Dow Jones Falls Below Key Level; Tesla Eyes Big Lithium, Graphite Plays After Lithium Stocks Crash

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

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The S&P 500 fell 2% and lost support at 4100. The yield on the 10-year Treasury note surged above resistance at  3.90%–a sign of mounting pressure on stocks.

According to Adam Turnquist, Chief Technical Strategist at LPL Financial, the S&P 500’s uptrend since October lows has remained intact. “A close below 3,940 would be required to break the uptrend and the market’s longer-term 200-day moving average.” Yield on the 10-year Treasury note has cleared key resistance at 3.90%, and that raises upside risk for yields and downside risk for stocks.

Volume on the NYSE  was higher and lower on the Nasdaq compared to closing time on Friday.

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

Crude oil slipped by a fraction and sold at $76.14 per barrel.

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

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

Existing home sales fell slightly in January and were well below year-ago levels. 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 Leaders Earnings

Dow Jones component Home Depot (HD) fell 7% Tuesday after earnings. The home-improvement giant had earnings of $3.30 per share on revenue of $35.83 billion. Shares nose-dived, undercutting the base and 200-day line.

Dow Jones leader Walmart (WMT) rose nearly 0.5% on Tuesday, according to MarketSmith chart analysis. A lower outlook after strong earnings of $1.72 per share and revenue of $164 billion pressured the stock, which pared losses in intraday trading in strong volume. It’s building support at its 50-day line.

Market Rally Faces Key Test; What To Do Now

Stocks Moving Today

Shares of Copart (CPRT) rose nearly 1% after earnings. The stock is approaching a buy point of 71.03 in a cup-with-handle base.

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 will enter a three year deal to supply graphite to Tesla from Feb. 2025. The EV giant also has plans to buy 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 drive down costs for the EV maker.

Sigma shares fell along with other lithium plays last week but gapped up over 15% after news of the possible buyout. Tesla shares pulled back 5% after an impressive run this year.

Earnings are due for Palo Alto Networks (PANW) after market close Tuesday, with Nvidia (NVDA) set to report Wednesday.

IBD Leaderboard stock Wingstop (WING) also reports Wednesday. WING shares are nearing a buy point of 169.04 in a cup-with-handle base. PANW is testing its 200-day line. NVDA fell over 3% at closing bell Tuesday.

Dow Jones leaders to watch: Salesforce (CRM) in a cup-with-handle base with a 178.94 entry and Disney (DIS), with a 118.28 entry in a cup-with-handle base. Both stocks are testing their 200-day line.

Please follow VRamakrishnan at Twitter for more news on the stock market today.

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