising start. TXRH stock traded slightly higher on Tuesday morning.

Stocks to watch

These are four top stocks to watch in today’s stock market, including two Dow Jones leaders.

company name Symbol Right point of purchase Type of base
Medpace (MEDP) 235.82 Consolidation
Texas Roadhouse (TXRH) 101.85 Flat base
larva (CAT) 239.95 Flat base
Amgen (AMGN) 296.77 Flat base
Source: IBD data as of December 27, 2022

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Tesla shares

Tesla shares fell another 2% on Friday, extending a losing streak to six sessions and hitting another 52-week low. Last week, Tesla stock plunged 18% to hit a new 52-week low of 121.02. Shares closed about 69% off their 52-week high.

Shares extended losses on Tuesday morning, plunging another 6% after Reuters reported that Tesla extended production cuts that began this month into next year. Tesla stock hit a new low, trading as low as 114.75.

Tesla reportedly halted production at the Shanghai factory on Saturday, accelerating its plan to stop production at the factory at the end of December.

Dow Jones Leaders: Apple, Microsoft

Among the Dow Jones stocks, Apple shares fell 0.3% on Friday, closing just shy of a 52-week low set on June 16 at 129.04. The stock is about 28% lower than its 52-week high. The share lost 1.7 percent on Tuesday.

Microsoft shares rose 0.2% on Friday, but remain below their 50-day line after last week’s 2.4% decline. The software giant is still about 30% off its 52-week high. MSFT stock was down 0.9% early Tuesday.

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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