Dow Jones Industrial Average rose off the day's lows and traded nearly flat at 1:30 p.m. ET on Tuesday. Dow stocks Salesforce, Boeing, Apple all rose. JPMorgan and Cisco also gained ground while health care stocks fell.
The S&P 500 was also flat in early afternoon trading. However, the index faces resistance at the current level. According to John Lynch, Chief Investment Officer at Comerica, a test of October's lows cannot be ruled out as the risk of an earnings recession looms.
The "combination of declining earnings, weakening economic growth, a steadfast Federal Reserve, and a lack of broad participation suggests the equity market is poised to struggle in the weeks and months ahead."
FactSet estimates expect an earnings recession, with profits declining 6.0% in the first quarter, greater than the five-year average intra-quarter decline of 2.8%. If met, it would represent a consecutive quarterly decline in corporate profits, resulting in an EPS recession.
Nvidia gained after an analyst upgrade.
Homebuilder stocks Lennar and D.R. Horton rallied ahead of Thursday earnings. Both stocks are in buy zones.
The Nasdaq fell 0.2% while the small-cap Russell 2000 saw a bigger drop of 0.6%. Travel and leisure stocks Airbnb and Booking rose.
Volume was lighter on the NYSE but higher on the Nasdaq compared to the same time Monday.
Crude oil notched a small gain to trade at $80.93 per barrel. The yield on the benchmark 10-year Treasury note fell 1 basis point to 3.58%.
Bitcoin held steady after clearing a critical level last week.
The leading crypto coin hit the $30,000 mark for the first time since June 2022, according to CoinMarketCap. It is a new high for the year after a prolonged crypto winter and black swan events like the FTX crash in November, which pummeled crypto instruments.
Stocks Moving Today
Bank of America gained in afternoon trading after strong earnings. Net interest income rose 25% as interest rates surged, helping the money-center bank post a strong quarter.
Weak bond trading and fewer deals undermined Goldman Sachs quarterly revenue. GS shares were testing the 50-day line after diving over 3%.
Johnson & Johnson fell sharply despite posting a strong quarter. The Dow Jones leader raised its full-year earnings outlook to $10.60-$10.70 per share. Sales of its cancer drugs and treatment for Crohn's disease was strong. Investors may have been disappointed by the lack of clarity on baby powder class-action lawsuits.
HSBC raised its Nvidia price target to 355 and upgraded its rating to buy from reduce. The IBD Leaderboard stock jumped 3%. Shares are extended with no clear base or entry yet.
Lockheed Martin broke out of a flat base after earnings. M/I Homes broke out of a cup with handle with a buy point at 63.57. Crocs on IBD SwingTrader broke out at an entry of 143.60, with a relative strength line at new highs.
AI Race Takes A Turn
Last week, the Wall Street Journal reported that Tesla CEO Elon Musk incorporated a new company in March that will develop artificial-intelligence technologies. Musk helped found OpenAI in 2015 but left it in 2018.
The new company, called X.ai, has 100 million shares on offer in a private sale. X.ai has plans of developing 'TruthGPT' that will rival Google parent Alphabet, Microsoft, C3.ai, OpenAI and DeepMind.
AI plays had mixed price action after the news.
C3.ai gained 4% and held most of its gains on Tuesday.
Shares of Google parent Alphabet continued to slip after falling on Monday. Shares also fell on news that Samsung might use Bing rather than Google on its phones. Dow Jones component Microsoft also slipped slightly. GOOGL is back below its buy point of 106.69, while Microsoft is in a buy zone above a base.
Earnings Deck Outside Dow Jones
Netflix rose slightly in the afternoon. The streaming giant reports earnings after the close. Analysts are looking for a profit of $2.87 per share. NFLX stock has added more than 12% this year and has doubled in price since bottoming out in May 2022.
Shares are in a cup with handle with a potential entry at 349.90. United Airlines is on tap as well this evening. Shares are clearing the 200-day line.
Tesla's earnings are due Wednesday. Morgan Stanley earnings are also on deck.
Housing starts and building permits declined in March. On Tuesday, the Commerce Department showed that single-family housing starts rose 2.7% on a seasonally adjusted basis. Single-family building permits rose 4.1%, but multifamily homes fell.
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