Dow Jones falls below key level; Tesla Eyes Big Lithium, Graphite plays after lithium stock crash

Major indices closed at session lows on Tuesday. The Dow Jones Industrial Average was down just over 2% at 4pm ET, falling below its 50-day moving average, while the Nasdaq, which has outperformed so far this year, was down 2.5% at closing.

X

The S&P 500 fell 2%, losing support at 4100. The yield on the 10-year Treasury rose above resistance by 3.90% – a sign of increasing pressure on equities.

According to Adam Turnquist, Chief Technical Strategist at LPL Financial, the S&P 500’s uptrend has remained intact since October’s lows. “A close below 3,940 would be necessary to break the uptrend and the market’s 200-day moving average.” The 10-year Treasury yield has cleared the main resistance of 3.90%, raising upside risk to yields and downside risk to equities.

Volume on the NYSE was higher and lower on the Nasdaq compared to Friday’s close.

The small-cap Russell 2000 saw the biggest decline, trading 2.7% lower at 4 p.m.

Crude oil fell by a fraction, selling for $76.14 a barrel.

The yield on the benchmark 10-year Treasury bill rose 12 basis points to 3.95%.

The S&P Global Flash US Composite PMI rose to an eight-month high for services in February and fell at a slower pace for manufacturing compared to January. The data supports growing optimism that the economy will see a soft landing in 2023.

Sales of existing homes fell slightly in January and were well below the level of a year ago. According to Comerica Chief Economist Bill Adams, “2023 will likely be the slowest year for total home sales — existing and new — in about a decade.”

Dow Jones Earnings Leaders

Dow Jones component DIY store (HD) fell 7% after gains on Tuesday. The home improvement giant had earnings of $3.30 per share on revenue of $35.83 billion. Stocks tumbled, undermining the baseline and 200-day lines.

Dow Jones leader walmart (WMT) rose nearly 0.5% on Tuesday, according to MarketSmith’s chart analysis. Lower outlook after strong earnings of $1.72 per share and revenue of $164 billion weighed on the stock, offsetting losses in intraday trading in strong volume. It builds support during its 50-day line.

Stocks move today

Shares of Co part (CPRT) rose nearly 1% after gains. The stock is approaching a buy point of 71.03 in a cup-with-handle basis.

Tesla (TSLA) signed a deal to buy Magnis Energy Technologies to get the graphite it needs for its batteries.

Graphite is used in lithium-ion battery anodes. Magnis enters into a three-year deal to supply graphite to Tesla from February 2025. The EV giant also has plans to buy the lithium company Sigma lithium (SGML), according to reports. The deal will value SGML at $3 billion. Tesla makes its own batteries and has a lithium processing plant in Texas. Sigma’s raw lithium will likely reduce costs for the EV maker.

Sigma shares fell along with other lithium plays last week, but rose more than 15% following news of the potential buyout. Tesla shares retreated 5% after an impressive run this year.

The income is due Palo Alto Networks (PANW) after market close Tuesday, with Nvidia (NVDA) reports on Wednesday.

IBD Leaderboard stock Wing stop (WING) also reports on Wednesday. WING shares are approaching a buy point of 169.04 in a cup-with-handle base. PANW is testing its 200-day line. NVDA was down more than 3% on Tuesday’s closing bell.

Dow Jones Leaders to Watch: Sales team (CRM) in a cup-with-handle base with an input of 178.94 en disney (DIS), with an entry of 118.28 in a handle cup. Both stocks are testing their 200-day line.

Please follow Ramakrishnan on Twitter for more news about the fair today.

YOU MAY ALSO LIKE:

What is CANSLIM? If you want to find winning stocks, you better know this

IBD Live: Learn and Analyze Growth Stocks with the Pros

Looking for the next big scholarship winners? Start with these 3 steps

Want more IBD insights? Subscribe to our investing podcast

Market Shrugs at High Inflation Data; Two travel shares fly too late