After-hours trading in the Dow Jones futures, S&P 500 futures, and Nasdaq futures showed little movement. Similar to how it closed the previous year, the major indexes and top stocks experienced strong spikes followed by declines.
On Tuesday, Apple shares plunged to new bear market lows. They fell under the $2 trillion value barrier on news that the company (AAPL) had reduced orders to suppliers for its MacBook, AirPod, and Apple Watch devices.
Following record fourth-quarter deliveries that fell short of analysts’ expectations and worries about even worse demand difficulties in 2023, Tesla (TSLA) tumbled to bear market lows.
Before making additional purchases, investors should watch for definite indicators of a long-term stock market rally.
Three equities worth keeping an eye on are the Dow Jones juggernaut LLY stock, Caterpillar (CAT), and the newly public Mobileye (MBLY). IBD 50 includes the MBLY stock. The IBD Stock Of The Day on Tuesday was Eli Lilly.
Today’s Dow Jones Futures:
Compared to fair value, Dow Jones futures somewhat declined. The Nasdaq 100 futures increased 0.2%, while S&P 500 futures barely changed.
The yield on the 10-year Treasury decreased by six basis points to 3.73%.
Investors will receive the December ISM manufacturing index and job openings from the November JOLTS survey at 10 a.m. ET on Wednesday. These are antecedents to the December jobs report on Friday.
Don’t forget that overnight trade in the Dow futures and elsewhere may not necessarily transfer into actual trading during the following regular stock market session.
Tuesday’s stock market:
Tuesday’s stock market started higher but immediately began to decline before sharply cutting losses in late afternoon trade.
Tuesday’s stock market trade resulted in a slight decline in the Dow Jones Industrial Average’s closing price. The S&P 500 index dropped 0.4%, with Tesla stock performing worst. Nasdaq composite prices fell 0.8%. The Russell 2000 small-cap index lost 0.6%.
After three consecutive weekly advances, the price of U.S. crude oil fell 4.2% to $76.93 per barrel. Likewise, prices for natural gas fell 10.9%, continuing a sharp decline in recent weeks.
The 10-year Treasury yield decreased by nine basis points to 3.79%, albeit it is still off the intraday low of 3.72%.
ETFs:
The Innovator IBD 50 ETF (FFTY), one of the finest ETFs, fell 1.1%, and the Innovator IBD Breakout Opportunities ETF (BOUT) lost 0.8%. A 0.2% increase was seen in the iShares Expanded Tech-Software Sector ETF (IGV). VanEck Vectors Semiconductor ETF (SMH) lost 0.8% of its value.
The Global X U.S. Infrastructure Development ETF (PAVE) was unchanged, and SPDR S&P Metals & Mining ETF (XME) was down 1.4%. U.S. Global Jets ETF (JETS) lost 0.6% of its value. XHB, the SPDR S&P Homebuilders ETF, increased by 1.3%. The Financial Select SPDR ETF (XLF) nudged up 0.35%, while the Energy Select SPDR ETF (XLE) slid 3.5%. Health Care Select Sector SPDR Fund (XLV) lost 0.3% of its value.
ARK Innovation ETF (ARKK) fell 2.5%, not far from last week’s five-year low, reflecting more speculative narrative equities. Likewise, the ARK Genomics ETF (ARKG) decreased by 2.1%. All of Ark Invest’s ETFs hold a significant amount of Tesla stock.
The stocks of Apple:
Tuesday saw a 3.7% decline in Apple shares to $125.07, breaking below the bear market bottom set last week and reaching its lowest point since June 2021.
AAPL stock had fallen below $2 trillion for the first time since March 2021, when it reached an intraday worth of $3 trillion. The market value of Apple stock as of Tuesday’s close was $1.988 trillion. That business continues to be the most valuable in the world.
It has been reported that a giant Foxconn iPhone factory in China is back up to 90% capacity. However, a report claims that Apple is decreasing orders for AirPods, MacBooks, and Apple Watches goods.
The stocks of Tesla:
Tesla stock fell 12.2% to 108.10, below the bear market low set last week, and reached its lowest levels since August 2020. The E.V. behemoth had not lost so much in a single day in more than two years. The price of TSLA stock dropped 37% in December and 65% overall in 2022.
Tesla deliveries reached a record high in Q4, but for the second consecutive quarter, they fell far short of actual production and revised projections. That was despite significant year-end sales incentives, particularly in China and the U.S.
With new Tesla EV orders much below the current delivery rate, the picture for 2023 could be bleak.
Tesla’s annual order run rate in Q4 was just about 1 million units, Toni Sacconaghi of Bernstein said on Sunday, “yet the company’s objective is to sell close to 2 million vehicles in 2023, with no new models.”
Since backlogs are running low, Tesla may require price reductions or incentives substantially above the year-end deals just to sustain Q4’s delivery pace in 2023. But Tesla’s profit margins might take a significant hit as a result.
Analysis of the stock market:
For 12 minutes, the stock market had a solid start in 2023. After that, the major indices swiftly declined despite coming off intraday lows.
The Dow Jones momentarily crossed its 50-day and 21-day lines before turning downward. From the 21-day line, the S&P 500 and Russell 2000 reversed below. The Nasdaq turned around when it approached its 21-day line.
The two biggest losers on the major indices were Tesla shares and Apple. After that, however, there was a widespread retreat. Concerning prices, energy stocks suffered severe losses.
Many attractive stocks, including Mobileye, Celsius (CELH), and Medpace, started the day higher before reversing course and closing below the significant indices (MEDP).
Along with other names associated with defensive growth, Eli Lilly and Caterpillar fared reasonably well. The 50-day/10-week lines of the LLY stock are being tested.
A few stocks focused on China, particularly online companies like Pinduoduo (PDD) and Macau gaming companies like Las Vegas Sands (LVS), defied the general trend but also experienced a decline.
Although the major indices eventually curbed their losses, the reversals from significant technical levels weren’t promising. As a result, many stocks saw severe declines and failed to recover. Nevertheless, thanks to last Thursday’s gain, the stock market is attempting a rally, although it appears to be a one-day bounce.
The Nasdaq is not far from bear market lows and is in a slump. There would still be several technical obstacles to overcome even if the rally effort picks up steam and conducts a follow-through day over the following week or two.
Steps to Take:
It’s not a good idea to start new jobs right now. The major indices, sectors, and individual sectors are vulnerable to reversals during this market correction.
Avoid being seduced by brief market spikes that cause stocks to move into buy zones. For instance, Tuesday saw a few equities flash buy signals for a short period, but the majority immediately faded. So even though the major indices closed the day with small losses, an investor who bought MBLY stock right when it opened on Tuesday may now be sitting with a 10% loss.
- Published By Team Hongkong Journalist
