Dow Jones dives as investors fear rate hikes into 2023; Tesla stock plummets

Dow Jones futures were higher ahead of Tuesday’s open after the Dow Jones Industrial Average sold off more than 480 points on Monday. Tesla shares tumbled after multiple reports said Tesla plans to scale back its EV production in China as demand appears to be weakening.


The EV giant refuted the reports, calling untrue claims that it was cutting production in China. Still, investors dumped the stock more than 6% and near daily lows.

More Fed rate hikes into 2023?

The stock market moved south on Monday as stronger-than-expected economic data sparked fears that the Federal Reserve will aggressively hike interest rates into next year on the back of a strong job market. Early Monday, the ISM services report came in better than expected, reading 56.5 in November versus 54.4 in October. The ISM Services is a barometer of US business conditions in the service sector; a value above 50 indicates expansion and a value below 50 indicates contraction.

Monday’s economic data came on the heels of Friday’s strong jobs report, which showed employers added 263,000 jobs to the payroll while the unemployment rate stayed at 3.7% and wages soared.

According to The Wall Street Journal’s Nick Timiraos, “Federal Reserve officials have signaled plans to raise their benchmark interest rate by 0.5 percentage point at their meeting next week, but increased wage pressures could prompt them to raise it further to higher levels than investors are currently seeing expect.”

Timiraos continued: “Policymakers expect price pressures to ease significantly over the next year, but buoyant wage growth or higher inflation in labour-intensive service sectors of the economy could prompt more of them to consider raising their key interest rate next year above current levels expected 5% to support investors.”

The 10-year government bond yield jumped to 3.59% on Monday, recovering from last week’s sharp losses.

This week’s earnings reports include Academy Sport + Outdoor (ASO), AutoZone (AZO), Broadcom (AVGO), Ciena (CIAN), Lululemon Athletica (LULU), Ollie’s Bargain Outlet (OLLI) and Great brothers (TOL).

stock market today

On Monday, the Dow Jones Industrial Average lost 1.4%, or 482 points, and the S&P 500 lost 1.8%. The tech-heavy Nasdaq Composite lost 1.9%. Among exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) fell 1.7% and the SPDR S&P 500 (SPY) fell 1.8%.

Giant for electric vehicles Tesla (TSLA) traded 6.4% lower on Monday. Among the Dow Jones stocks Apple (AAPL) declined 0.8% and Microsoft (MSFT) fell 1.2% in today’s stock market.

Celsius (CELH), Chubb (CB), Dexcom (DXCM) and KLA (KLAC) – as well as Dow Jones names Caterpillar (CAT), rafters (CVX) and home depot (HD) – are among the top stocks to buy and watch.

Dexcom is an IBD leaderboard stock. Caterpillar and Home Depot were featured in this week’s “Stocks Near a Buy Zone” column. Celsius was a recent IBD 50 Stocks To Watch pick and a New America stock. Caterpillar was Thursday’s stock of the day.

4 top growth stocks to buy and watchrightde Stock market rally

Dow Jones Futures Today: Oil Prices

Ahead of Tuesday’s opening bell, Dow Jones futures were up 0.2% from fair value, while S&P 500 futures were up 0.25%. Tech-heavy Nasdaq 100 futures are up 0.3% from fair value. Keep in mind that overnight action in Dow Jones futures and elsewhere doesn’t necessarily translate to actual trading in the next regular trading session.

US oil prices reversed from early gains and fell more than 3%. West Texas Intermediate futures traded just above $77 a barrel. Crude oil prices initially rose after European Union sanctions on Russian crude took full effect.

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What to do in the stock market rally?

Now is an important time to read the IBD column, The Big Picture, where the stock market trend is back in a “confirmed uptrend.”

While it’s true that the S&P 500 and Nasdaq Composite are still in confirmed uptrends, the harvest of actionable stocks has been disappointing. It wasn’t easy to increase exposure.

What kind of feedback do you get when it comes to new purchases? Do new purchases progress through Buy Points? In that case, it’s okay to give them some space. But don’t be afraid to take partial profits when a profit reaches at least 10%. If new buying is going in the wrong direction, cut losses when the stock is down 3% to 4% instead of waiting for the 7% rule to trigger.

Light, flexible trading is currently the best course of action. As the uptrend resumes, there will be many opportunities to increase exposure. And don’t be afraid to look for early entries rather than waiting for a stock to reach a traditional buy point.

(See IBD stock lists such as IBD 50 and stocks near a buy zone for more stock ideas.)

Five Dow Jones stocks to buy and watch

Dow Jones stocks to buy and watch: Caterpillar, Chevron, Home Depot

Dow Jones member Caterpillar is about to recapture the buy point of its 238 cup base. according to pattern recognition by IBD MarketSmith and is about 2% below the entry. CAT shares fell 1.5% on Monday.

CAT stocks have a solid 94 out of 99 perfect IBD Composite Ratings, according to the IBD Stock Checkup.

Energy giant Chevron fell 2.5% on Monday, further falling below its 182.50 buy point on a consolidation basis.

Hardware retailer Home Depot ended Monday about 4% below the buy point of a cup basis of 333.08 after the stock fell 2.4%.

Top stocks to buy and watch: Celsius, Chubb, Dexcom, KLA

Energy drink maker Celsius fell 3.5% on Monday, posting a three-day winning streak. Stocks are attempting to break out of the buy point from a 118.29 cup base but are about 4% below entry, according to pattern recognition by IBD MarketSmith.

Insurance giant Chubb is trading just below the mug buy point of 216.10 on Monday after shedding 1.7% in the session. The 5% buy area is at 226.91.

IBD leaderboard stock Dexcom is nearing an alternative entry at 123.46 despite Monday’s 1.3% drop. Stocks are about 5% from their last buy point.

New IBD long-term leader KLA continues to hold just below the mug buy point of 392.60 amid a three-day losing streak as shares fell 0.25% on Monday. The RS line continues to hold new highs, a sign of stock market leadership.

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

Tesla stock

Tesla shares slipped 6.4% on Monday, breaking a three-day winning streak and giving up all of last week’s gains.

In the last few weeks, the stock hit its lowest level since November 23, 2020, hitting a new 52-week low at 166.19. Since then, the stock has recovered but remains well below its 50-day and 200-day moving averages. Shares are about 55% off their 52-week high.

Dow Jones Leaders: Apple, Microsoft

Among the Dow Jones stocks, Apple shares fell 0.8% on Monday but are still holding above their 50-day moving average. The stock is down more than 20% from its 52-week high.

Microsoft faltered 1.2% on Monday as shares continue to hold above the 50-day moving average. The software giant remains about 27% below its 52-week high.

Follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.


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