Dow Jones futures were higher ahead of Tuesday’s open after the Dow Jones Industrial Average sold off nearly 500 points Monday. Investors will soon shift their attention to Fed Chair Jerome Powell’s Wednesday speech, while key inflation data is due out Thursday.
Monday’s stock market weakness was due to a combination of the spreading Covid-19 protests in major cities in China and St. Louis Federal Reserve President Jim Bullard’s comments on interest rates.
In a webcast interview with MarketWatch, Bullard responded to a question about how long he expects the Fed funds rate to stay in the 5% to 7% range, saying “I think we’ll have to stay there all during 2023 and into 2024.”
Bullard believes that markets are still underestimating the degree to which the Fed will need to keep policy tight in order to rein in inflation. Traders place a 72% chance of a 50 basis-point rate hike, down from 80% one week ago, in the central bank’s upcoming meeting, according to the CME’s FedWatch Tool.
Earnings reports this week include CrowdStrike (CRWD), Dollar General (DG) and Intuit (INTU). Also included is Dow Jones stock Salesforce (CRM), along with Snowflake (SNOW), Ulta Beauty (ULTA) and Workday (WDAY).
Stock Market Today
On Monday, the Dow Jones Industrial Average lost 1.45%, or 497 points, and the S&P 500 dropped 1.5%. The tech-heavy Nasdaq composite sold off 1.6%. Among exchange traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) moved down 1.5% and the SPDR S&P 500 (SPY) fell 1.6%.
Solar stocks sold off sharply Monday, as an analyst downgrade of First Solar (FSLR) impacted the rest of the industry. FSLR stock declined 3.4% after JPMorgan downgraded the stock from overweight to neutral due to the stock’s strong performance in recent weeks. Array Technologies (ARRY) and Shoals Technologies (SHLS) tumbled 7.1% and 6.4%, respectively. Array Technologies gave up a recent buy point, while SHLS stock fell back into buy range above a 28.57 buy point.
IPO Leader Array Technologies, IBD Leaderboard stock Arista Networks (ANET), Celsius (CELH) and Chubb (CB) — as well as Dow Jones names Boeing (BA), Caterpillar (CAT) and Chevron (CVX) — are among the top stocks to buy and watch.
Arista Networks is an IBD Leaderboard stock and was a recent IBD Stock Of The Day. Boeing is an IBD SwingTrader stock and was one of the four leaders featured in this week’s Stocks Near A Buy Zone column. Celsius was Monday’s IBD 50 Stocks To Watch pick.
Dow Jones Futures Today: Treasury Yields, Oil Prices
Ahead of Tuesday’s opening bell, Dow Jones futures rose 0.1%, while the S&P 500 gained 0.15%. The tech-heavy Nasdaq 100 futures moved up 0.2% vs. fair value. Remember that overnight action in Dow Jones futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
The 10-year Treasury yield ticked higher to 3.7% Monday, holding near its recent lows. On Friday, the 10-year Treasury yield closed at 3.69%, its lowest close since Oct. 4. Meanwhile, U.S. oil prices reversed higher after touching their lowest level since December 2021. West Texas Intermediate futures traded around $77 a barrel.
What To Do In The Stock Market Rally
Now is an important time to read IBD’s The Big Picture column with the stock market trend back in a “confirmed uptrend.”
While it’s fine putting money to work in the current stock market, keep your exposure on the conservative side with small positions to start. Just because the stock market is in a confirmed uptrend doesn’t mean you have to be 100% invested. And don’t be afraid to take a 10% gain if you have it, given the choppy nature of the market.
Dow Jones Stocks To Buy And Watch: Boeing, Caterpillar, Chevron
Airplane maker Boeing dropped 3.7% Monday, falling back under a cup base’s 173.95 buy point. Look for a decisive retake of that entry before considering a purchase of Boeing shares.
Dow Jones member Caterpillar is close to retaking its cup base’s 238 buy point, according to IBD MarketSmith pattern recognition, and is less than 2% below the entry. CAT stock, with a heavy exposure to China, fell 1.4% Monday.
Energy giant Chevron fell 2.9% Monday, giving up its 182.50 buy point in a consolidation base.
Top Stocks To Buy And Watch: Array, Arista, Celsius, Chubb
Solar leader and IPO stock Array Technologies gave up its 22.40 buy point in a cup with handle during Monday’s tumble, according to IBD MarketSmith pattern recognition. Shares are about 3% below the entry. Further weakness would trigger the 7%-8% loss-cutting sell rule.
Energy-drink maker Celsius reversed down 1.3% Monday, as the stock continues to form a cup base with a 118.29 buy point. Monday’s weakness could be the start of potential handle that would offer a lower entry.
Chubb is trading just below a cup-with-handle’s 216.10 buy point Monday after the session’s slight losses. The 5% buy area will top out at 226.91.
Tesla stock inched higher Monday, but remains sharply below its 50- and 200-day moving average lines. Shares are around 55% off their 52-week high.
Last week, the stock hit its lowest level since Nov. 23, 2020, reaching a new 52-week low price at 166.19.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares sold off 2.6% Monday, breaking down below their 50-day support level. Apple iPhone Pro production could fall short by 6 million units due to civil unrest and Covid restrictions in China, according to reports. The stock is more than 20% off its 52-week high.
Bloomberg reported that unrest at the Foxconn plant in Zhengzhou could trigger a 6-million-unit shortfall in 2022 iPhone Pro production. And that number could grow if Covid restrictions are extended a few more weeks, according to sources. The Zhengzhou factory manufactures the vast majority of iPhone 14 Pro and Pro Max smartphones.
Microsoft skidded 2.3% Monday, falling for a second straight session. Shares continue to hold above the 50-day line. The software giant remains about 30% off its 52-week high.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.
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