The Dow Jones Industrial Average briefly dropped 300 points Tuesday morning, as Wall Street took a breather after Monday's sharp rebound. One major player, Netflix, contributed to the overall market slide, thanks to an analyst downgrade, while Tesla stock broke down below a key support level.
After the opening bell, the Dow Jones Industrial Average lost 0.6%, while the S&P 500 dropped 0.4%. The tech-heavy Nasdaq composite was down 0.4% in morning action.
Among U.S. exchange traded funds, the Nasdaq 100 tracker Invesco QQQ Trust was down 0.4%, while the SPDR S&P 500 ETF dropped 0.7%.
The 10-year Treasury yield rose to 4.03% Tuesday. On Monday, the Treasury yield closed at 4%, retreating after notching its highest close since Dec. 12. Also, oil prices rebounded from Monday's losses, as West Texas Intermediate futures rallied nearly 2% Tuesday morning. WTI futures moved above $72 a barrel.
In morning action Tuesday, Netflix declined nearly 2% after Citigroup downgraded the streaming giant from buy to neutral, with a 500 price target. Citigroup cited "too high" revenue forecasts for 2024 and spending that may "exceed Street estimates" in its research note.
Earnings Reports
Banks are due to launch their fourth-quarter reporting season on Friday, with JPMorgan Chase, Bank of America, Citigroup and Wells Fargo lined up to report.
Ahead of that big day, Acuity Brands, Jefferies and Neogen were earnings movers Tuesday morning.
Jefferies shares declined nearly 3% in morning trade, while AYI stock surged 5%. Finally, Neogen shares tumbled 11% in early morning action.
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Dow Jones Rebounds
On Monday, the Dow Jones Industrial Average moved up 0.6%, and S&P 500 rallied 1.4%. The tech-heavy Nasdaq composite advanced 2.2%.
Monday's Big Picture column commented, "The stock market's behavior in the new year is a reminder of why investors need to be ready to pivot quickly. Last week, profit-taking sent most of the market lower and Investor's Business Daily shifted its recommended exposure level down to 60%-80%."
Now is an important time to read IBD's The Big Picture column amid the continuing stock market rally. Be sure to read how to adjust to changing market conditions, with IBD's new exposure levels.
Learn How To Time The Stock Market With IBD's ETF Market Strategy
Best Stocks To Buy And Watch
Magnificent Seven players Alphabet and Amazon, along with Netflix and Novo Nordisk — plus Dow Jones components Amgen, Caterpillar and Visa — are among the best stocks to buy and watch in the current market rally.
Amgen and Novo Nordisk featured in this Stocks Near A Buy Zone column.
Get Real-time Buy And Sell Alerts On Stock Market Leaders With IBD Leaderboard
Dow Jones: Amgen Out Of Buy Range
Biotech leader Amgen rallied 2.6% Monday, moving further out of the 5% buy range past a 288.46 official buy point in a flat base. The 5% buy area went up to 302.88. AMGN stock was down 1.2% Tuesday.
Heavy machinery giant Caterpillar ended Monday just below its 293.88 buy trigger, amid a 1.2% gain. CAT stock lost 0.8% Tuesday morning.
Payments leader Visa is close to being extended above a 250.06 entry in a cup base, according to IBD MarketSmith pattern recognition. V stock was down 0.4% Tuesday.
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Amazon, Netflix Retake Entries
Alphabet regained its 50-day line, but closed just below its 139.42 buy point in a cup with handle following a 2.3% rise Monday, according to IBD MarketSmith. GOOGL stock rose 0.5% early Tuesday.
IBD Leaderboard stock Amazon reclaimed its cup base's 145.86 buy point during Monday's 2.7% rally, finding support around its 50-day line. AMZN stock fell 0.2% Tuesday morning.
Before losing ground on the downgrade Tuesday, IBD SwingTrader stock Netflix had moved up 2.3% Monday, regaining a 482.70 buy point in a cup with handle. Tuesday's action threatens to push Netflix back below a conventional entry of 485 out of a consolidation.
Weight-loss drug maker Novo Nordisk ended Monday up 0.4%, above a 105.69 flat-base buy point following a strong breakout on Jan. 4. NVO stock moved down 0.4% early Tuesday.
Best Bets In Today's Action
These are four best stocks to watch in today's stock market, including a Dow Jones leader.
| Company Name | Symbol | Correct Buy Point | Type Of Buy Point |
|---|---|---|---|
| Novo Nordisk | 105.69 | Flat base | |
| Caterpillar | 293.88 | Cup base | |
| Netflix | 482.70 | Cup with handle | |
| Snowflake | 192.66 | Cup with handle |
Source: IBD Data As Of Jan. 8, 2024
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Magnificent Seven Stocks: Nvidia, Tesla
Magnificent Seven stocks Nvidia and Tesla traded mixed Tuesday morning. NVDA stock moved up 0.4%, while Tesla shares were down 3.2%.
Nvidia ended Monday's session up 6.4%, breaking out past a flat base's 505.48 buy point. Shares are in buy range. Nvidia is an IBD Leaderboard stock, and reversed lower after setting more record highs Tuesday morning.
Tesla stock moved up 1.3% Monday, as shares rebound from their 50-day support level. TSLA stock snapped a six-day losing streak Monday. The EV giant has a big double-bottom pattern with conventional buy point of 278.98. Meanwhile, an early buy trigger is at 265.13.
Shares threatened to break their key 50-day line Tuesday, with sharp losses.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones components in the Magnificent Seven, Apple and Microsoft traded lower after Tuesday's stock market open.
Apple ended a five-day skid Monday, with a 2.4% advance. Shares remains below a 192.93 buy point and their 50-day line. AAPL fell 1.1% Tuesday morning.
Microsoft stock rebounded 1.9% Monday, still in buy range a 366.78 cup-base buy point. Meanwhile, MSFT is rebounding from its 50-day line. And the software giant was down 0.8% Tuesday morning.
Be sure to follow Scott Lehtonen on X, formerly known as Twitter, at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.
