Dow Jones Futures Rise With Key Data Due After Market Hit Resistance To Start 2023

Dow Jones futures rose slightly early Wednesday, along with S&P 500 futures and Nasdaq futures, with key economic data on tap. Treasury yields and crude oil fell.




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The stock market began 2023 as it ended last year, with flashes of strength on Tuesday followed by reversals in major indexes and major stocks.

Apple stock on Tuesday skidded to new bear market lows and fell below a $2 trillion valuation on reports that Apple (AAPL) has reduced orders to suppliers for its MacBook, AirPod and Apple Watch products.

Tesla (TSLA) fell to record lows in the market after record fourth-quarter shipments that have not yet lost sight of lower, with concerns about even greater demand concerns in 2023.

Investors should wait for clear signs of a sustained stock market rally before making new purchases.

LLY stock, Dow Jones giant Caterpillar (CAT) and recent IPO Mobileye (MBLY) are three stocks to watch. MBLY stock is on the IBD 50. Eli Lilly was the IBD of the Day on Tuesday.

The video embedded in the article discussed Tuesday’s market action and analyzed CAT, Eli Lilly and Mobileye stock.

Dow Jones Futures Today

Dow Jones futures rose 0.25% against fair value. S&P 500 futures rose 0.3% and Nasdaq 100 futures advanced 0.5%.

Apple and Tesla rose slightly in premarket trading.

UBS grade of Microsoft (MSFT) on Azure and Office concerns knicked the software giant Dow. UBS also gave a Dow component Honeywell (HON) double downgrade to sell. Another component of the Dow, Salesforce.com (CRM), increased modestly on a restructuring plan that will cut 10% of staff.

The 10-year Treasury yield fell 10 basis points to 3.69%.

Crude oil futures fell more than 3%. Natural gas tried to stop after a big selloff.

At 10 am ET on Wednesday, investors will get the December ISM manufacturing index as well as job openings from the November JOLTS survey. The Fed’s minutes from the December policy meeting are due at 2 pm ET. Those are precursors to Friday’s December jobs report.

Hong Kong’s Hang Seng rose 3.2%, continuing to win on hopes that Covid infections have abated. Chinese internet stocks have soared, partly on signs that regulators are loosening up Alibaba (BABA) and its affiliate Ant Group.

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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 stocks in the stock market rally on IBD Live


Stock Market Tuesday

The stock market on Tuesday opened higher but quickly headed south before paring losses significantly in late afternoon trading.

The Dow Jones Industrial Average closed up just a fraction in Tuesday’s stock trading. The S&P 500 index gave up 0.4%, with Tesla stock by far the worst performer. The Nasdaq composite fell 0.8%. The small-cap Russell 2000 gave up 0.6%.

US crude oil prices fell 4.2% to $76.93 a barrel, after three straight weekly gains. Natural gas prices fell 10.9%, extending a big selloff in recent weeks.

The 10-year Treasury yield fell 9 basis points to 3.79%, albeit at an intraday low of 3.72%.

ETFs

Among the top ETFs, the Innovator IBD 50 ETF (FFTY) sank 1.1%, while the Innovator IBD Breakout Opportunities ETF (BOUT) gave up 0.8%. The iShares Expanded Tech-Software Sector ETF ( IGV ) rose 0.2%. The VanEck Vectors Semiconductor ETF (SMH) retreated 0.8%.

SPDR S&P Metals & Mining ETF (XME) fell 1.4% and the Global X US Infrastructure Development ETF (PAVE) was flat. US Global Jets ETF (JETS) fell 0.6%. The SPDR S&P Homebuilders ETF (XHB) rose 1.3%. The Energy Select SPDR ETF (XLE) skidded 3.5% and the Financial Select SPDR ETF (XLF) rose 0.35%. The Healthcare Select Sector SPDR Fund ( XLV ) was down 0.3%.

Reflecting a more speculative stock history, ARK Innovation ETF ( ARKK ) lost 2.5%, not far from last week’s five-year low. ARK Genomics ETF (ARKG) shed 2.1%. Tesla stock is a major holding in Ark Invest’s ETFs. Cathie Wood’s ARK bought a lot of TSLA shares in the past three months, as the EV giant slumped.


Five Best Chinese Stocks To Watch Now


Apple storage

Apple stock fell 3.7% to 125.07 on Tuesday, falling below last week’s bear market low to the worst levels since June 2021.

AAPL stock, which reached an intraday valuation of $3 trillion in early 2022, has now fallen below $2 trillion for the first time since March 2021. Apple stock closed Tuesday with a limit of market of $ 1.988 trillion. That is still the most valuable company in the world.

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Foxconn’s giant iPhone factory in China is back up to 90% of capacity, Bloomberg reported. But Apple is reducing orders for AirPods, MacBooks and Apple Watch products.

AAPL stock rose early Wednesday even as Wedbush cut its price target to 175 from 200.

Tesla stock

Tesla stock fell 12.2% to 108.10, falling below last week’s market low, and hitting its worst levels since August 2020. It was the EV giant’s worst one-day loss in more than two years. TSLA stock has already crashed 37% in December and 65% for all of 2022.

Tesla deliveries hit a record high in Q4, but for the second quarter in a row they fell well short of lowered estimates and actual production. This was despite big year-end incentives, especially in China and the United States, to boost sales.

The outlook could be grim for 2023, with new Tesla EV orders well below the current pace of delivery.

Bernstein’s Toni Sacconaghi wrote on Sunday “Tesla’s annual order rate in Q4 including a significant discount was only ~1M units, and the company’s target is to sell close to 2M units in 2023, without new models.”

With a low backlog, Tesla may need price cuts or far higher incentives than year-end deals just to maintain the Q4 2023 delivery pace. But that could mean big hits to Tesla’s profit margins.


Tesla vs. BYD: EV Giants Vie For Crown, But Which Is The Better Buy?


Stock Market Analysis

The stock market started 2023 strong – for 12 minutes. After that, the main indices retreated quickly, although they came off the intraday lows.

The Dow Jones reversed lower after briefly breaking above its 50-day and 21-day lines. LS&P 500 and Russell 2000 rebounded lower than the 21-day line.

The Nasdaq reversed after coming close to its 21-day line.

Tesla and Apple stock were the big drags on the major indexes. But there was a broad-based retreat. Energy stocks were big losers in underlying prices.

Many interesting stocks opened higher but then turned lower with the major indexes, such as Mobileye, Celsius (CELH) and Medpace (MEDP).

Eli Lilly and Caterpillar, along with related defensive growth names, held up relatively well. LLY stock is testing its 50-day/10-week lines.

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Stocks focused on China, notably internets like Pinduoduo (PDD) and Macau casino plays like Las Vegas Sands (LVS), bucked the trend, but also broke out of the highs.

The major indices ultimately limited their losses, but reversals from key technical levels were not encouraging. Many stocks fell hard, and did not come back. The stock market is trying to rally thanks to last Thursday’s gains, but that looks like a one-day bounce.

The market is in a correction, with the Nasdaq not that far from market lows. Even if the rally attempt gains momentum and makes a follow-up day during the next week or two, there will still be a number of technical obstacles that must be removed.


Time The Market With IBD’s ETF Market Strategy


What To Do Now

Not a good time to be taking new positions. It is a market correction with major indices, sectors and individual sectors prone to reversals.

Do not be tempted by momentary bursts of the market that push stocks into buying zones. For a few minutes Tuesday, a number of stocks flashed buy signals, but the fastest faded. Even though the major indexes finished with modest losses, an investor jumping into MBLY stock near Tuesday’s open could now be sitting on a 10% loss.

Bottom line: Do not act as if the market is in an uptrend until the market is actually in an uptrend.

Anyway, many good stocks continue to trade close to the buy points, while the attempt of a market rally can carry out a follow-up in the coming days. So build your watch lists and stay engaged.

Read The Big Picture daily to stay in sync with market direction and key stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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