Stocks Reverse Higher; Tesla Falls On Price Target Cuts

The Dow Jones Industrial Average reversed higher Tuesday morning, as global markets struggled following a sudden monetary policy shift by the Bank of Japan. The Dow Jones industrials sit on a four-day losing streak, with Walt Disney and Nike leading the declines. And Tesla stock saw its price target slashed at multiple analyst firms Tuesday.

X

Economic data due out Wednesday include consumer confidence and existing home sales. December’s consumer confidence index is expected to edge higher to a reading of 101.0 vs. November’s 100.2 reading. Meanwhile, the Econoday consensus number sees November’s existing home sales falling further, to an annualized rate of 4.20 million vs. October’s 4.43 million. Both readings are due out at 10 a.m. ET.

Heico (HEI) rallied 1.5% Tuesday after the company posted better-than-expected quarterly earnings and sales results. General Mills (GIS) dropped 4% despite beating Wall Street’s earnings and sales targets.

More earnings reports this week include Micron Technology (MU) and Dow Jones stock Nike (NKE).

Steel Dynamics (STLD) will join the S&P 500 index and Super Micro Computer (SMCI) will join the S&P MidCap 400, effective prior to Thursday’s market open, according to S&P Dow Jones Indices. Steel Dynamics climbed 0.7%, while SMCI stock jumped 6.7% in morning trade.

Electric-vehicle giant Tesla (TSLA) dropped more than 3% Tuesday morning after multiple price-target cuts from Daiwa, Evercore ISI and Mizuho. Dow Jones tech leaders Apple (AAPL) and Microsoft (MSFT) were lower after today’s stock market open.

IBD Leaderboard stock Neurocrine Biosciences (NBIX), KLA (KLAC), O’Reilly Auto Parts (ORLY) and United Rentals (URI) — as well as Dow Jones names Caterpillar (CAT), Home Depot (HD) and UnitedHealth Group (UNH) — are 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.

IBD’s latest newsletter MarketDiem gives you actionable ideas for stocks, options and crypto right in your inbox

Dow Jones Today: Oil Prices, Treasury Yields

After Tuesday’s opening bell, the Dow Jones Industrial Average moved up 0.2%, and the S&P 500 rose 0.15%. The tech-heavy Nasdaq composite moved up 0.1% in morning action.

U.S. trade largely resisted the selling that battered markets across Asia on Monday, after the Bank of Japan doubled the yield cap 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 tumbled 2.6%, while Asia’s other leading markets ended broadly lower.

European markets recovered from the early hit and turned mixed near mid-session. U.S. bonds dropped, sending the 10-year yield nine basis points higher, to 3.66%, pointing to a third-straight rally.

Among U.S. exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) fell 0.6% and the SPDR S&P 500 ETF (SPY) moved down 0.3% early Tuesday.

Meanwhile, U.S. oil prices traded up less than 1% Tuesday, but still on pace to add to Monday’s gains. West Texas Intermediate futures rose to nearly $76 a barrel in morning trade. Natural gas prices shed more than 5% in early action, tacking toward a third straight drop after diving 11% on Monday.

Stock Market Rally Under Pressure

On Monday, tech stocks and small caps underperformed once again, dropping the Nasdaq composite 1.5% and the Russell 2000 1.4%. The Dow Jones Industrial Average held up the best, shedding 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 denotes the period between Christmas and the first two trading days of 2023. The Dow Jones Industrial Average has averaged a 1.38% gain for this period since 1950 while the S&P 500 has averaged 1.32%, according to data compiled by Dow Jones Market Data. Both indexes traded higher around 78% of the time. There are still no signs that buyers are willing to catch falling knives into year’s end, but skepticism may be high enough to ignite a few short squeezes.”

Now is an important time to read IBD’s The Big Picture column amid the 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 slight fall. Shares found support at the stock’s 21-day exponential moving average and the stock’s relative strength line is edging to new highs. CAT stock inched higher Tuesday.

CAT stock shows a strong 97 out of a perfect 99 IBD Composite Rating, per the 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 stock traded down 1.1% Tuesday morning after Credit Suisse downgraded the stock from outperform to neutral, with the slowing housing market as a key risk.

Health care giant UnitedHealth Group is tracing a flat base that features a 558.20 buy point. Shares are about 6% away from the latest entry after giving up support near their 50-day line last week. UNH stock is now trying to stem its recent slide around the 200-day line. Shares added 0.4% early Tuesday.

4 Top Growth Stocks To Watch In The Current Stock Market Rally

Top Stocks To Watch: KLA, Neurocrine, O’Reilly, United Rentals

Chip equipment leader KLA has been mostly holding up amid the market weakness, and is about 2% under a cup-with-handle’s 392.60 entry after Monday’s modest loss. KLA shares dropped 1% Tuesday.

IBD Leaderboard stock Neurocrine is attempting to find support at its 50-day level amid a two-week losing streak. A strong rebound would be bullish for the stock’s immediate prospects and would likely lead to the formation of a new base. Meanwhile, a sharp breach could mean the stock needs more consolidation. NBIX stock was up 0.9% Tuesday.

O’Reilly Auto Parts is attempting to find support at its 50-day line this week and remains squarely above a 750.98 flat-base entry. A big rebound off the 50-day line could bring a follow-on entry point, but the market uptrend is under pressure right now, which increases the risk of buying stocks. ORLY shares were up 0.1% Tuesday.

United Rentals remains squarely below a 368.04 buy point in a cup-with-handle pattern. Shares are about 5% below the buy point, and further weakness would trigger the 7%-8% loss rule. URI stock was up 0.1% Tuesday.

Stocks To Watch

These are five top stocks to watch in today’s stock market, including three Dow Jones leaders.

Source: IBD Data As Of Dec. 19, 2022

Join IBD experts as they analyze leading stocks in the current stock market rally on IBD Live

Tesla Stock

Tesla stock fell as much as 2.9% Monday before slashing losses to just 0.2%. Shares declined more than 3% Tuesday morning, as the stock saw its price target cut 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, in part to the “Twitter distraction.” Evercore slashed 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 Dow Jones stocks, Apple shares sold off 1.6% Monday, hitting their lowest level since mid June. AAPL stock finished 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. Shares traded down 1.4% Tuesday.

Microsoft declined 1.7% Monday, as shares looked to find support around their 50-day line amid a three-day losing streak. The software giant remains about 30% off its 52-week high. MSFT stock moved 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.

YOU MAY ALSO LIKE:

Top Growth Stocks To Buy And Watch

Learn How To Time The Market With IBD’s ETF Market Strategy

Find The Best Long-Term Investments With IBD Long-Term Leaders

MarketSmith: Research, Charts, Data And Coaching All In One Place

How To Research Growth Stocks: Why This IBD Tool Simplifies The Search For Top Stocks