The Dow Jones Industrial Average closed lower Monday as Tesla outshined other Magnificent Seven stocks like Apple and Nvidia. Famed investor Cathie Wood bought a diving stock. And Berkshire Hathaway fell on the stock market today after Warren Buffett flagged why progress has been difficult for the firm.
Meanwhile, some noteworthy name ended the session near buy points. Ollie's Bargain Outlet and Dream Finders Homes tested entries while Qualcomm moved toward a potential buy point.
Stock Market Today: Nasdaq Falls, Small Caps Shine
The Nasdaq composite saw a slim gain melt away as it finished the session down 0.1%. Palo Alto Networks turned in a 7.3% gain, though it remains stuck below its 50-day moving average.
The benchmark S&P 500 fell 0.4%. Domino's Pizza was faring well here, rising 5.9% on strong earnings. The firm is also raising its dividend by 25% and increasing its share buyback program. Kroger fell 2% after the Federal Trade Commission sued to block its planned $25 billion merger with Albertsons.
The S&P 500 sectors ended mostly negative. Consumer discretionary and energy outperformed on the stock market today. Communication services and utilities, the latter a defensive area, struggled the most.
Small caps reversed higher, with the Russell 2000 rising 0.6%. Growth stocks fared best though, as the Innovator IBD 50 ETF surged more than 2%.
Meanwhile, Treasury yields moved higher. The 10-year Treasury note rose 2 basis points to 4.28% while the 30-year also inched up 2 basis points to 4.4%. The 5-year yield popped 3 basis points to 4.31% while the 2-year rose 4 basis points to 4.73%.
Dow Jones Today: Walmart Shines As Stock Splits
The Dow Jones Industrial Average snapped a three-day winning streak as it fell 62 points, or nearly 0.2%. It too saw early gains disappear.
Walmart was among the strongest performers. It climbed 1.9% as a 3-for-1 stock split came into effect.
However, it was Salesforce that stood out the most as it gained 2.6%.
Verizon Communications struggled the most on the Dow Jones today, falling 2.4%. Nike and Amgen also lagged, both falling 1% apiece.
Warren Buffett Cites This Issue; Berkshire Falls
Berkshire Hathaway stock reversed lower, tumbling 1.9% following its earnings report over the weekend. It is still trading near all-time highs. But the price action suggests the stock is peaking, at least in the short term.
Chief Executive Warren Buffett took time in his annual letter to shareholders to explain how difficult it is for the firm to find good takeover candidates in an era of plentiful capital.
"Size did us in, though increased competition for purchases was also a factor," he said.
In the past, Berkshire was able to make transformative deals such as purchasing insurance giant Geico and BNSF Railway. Buffett also said Berkshire has "no possibility of eye-popping performance."
One side-effect of the environment has been a continual increase in the firm's gigantic cash pile. Berkshire's cash hoard swelled to a fresh record $167.6 billion in the fourth quarter, up from the previous period's $157 billion.
Nevertheless, Berkshire Hathaway earnings rose 28% on an operating basis vs. a year earlier to $8.48 billion, as underwriting and investment income offset some weakness at its railroad, energy and utility operations. Operating profit per class A share swelled 30% to $5,881, topping estimates of $5,717 from analysts polled by FactSet.
Cathie Wood Snaps Up Roku Stock
One investor who is never afraid to buy a stock well off highs is Cathie Wood, the CEO of ARK Invest. She used a massive pullback in a streaming stock to snap up shares.
Her firm, where she also serves as chief investment officer, snapped up nearly 99,000 shares of Roku Friday for the ARK Innovation exchange traded fund.
Roku stock saw early gains fade on the stock market today as it dipped 0.2%. It currently trades below its 50-day and 200-day moving averages, MarketSmith analysis shows. This is a distinctly bearish look. Roku stock fell as much as 43% from its Dec. 14 high of 108.84 last week. It now sits around 41% below this level.
Other moves made by the fund Friday included selling around 23,000 shares in Twilio and cutting loose around 362,000 shares of Teledoc. Twilio dipped while Teledoc climbed 2% Monday.
While snapping up stock market laggards can be tempting, IBD recommends buying stocks with strong earnings and price performance. This prevents people getting locked in a value trap. Look for leaders in strong industries that are showing superior earnings growth and sales.
Magnificent Seven: Tesla Stock In Front
So-called Magnificent Seven stocks had a mixed start to the week.
Tesla fared best as it rallied 3.9%. Nevertheless, the electric-vehicle maker remains stuck below its 50-day and 200-day moving averages and is well off highs. It has been trading tightly of late, though.
Nvidia also finished in positive territory, rising 0.4%. The Leaderboard stock is extended past its most recent entry. The chip stock, a leader in artificial intelligence, is struggling to overcome resistance at the 800 level.
Google-parent Alphabet struggled most as it fell 4.4% in above-average volume. Shares fell amid criticism of its "Gemini" artificial intelligence system. It comes after the tech giant suspended its ability to generate human images amid a media backlash over inaccurate racial depictions of historical figures.
Dow Jones stock Apple fell 0.8% while Microsoft shed 0.7%. Meta Platforms and e-commerce giant Amazon.com flirted with positive territory but Meta fell 0.5% while Amazon dipped 0.2%. This means Amazon was little changed despite joining the Dow Jones Industrial Average on Monday.
Stock Market Today: China EV Stock Soars
Chinese EV stock Li Auto ended near highs for the day as it surged 18.8%. Li turned in strong fourth-quarter earnings early Monday.
It earned 60 cents per ADS, a 1,400% increase on the 4 cents it reported a year earlier. Revenue soared 130% to $5.88 billion. It was also well clear of Wall Street views. Analysts expected Li Auto earnings per ADS of 44 cents on revenue of $5.5 billion.
It was not all good news, though. The company predicted first quarter revenue of $4.4 billion to $4.53 billion, up 66%-71% vs. a year earlier in local currency terms, but under analyst forecasts. Deliveries are expected to be 100,000-103,000, up 90%-96% vs. a year earlier but down from the fourth quarter's record 131,805, which was also light of expectations.
Li stock remains shy of a double-bottom base entry of 42.35. However, the stock topped an alternative entry at 38.48.
Other EV stocks also gained. Rivian Automotive surged 6.3%, Warren Buffett-backed BYD jumped nearly 4.9%, closing near its 50-day line, and Lucid rose 4.3% after a late rally.
Outside Dow Jones: Ollie's Stock Tests Entry
A couple of stocks attempted breakouts despite the action outside the Dow Jones index on the stock market today.
Ollie's Bargain Outlet is just below a buy zone after briefly clearing a consolidation entry of 83.19. This is a first-stage pattern, a bonus.
All-around performance is good, but not ideal, with its IBD Composite Rating coming in at 90 out of 99. It ended the session down 1.8%.
Dream Finders Homes jumped 7% and into a buy zone after clearing a cup-base entry of 37 in big volume. Earnings performance is strong for the homebuilder. It is also in the top 3% of issues in terms of price performance over the past 12 months.
Qualcomm is one to watch as it eyes a flat-base buy point of 157.98. It is just below this level after rising 1.4%. This is a first-stage base.
Big Money has been snapping up Qualcomm stock of late, with its Accumulation/Distribution Rating coming in at A-.
Please follow Michael Larkin on X, formerly known as Twitter, at @IBD_MLarkin for more analysis of growth stocks.
