The Dow Jones Industrial Average reversed higher on Tuesday morning as global markets struggled following a sudden change in monetary policy by the Bank of Japan. Dow Jones Industrialists are on a four-day losing streak, with Walt Disney and Nike leading the declines. And Tesla stock saw its target price cut at several analyst firms on Tuesday.
Economic data due out Wednesday includes consumer confidence and existing home sales. The December consumer confidence index is expected to climb to 101.0 from 100.2 in November. Meanwhile, Econoday’s consensus figure sees November existing home sales fall further, to an annualized rate of 4.20 million from October’s 4.43 million. Both statements are due out at 10 a.m. ET.
steel dynamics (STLD) will join the S&P 500 index and super microcomputer (SMCI) will join the S&P MidCap 400, effective before Thursday’s market open, according to the S&P Dow Jones Indices. Steel Dynamics climbed 0.7%, while SMCI stock jumped 6.7% in morning trading.
Electric vehicle giant You’re here (TSLA) fell more than 3% on Tuesday morning after several price target cuts from Daiwa, Evercore ISI and Mizuho. Dow Jones Technology Leaders Apple (AAPL) and Microsoft (MSFT) were lower after today’s stock market open.
IBD classification Stock Neurocrine Biosciences (NBIX), KLA (KLAC), O’Reilly Auto Parts (ORLY) and United rentals (URI) – as well as the Dow Jones names caterpillar (CAT), Home deposit (High Definition) and UnitedHealth Group (A H) – are among the most important stocks to consider for investor watchlists.
Neurocrine and United Rentals are IBD classification shares. UnitedHealth has been presented last week Stocks Near Buy Zone column. Caterpillar and United Rentals were recent IBD stock of the day companies.
Dow Jones Today: Oil Price, Treasury Yields
After Tuesday’s opening bell, the Dow Jones Industrial Average rose 0.2% and the S&P 500 rose 0.15%. The tech-heavy Nasdaq composite rose 0.1% in morning action.
U.S. trade largely resisted the selloff that hit Asian markets on Monday, after the Bank of Japan doubled the yield cap on its 10-year bond to 5%. This decision caused repercussions in global bond markets and caused the yen to rise sharply. Tokyo’s Nikkei 225 fell 2.6%, while other major Asian markets ended lower overall.
European markets recovered on the first hit and became mixed towards the mid-term. US bonds fell, pushing the 10-year yield up nine basis points to 3.66%, signaling a third consecutive rally.
Meanwhile, US oil prices rose less than 1% on Tuesday, but still have room to add to Monday’s gains. West Texas Intermediate futures hit nearly $76 a barrel in morning trading. Natural gas prices fell more than 5% at the start of the action, heading for a third consecutive decline after plunging 11% on Monday.
Stock market rally under pressure
Tech and small-cap stocks underperformed again on Monday, sending the Nasdaq composite down 1.5% and the Russell 2000 down 1.4%. The Dow Jones Industrial Average was the best, losing 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 legendary Santa Claus rally refers to the period between Christmas and the first two trading days of 2023. The Dow Jones Industrial Average has averaged a gain of 1.38% for this period since 1950, while the S&P 500 averaged 1.32%, according to data compiled by Dow Jones Market Data.Both indices have traded higher about 78% of the time.There are still no signs that buyers are ready to catch falling knives at the end of the year, but the skepticism can be high enough to trigger a few small pressures.”
This is an important time to read IBD’s The Big Picture column amid ongoing stock market volatility.
Dow Jones stocks to watch: Caterpillar, Home Depot, UnitedHealth
Dow Jones member Caterpillar continues to trade near a buy point of 239.95 in a flat basis, according to IBD Pattern Recognition MarketSmith, following Monday’s slight decline. Stocks have found support at the stock’s 21-day exponential moving average and the stock’s relative strength line is reaching new highs. CAT stock rose slightly on Tuesday.
Home improvement retailer The Home Depot is around 4% below the 329.77 buy point for a base cup with handle after reversing last week’s breakout move. HD stock traded down 1.1% on Tuesday morning after Credit Suisse downgraded the outperforming stock to neutral, with a housing market slowdown a key risk.
Healthcare giant UnitedHealth Group is charting a flat base that has a buy point of 558.20. The shares are around 6% off the last entry after dropping support near their 50-day line last week. UNH stock is now trying to stem its recent drop around the 200-day line. Stocks added 0.4% early Tuesday.
Top stocks to watch: KLA, Neurocrine, O’Reilly, United Rentals
Chip equipment leader KLA mostly resisted market weakness and is about 2% below the 392.60 entry of a cup with handle after Monday’s modest loss. UCK shares fell 1% on Tuesday.
IBD classification Neurocrine stock is trying to find support at its 50-day level amid a two-week losing streak. A strong rally would be bullish for the stock’s immediate outlook and likely lead to the formation of a new base. Meanwhile, a strong breakout could mean the stock needs more consolidation. NBIX stock rose 0.9% on Tuesday.
O’Reilly Auto Parts is trying to find support at its 50-day line this week and remains squarely above a flat base entry of 750.98. A big bounce off the 50-day line could bring a follow-on entry point, but the uptrend in the market is currently under pressure, increasing the risk of buying stocks. ORLY shares rose 0.1% on Tuesday.
United Rentals remains squarely below a buy point of 368.04 in a cup with handle pattern. Stocks are about 5% below the buy point, and further weakness would trigger the 7% to 8% loss rule. URI store was up 0.1% on Tuesday.
Stocks to Watch
These are the top five stocks to watch in today’s stock market, including three leaders from the Dow Jones.
|Company Name||Symbol||Correct point of purchase||Basic Type|
|KLA||(KLAC)||392.60||Mug with handle|
|United rentals||(URI)||368.04||Mug with handle|
|Home deposit||(High Definition)||329.77||Mug with handle|
|UnitedHealth||(A H)||558.20||Flat bottom|
Source: IBD data as of December 19, 2022
Tesla Stock fell 2.9% on Monday before narrowing losses to just 0.2%. Shares were down more than 3% on Tuesday morning as the stock saw its price target lower at Daiwa, Evercore ISI and Mizuho. TSLA stock hit a new 52-week low at 144.17.
Daiwa lowered its target from 240 to 177, partly due to “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 tough global auto market.
On Monday, TSLA stock hit its lowest level since November 2020. Shares closed around 63% off their 52-week high.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones Stocks, Apple shares fell 1.6% on Monday, hitting their lowest level since mid-June. AAPL stock ended just off its 52-week low, which was set on June 16 at 129.04. The stock is around 27% off its 52-week high. The shares traded down 1.4% on Tuesday.
Microsoft fell 1.7% on Monday as stocks sought to find support around their 50-day line amid a three-day losing streak. The software giant remains around 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 to learn more about growth stocks and the Dow Jones Industrial Average.
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