The Dow Jones Industrial Average dropped 200 points Tuesday as fourth-quarter earnings season picked up with eight key earnings reporters, including Johnson & Johnson (JNJ) and Verizon Communications (VZ). Software giant Microsoft (MSFT) reports after the market close.
MMM stock dived more than 5%, while DHI shares climbed 3%. Halliburton stock dropped 1.3%, while JNJ stock rose 0.7%. Travelers shares were up 1.7%. And VZ stock surged more than 7%.
Shares of General Electric (GE) lost 1.4% and Raytheon (RTX) rallied 7% on earnings news. GE topped views in its first report since spinning off its GE Healthcare Technologies (GEHC) unit. Raytheon reported mixed results, with revenue just missing analyst targets.
On the economic front, preliminary January PMI for manufacturing and services from researcher Markit is due out at 9:45 a.m. ET. Both PMIs are expected to remain in contraction, with the manufacturing index at a 46.5 reading and the services index at a 45.5 reading, per Econoday estimates.
Stock Market Today
Advanced Micro Devices (AMD) declined 3.9% on a Bernstein downgrade to market perform from outperform. Lululemon Athletica (LULU) dropped 4% after Bernstein downgraded the retailer from market perform to underperform.
Electric-vehicle leader Tesla (TSLA) traded down 0.8% Tuesday morning, ahead of its earnings, which are due Wednesday. Dow Jones tech giants Apple (AAPL) and Microsoft were both lower after today’s stock market open.
Axon Enterprise (AXON), IBD Stock Of The Day Etsy (ETSY), IBD Leaderboard stock Fluor (FLR), Medpace (MEDP), Monster Beverage (MNST) and Vertex Pharmaceuticals (VRTX) — as well as Dow Jones names Chevron (CVX), JPMorgan Chase (JPM) and Visa (V) — are among the top stocks to buy and watch with the market testing the strength of a new rally.
Dow Jones Today: Oil Prices, Treasury Yields
After Tuesday’s opening bell, the Dow Jones Industrial Average moved down 0.7%, and the S&P 500 fell 0.5%. The tech-heavy Nasdaq composite lost 0.55%.
The 10-year U.S. Treasury yield ticked lower to 3.51% Tuesday morning, threatening to snap a three-day win streak. Despite the recent gains, the 10-year yield is on three-week losing streak that saw it hit its lowest level since mid-September.
Oil prices climbed Tuesday, holding near its recent highs. West Texas Intermediate futures traded up 0.7% to just above $82 a barrel.
In China, the mainland’s Shanghai Stock Exchange remains closed all week for the country’s Lunar New Year celebration. The Hong Kong Stock Exchange is closed through Wednesday, and will reopen on Thursday.
Stock Market Rally
On Monday, the Dow Jones Industrial Average rallied 0.8%, and the S&P 500 jumped 1.2%. The tech-heavy Nasdaq composite surged 2% to add to Friday’s gains.
But Monday’s The Big Picture column cautioned, “The bullish turn in the stock market also invites the risk that indexes are overshooting their trends. Case in point: The MarketSmith short-term overbought-oversold oscillator is near the highest level in more than a year on both the Nasdaq and NYSE.”
Now is an important time to read IBD’s The Big Picture column amid the ongoing stock market rally.
Dow Jones Stocks To Buy And Watch: Chevron, JPMorgan, Visa
Energy giant Chevron is rounding out the right side of a cup base with a 189.78 buy point, according to IBD MarketSmith pattern recognition. Keep an eye out for a handle to offer a lower entry. Chevron’s fourth-quarter earnings are due Friday. CVX shares fell 0.4% Tuesday.
Banking giant JPMorgan is about 1% below a 138.76 flat-base buy point following last week’s breakout attempt, according to IBD MarketSmith chart analysis. Shares were down 0.3% Tuesday morning.
Payments leader Visa is trading in buy range above a 220.08 handle buy point in a long pattern. The 5% buy area goes up to 231.08. Visa shares were lower early Tuesday, ahead of the company’s fiscal first-quarter results due on Thursday.
Top Stocks To Buy And Watch: Axon, Etsy
Security leader Axon briefly topped a 189.72 buy point in a cup-with-handle base during Monday’s rapid gains. Axon shares were down 1.5% Tuesday morning.
Backstory: Formerly known as Taser International, the company has taken advantage of the business opportunity offered by public demands for more police oversight. Its line of body cameras and accompanying software are now market leaders. The Scottsdale, Ariz.-based company also boasts a cloud-based digital evidence platform.
Etsy broke out past a 137.01 buy point in a cup with handle, rallying 5.5% Monday and closing in the 5% buy area that goes up to 143.86. ETSY stock was down 0.9% Tuesday.
Backstory: The company is a provider of an online e-commerce platform where creators of arts and crafts, vintage items and other unique goods go to sell their products. It has a unique business model that, in the last few years, has gone from a niche e-commerce marketplace to a top-of-mind shopping destination across numerous categories.
Fluor, Medpace Break Out
IBD Leaderboard stock Fluor is trying to break out past a flat base’s 36.16 buy point, and is right at the entry following Monday’s 0.1% rise. If shares retake that entry, the 5% buy area tops out at 37.97. FLR stock was down 1.2% early Tuesday.
Backstory: Fluor manages big infrastructure projects in the oil and gas, chemical, mining and transport industries. This is an earnings turnaround play. A poor EPS Rating reflects net losses in 2019 and 2020 and a dip in profit expected in 2022 to 86 cents a share. Analysts, however, see earnings vaulting 95% next year to $1.68 a share.
Medpace is breaking out above a consolidation’s 235.82 buy point, ending in the buy zone that tops out at 247.61. In recent weeks, shares moved above an early entry at 220.09. The company’s earnings results are expected on Feb. 13. Medpace shares were down 0.5% early Tuesday.
Backstory: Medpace is a clinical contract resource organization, or CRO. It helps drugmakers run the clinical studies needed to gain approval for new medicines. In the third quarter, the company issued a bullish outlook for 2023, calling for 18% sales growth at the midpoint of its guidance.
Monster, Vertex Trace Flat Bases
Monster Beverage remains squarely below its 50-day line amid Monday’s slight rise. Shares are tracing a flat base with a 104.75 buy point. MNST stock was up 0.2% Tuesday.
Backstory: Monster Beverage leads an energy-drink duopoly with privately held competitor Red Bull. The company’s portfolio of energy drink brands include Monster Energy, Reign and NOS Energy.
Monster dominates energy drinks in the U.S. and claimed a 39% market share last year, according to Jefferies data, resulting in a record $5.5 billion in revenue for the company. Red Bull accounted for 37% of the American energy drink market in 2021. Upstart Celsius (CELH), which is on an impressive growth streak, claimed 4.9% of the market.
Wednesday’s IBD Stock Of The Day, Vertex Pharmaceuticals, is approaching a 324.85 buy point in a flat base after bullishly retaking its 50-day line in recent sessions. VRTX stock lost 0.2% Tuesday.
Backstory: The company is well-known for its cystic fibrosis treatments — a market that Vertex estimates at 88,000 patients. Of those, there are still 20,000 patients who could receive its old-school oral treatments. But analysts are watching for what’s new from Vertex, including an updated regimen of three drugs that could strengthen Vertex’s position against rival AbbVie (ABBV).
Stocks To Buy And Watch In Stock Market Rally
These are seven top stocks to buy and watch in today’s stock market, including three Dow Jones leaders.
|Company Name||Symbol||Correct Buy Point||Type Of Base|
|Axon||(AXON)||189.72||Cup with handle|
|Etsy||(ETSY)||137.01||Cup with handle|
|Visa||(V)||220.08||Cup with handle|
Source: IBD Data As Of Jan. 24, 2023
Tesla stock raced 7.7% higher Monday, closing at its highest level since Dec. 19. Despite their recent rebound, shares remain sharply below their 50- and 200-day lines. Tesla stock closed Monday about 63% off its 52-week high. Tesla earnings are due out Wednesday after the close.
Shares of the EV giant looked to add to Monday’s gains, but traded down around 1% Tuesday morning.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares rallied 2.35% Monday, decisively retaking their 50-day line, which they had been trading under since mid-December. The stock remains around 21% off its 52-week high. Apple will report its quarterly earnings on Feb. 2. AAPL stock traded down 0.1% Tuesday.
Microsoft stock advanced 1% Monday, finishing just above its 50-day line, where it found stout resistance last week. A more decisive retake would be bullish for the stock’s prospects, even though shares remain 23% off their 52-week high. Shares were down 0.4% early Tuesday.
MSFT earnings are due out late Tuesday. The software giant is expected to earn $2.29 a share on sales of $52.9 billion, according to IBD data.
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: