Stock market indexes reversed after an opening-rally spike and sold off into the lunch hour of the first trading day of 2023. Tesla plummeted nearly 13% to a two-year low after the carmaker missed delivery estimates. Gold rallied to a six-month high as the 2% inflation mantra drew a crowd of skeptics.
The end of tax-selling season and a clean slate encouraged investors to scoop up depressed shares early Tuesday, but bearish macroeconomic issues brought bears out in force.
The Dow Jones Industrial Average fell 0.6% in the first half while the S&P 500 shed 0.9%. Small caps attracted early interest as positive seasonality took control, but the Russell 2000 matched blue-chip losses at the lunch hour. The Nasdaq composite led the downside with a 1.3% drop.
Nasdaq and NYSE volume rose by high double-digit percentages compared with the first half of Friday's holiday-light session.
The 10-year Treasury note yield slid around 2.3%, or 8 basis points, to 3.80%. Crude oil slipped more than 3.4% to $77.60 per barrel. European markets rose in unison while Asian markets were mixed, weighed down by the Nikkei's 1.3% loss.
In the crypto world, Bitcoin ran in place above November lows, trading around $16,600, while Coinbase traded just above last week's all-time low at 31.83.
The S&P 500 and Nasdaq are trading below their 50-day moving averages. The Dow opened the session right on top of its 50-day line and broke support, but the index remains solidly above its 200-day line. The current IBD outlook remains at "market in correction." It is recommended that investors keep their powder dry while early 2023 market trends are revealed.
Stock Market: The Week Ahead
December employment data will dominate this week's economic reports, with JOLTs, ADP and Friday's nonfarm payroll's report also due. However, it's likely that corporations put off big job cuts to January or February to avoid worker backlash and bad press during the holiday season. As a result, February data may be far more enlightening. Fed minutes and ISM manufacturing mark top events on Wednesday's economic calendar.
Dow Jones component Walgreens Boots Alliance reports earnings on Thursday. The pharmacy chain recently failed an attempted move above its 50-day and 200-day moving averages. WBA stock has been stuck in a downtrend since topping out in 2015.
Troubled retailer Bed Bath & Beyond is also scheduled to report that day.
Apple At 52-Week Low
Dow Jones component and tech icon Apple completed a double-top breakdown after a weeklong test, dropping to an 18-month low. AAPL stock traded lower by 4.2% into the lunch hour.
A final level of intermediate support could come into play around 120, perhaps in time for the Jan. 26 earnings report. However, it isn't wise to overthink declines in this dangerous market environment because bear markets often don't care about technical support levels, at least during active declines.
Gold At Six-Month High
SPDR Gold Trust rallied to a six-month high on Tuesday morning, completing a successful test at the 200-week moving average. The yellow metal bottomed out as the Federal Reserve completed the fourth-quarter transition from 75-basis point hikes to 50 basis points.
Gold ended a four-year decline at the start of 2016, after testing the $2,000 level in 2011. It completed a round trip into the prior peak in August 2020 and started a basing pattern that broke down last September. The contract and fund have now remounted broken base support, signaling increased momentum and buying interest. However, there's still a ton of resistance above 180 on the fund and about $1,900 on the futures contract.
The rally suggests skepticism about the central bank's obsession with a return to a 2% inflation rate, which characterized the last decade. At some point, bankers will admit those days are gone for now, and possibly our lifetimes, as core inflation returns to much higher long-term norms. That admission could trigger a rapid gold breakout to all-time highs.
Stock Market Movers And Shakers
Tesla sold off to 108 last week and bounced above 124 as 2022 came to an end. It dumped nearly 13% into midday Tuesday after reporting Q4 deliveries of 405,000, and 1.3 million vehicles for the full year. This marked 40% year-over-year growth, which was less than estimates.
The electric-vehicle maker has undercut the Dec. 28 low around 108, but TSLA stock traded down to around 104 in the premarket that morning. More important, this looks like a classic test of "round number" support at 100, with sell stops and buy orders naturally congregating around those psychological levels.
The Innovator IBD 50 ETF matched blue-chip losses, down 1.1%.
IBD 50 component Griffon pulled back from the top of a six-week flat base that crisscrossed the buy zone of a 33.63 buy point. GFF stock is trading near an all-time high.
The building construction manufacturer has posted double- or triple-digit earnings growth in each of the last four quarters.
Wynn Resorts and Las Vegas Sands both rose more than 3% after Wells Fargo upgrades, in reaction to China's reopening of its economy and its impact on Macao casino revenue.
At the same time, the Macao Gaming Inspection and Coordination Bureau just reported that December receipts fell 56% after an equally ferocious decline in November.
Those terrible numbers, on top of already-depressed revenues, highlight the tough road ahead for both resort operators.
Follow Alan Farley on Twitter at @msttrader.
