The Dow Jones Industrial Average fell on Tuesday morning, as global markets struggled after a sudden change in monetary policy from the Bank of Japan. The Dow Jones industrials are on a four-day losing streak, with Walt Disney and Nike leading decliners. And the Tesla share saw its price target cut by several analyst firms on Tuesday.
Economic data due out on Tuesday includes consumer confidence and existing home sales. December’s consumer confidence index is expected to increase to a reading of 101.0 against November’s 100.2 reading. Meanwhile, the Econoday consensus number sees November existing home sales falling further, to an annual rate of 4.20 million from October’s 4.43 million. Both readings are due at 10 a.m. ET.
Hi there ( HEI ) rose 1.5% on Tuesday after the company posted better-than-expected quarterly earnings and sales results. General Mills ( GIS ) fell 4% despite beating Wall Street’s earnings and sales targets.
More earnings reports this week include Micron technology (MU) and Dow Jones shares Nike (THE).
Steel dynamics (STLD) will join the S&P 500 index and Super micro computer (SMCI) will join the S&P MidCap 400, effective before Thursday’s market open, according to S&P Dow Jones Indices. Steel Dynamics climbed 0.7%, while SMCI shares jumped 6.7% in morning trade.
Electric vehicle giant Tesla ( TSLA ) fell more than 3% Tuesday morning after multiple price target cuts from Daiwa, Evercore ISI and Mizuho. Dow Jones Technology Leaders apple (AAPL) and Microsoft (MSFT) was lower after today’s market opening.
IBD Leaderboard stock Neurocrine Life Sciences (NBIX), CLOTHES (KLAC), O’Reilly Auto Parts (ORLY) and United Rentals (URI) – as well as Dow Jones names larva (CAT), Home Depot (HD) and UnitedHealth Group (UNH) – is among the top stocks to consider for investor watchlists.
Neurocrine and United Rentals are IBD Leaderboard stocks. UnitedHealth was featured in last week’s Stocks Near a Buy Zone column. Caterpillar and United Rentals 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 0.2%, and the S&P 500 lost 0.4%. The technology-heavy Nasdaq composite was down 0.7% in morning action.
US trade largely resisted the selloff that hit markets across Asia on Monday, after the Bank of Japan doubled the yield ceiling on its 10-year bond to 5%. The move sent ripples through global bond markets and caused a sharp rise in the yen. Tokyo’s Nikkei 225 fell 2.6%, while Asia’s other leading markets ended largely lower.
European markets recovered from the early hit and were mixed near the middle of the session. U.S. Treasuries fell, sending the 10-year yield nine basis points higher to 3.66%, pointing to a third straight rally.
Among U.S. exchange-traded funds, Nasdaq 100 tracker Invesco QQQ Trust ( QQQ ) fell 0.6% and the SPDR S&P 500 ETF ( SPY ) fell 0.3% early Tuesday.
Meanwhile, US oil prices traded up less than 1% on Tuesday, but still on pace to extend Monday’s gains. West Texas Intermediate futures rose to nearly $76 a barrel in morning trading. Natural gas prices fell more than 5% in early action, heading for a third straight drop after plunging 11% on Monday.
Stock market rally under pressure
On Monday, technology stocks and small caps underperformed once again, with the Nasdaq composite down 1.5% and the Russell 2000 down 1.4%. The Dow Jones Industrial Average was the best performer, declining just 0.5%. The S&P 500 lost 0.8%, closing below its 50-day moving average for the second day in a row.
Monday’s The Big Picture column commented: “The fabled Santa Claus rally marks the period between Christmas and the first two trading days of 2023. The Dow Jones Industrial Average has averaged 1.38% for this period since 1950, while the S&P 500 has been in average 1.32%, according to data compiled by Dow Jones Market Data. Both indexes traded higher about 78% of the time. There is still no sign that buyers are willing to catch falling knives toward the end of the year, but skepticism may be high enough to ignite a few short hugs.”
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: Caterpillar, Home Depot, UnitedHealth
Dow Jones member Caterpillar continues to trade near a 239.95 buy point in a flat base, according to IBD MarketSmith pattern recognition, in the wake of Monday’s weak decline. The shares found support at the share’s 21-day exponential moving average, and the share’s relative strength is on its way to new highs. CAT shares rose on Tuesday.
CAT stock scores a strong 97 out of a perfect 99 IBD Composite Rating, according to IBD Stock Checkup.
Home improvement retailer Home Depot is about 4% below a cup-with-handle base’s 329.77 buy point after reversing last week’s breakout move. HD shares traded down 1.1% on Tuesday morning after Credit Suisse downgraded the stock from outperform to neutral, with the slowing housing market a key risk.
Healthcare UnitedHealth Group is tracking a flat base that has a buy point at 558.20. Shares are about 6% off their latest entry after giving up support near the 50-day line last week. The UNH share is now trying to stem the recent fall around the 200-day line. Shares rose 0.4% early Tuesday.
4 top growth stocks to watch right nowra stock market rally
Top stocks to watch: KLA, Neurocrine, O’Reilly, United Rentals
Chip equipment leader KLA has largely held firm amid the market’s weakness, and is about 2% below a cup-with-handle entry of 392.60 after Monday’s modest losses. KLA shares fell 1% on Tuesday.
IBD Leaderboard stock Neurocrine is trying to find support at its 50-day level amid a two-week losing streak. A strong pullback would be bullish for the stock’s immediate outlook and would likely lead to the formation of a new base. Meanwhile, a sharp break could mean the stock needs more consolidation. The NBIX share rose 0.9 percent on Tuesday.
O’Reilly Auto Parts is trying to find support at its 50-day line this 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. The ORLY share rose 0.1 percent on Tuesday.
United Rentals remains below a 368.04 buy point in a cup-with-handles pattern. Shares are about 5% below the buy point, and further weakness will trigger the 7%-8% stop loss rule. URI shares rose 0.1% on Tuesday.
Stocks to watch
These are five top stocks to watch in today’s stock market, including three Dow Jones leaders.
|company name||Symbol||Right point of purchase||Type of base|
|CLOTHES||(CLICK)||392.60||Cup with handle|
|United Rentals||(URI)||368.04||Cup with handle|
|Home Depot||(HD)||329.77||Cup with handle|
Source: IBD data as of December 19, 2022
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Tesla shares fell as much as 2.9% on Monday before paring losses to just 0.2%. Shares fell more than 3% on Tuesday morning, as the stock saw its price target cut at Daiwa, Evercore ISI and Mizuho. TSLA stock hit a new 52-week low of 144.17.
Daiwa lowered the target from 240 to 177, partly to the “Twitter distraction”. Evercore cut its target from 300 to 200, citing weaker demand. And Mizuho lowered its target from 330 to 285, due to a challenging global auto market.
On Monday, TSLA stock hit its lowest level since November 2020. Shares closed about 63% off their 52-week high.
Dow Jones Leaders: Apple, Microsoft
Among the Dow Jones stocks, Apple shares sold off 1.6% on Monday, hitting their lowest level since mid-June. AAPL stock finished close to a 52-week low set on June 16 at 129.04. The stock is about 27% lower than its 52-week high. The shares fell 1.4 percent on Tuesday.
Microsoft fell 1.7% on Monday, as shares looked to find support around its 50-day line amid a three-day losing streak. The software giant is still about 30% off its 52-week high. MSFT stock was down 0.1% 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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