Dow Jones futures were up slightly after the close, along with S&P 500 futures and Nasdaq futures. The stock market began 2023 much like it ended last year, with flashes of strength followed by reversals in major indices and leading stocks.
X
Apple stock slid to fresh bear market lows on Tuesday, falling below a $2 trillion valuation on reports Apple (AAPL) has cut supplier orders for its MacBook, AirPod and Apple Watch products.
Tesla (TSLA) tumbled to bear-market lows after record fourth-quarter shipments that still missed lowered outlook, on concerns of even greater demand worries in 2023.
Investors should wait for clear signs of a sustained stock market rally before making any new purchases.
LLY stock, Dow Jones giant Caterpillar (CAT) and recent IPO Mobileye (MBLY) are three stocks worth watching. MBLY stock is on the IBD 50. Eli Lilly was Tuesday’s IBD stock of the day.
The video embedded in the article discussed Tuesday’s market action, analyzing CAT stock, Eli Lilly and Mobileye.
Dow Jones futures today
Dow Jones futures rose 0.1% from fair value. S&P 500 futures were up 0.2% and Nasdaq 100 futures were up 0.35%.
The 10-year government bond yield fell 5 basis points to 3.74%.
On Wednesday at 10:00 am ET, investors will receive the December ISM manufacturing index and jobs from the November JOLTS survey. These are precursors to Friday’s December jobs report.
Keep in mind that overnight action in Dow futures and elsewhere doesn’t necessarily translate to actual trading in the next regular trading session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Exchange Tuesday
The stock market opened higher on Tuesday but quickly moved south before significantly paring losses in late afternoon trading.
The Dow Jones Industrial Average closed just a fraction in trading on Tuesday. The S&P 500 index fell 0.4%, with Tesla stock by far the worst performer. The Nasdaq Composite lost 0.8%. The small cap Russell 2000 fell 0.6%.
US crude prices fell 4.2% to $76.93 a barrel after three straight weeks of gains. Natural gas prices plunged 10.9%, extending a major selloff of recent weeks.
The 10-year government bond yield slipped 9 basis points to 3.79%, despite being below the intraday low of 3.72%.
ETFs
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) lost 1.1%, while the Innovator IBD Breakout Opportunities ETF (BOUT) lost 0.8%. The iShares Expanded Tech-Software Sector ETF (IGV) edged up 0.2%. The VanEck Vectors Semiconductor ETF (SMH) is down 0.8%.
The SPDR S&P Metals & Mining ETF (XME) was down 1.4% and the Global X US Infrastructure Development ETF (PAVE) was flat. The US Global Jets ETF (JETS) fell 0.6%. The SPDR S&P Homebuilders ETF (XHB) is up 1.3%. The Energy Select SPDR ETF (XLE) slipped 3.5% and the Financial Select SPDR ETF (XLF) edged up 0.35%. The Health Care Select Sector SPDR Fund (XLV) fell 0.3%.
Mirroring more speculative story stocks, ARK Innovation ETF (ARKK) is down 2.5%, not far from last week’s five-year low. The ARK Genomics ETF (ARKG) lost 2.1%. Tesla stock is a key position in Ark Invest’s ETFs.
The five best Chinese stocks to watch right now
Apple stock
Apple shares fell 3.7% to $125.07 on Tuesday, breaking below last week’s bear market low to its worst level since June 2021.
AAPL stock, which topped 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 market cap of $1.988 trillion. It’s still the most valuable company in the world.
A giant Foxconn iPhone factory in China is back at 90% capacity, Bloomberg reported. However, Apple is cutting orders for AirPods, MacBooks and Apple Watch products, according to a report.
Tesla stock
Tesla shares fell 12.2% to 108.10, falling below last week’s bear market low and hitting its lowest level since August 2020. It was the electric vehicle giant’s worst one-day loss in more than two years. TSLA stock plunged 37% back in December and 65% for the whole of 2022.
Tesla deliveries hit a record high in the fourth quarter, but fell well short of lowered estimates and actual production for the second straight quarter. And that’s despite big year-end stimulus, particularly in China and the US, to boost sales.
The outlook for 2023 could be bleak as new Tesla EV orders are well below the current pace of deliveries.
Bernstein’s Toni Sacconaghi wrote on Sunday, “Tesla’s Q4 annual order rate, including significant discounts, was only ~1 million units, and the company’s goal is to sell nearly 2 million units in 2023, excluding new models.”
With backlogs running low, Tesla may need price cuts or stimulus well in excess of year-end offerings just to maintain its fourth-quarter delivery pace in 2023. However, this could mean a big impact on Tesla’s profit margins.
Tesla vs. BYD: EV giants vie for the crown, but which is the better buy?
Stock market analysis
The stock market started 2023 strong – for 12 minutes. After that, major indices quickly retreated despite making intraday lows.
The Dow Jones reversed lower after briefly rising above its 50-day and 21-day moving averages. The S&P 500 and Russell 2000 turned down from the 21-day moving average.
The Nasdaq reversed after approaching its 21-day moving average.
Tesla stocks and Apple were the big detractors for the major indices. But there was a broad retreat. Energy stocks were big losers with underlying prices.
Many interesting stocks opened higher but then rebounded with the major indices like Mobileye, Celsius (CELH) and Medpace (MEDP).
Eli Lilly and Caterpillar held up relatively well, along with related defensive growth stocks. LLY stock is testing its 50-day/10-week moving average.
Stocks focused on China, especially internets such as Pinduo (PDD) and Macau Casino plays like Las Vegas sand (LVS), bucked the trend but also came off highs.
The major indices eventually limited their losses, but reversals from key technical levels were not encouraging. Many stocks fell hard and never recovered. The stock market is in a rally attempt thanks to last Thursday’s gain, but this looks like a one-day rally.
The market is in a correction with the Nasdaq not far from bear market bottoms. Even if the rally attempt gains momentum and hosts a follow-up day in the next one to two weeks, there are still a few technical hurdles to be overcome.
Time the market with IBD’s ETF market strategy
What now
It’s not a good time to take up new positions. It is a market correction where the major indices, sectors and individual sectors are prone to reversals.
Don’t be tempted by momentary market breakouts that propel stocks into buy territory. A number of stocks flashed buy signals for a few minutes Tuesday, but faded the fastest. Even though the major indices ended with modest losses, an investor who jumped into MBLY stock just before Tuesday’s open could now be sitting with a 10% loss.
Bottom Line: Don’t trade like the market is in an uptrend until the market is actually in an uptrend.
Nonetheless, many good stocks continue to trade near buy points as the market rally attempt may continue in the coming days. So build your watch lists and stay engaged.
Read The Big Picture every day to keep up to date with market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
YOU MAY ALSO LIKE:
Why this IBD tool makes finding top stocks easy
Catch the next big winner stock with MarketSmith
Want to make quick profits and avoid big losses? Try SwingTrader
The best growth stocks to buy and watch
IBD Digital: Unlock IBD’s premium stock lists, tools and analysis today