The Dow Jones Industrial Average dropped 200 points, as Tesla stock briefly fell from record highs on a vehicle recall. Chinese electric vehicle stocks Li Auto, Nio and Xpeng Motors tumbled on a Chinese government investigation. Nikola plunged as much as 17% in morning trade.
Tesla (TSLA) reversed 1.5% higher Wednesday midday to hit an all-time high. Shares briefly dropped after the company recalled over 9,000 Model X SUVs. Shares cut losses in morning trade. Meanwhile, Nikola (NKLA) plunged as much as 17%.
Chinese EV stocks tumbled after Reuters reported that China’s state planner was investigating new energy vehicle projects related to two property developers. Li Auto (LI) skidded 9%. Nio (NIO) faltered 3.7%, while Xpeng Motors (XPEV) sold off 9.6% in morning trade.
Microsoft and Tesla are IBD Leaderboard stocks, while Apple is on the Leaderboard Watchlist. AMD and Zumiez were featured in this week’s Stocks Near A Buy Zone column. FedEx was Tuesday’s IBD Stock Of The Day.
Dow Jones Today
On Wednesday, the Dow Jones Industrial Average fell 0.6%, while the S&P 500 lost 0.3%. The tech-heavy Nasdaq composite outperformed with a 0.1% rise in midday trade.
Amid the coronavirus stock market rally, the tech-heavy Nasdaq is up 34.1% for the year through Tuesday’s close. Meanwhile, the S&P 500 is up 12.5%, while the Dow is up 5.3% year to date, through the Nov. 24 close.
According to the Worldometer data tracker, the cumulative number of confirmed coronavirus cases in the U.S. topped 12.9 million on Wednesday. Total virus-related deaths rose past 265,000.
The cumulative total of worldwide Covid-19 cases confirmed since the start of the outbreak topped 60.2 million Wednesday, with more than 1.4 million virus-related deaths.
Coronavirus Stock Market Rally
According to IBD’s The Big Picture, the stock market returned to a new uptrend following a bullish follow-through day on Nov. 4.
Tuesday’s Big Picture commented, “The Dow Jones Industrial Average’s 1.5% gain to 30,046 didn’t simply make history as the first close above a key psychological price level. The action affirms that the Dow’s follow-through day on Nov. 4 was no head-fake of a rally. Since that noteworthy session, the Dow industrials have climbed nearly 7.9%.”
Investors should continue to use the stock market’s strength to buy breakouts. Start slowly with new purchases and see how they perform. If they work, then add more exposure. But if breakouts start to fail, then you can back away.
In particular, focus on stocks with strong relative strength. Find them by using the relative strength line. The RS line measures a stock’s price performance vs. the S&P 500. If the stock is outperforming the broader market, then the RS line angles upward. If a stock is performing worse than the broad market, then the line will point lower.
Stocks to watch include IBD Long-Term Leaders, companies with stable earnings growth and price performance. Fair Isaac (FICO) is the most recent addition to the list, added on Nov. 13. Shares are extended after they cleared resistance around 450.
Dow Jones Stocks: Salesforce Approaches Buy Point
Dow Jones stock Salesforce.com is approaching a 271.02 buy point in a double bottom with handle, according to MarketSmith chart analysis. Shares rallied 1% Wednesday morning and are about 3% away from the new entry.
The cloud software company is the No. 1-performing stock on the Dow Jones Industrial Average, advancing 60.4% year to date.
Stocks In Or Near Buy Zones: AMD, FedEx, Zumiez
A potential handle entry offers a slightly lower buy point, at 87.15. The stock was again trying to move past this early entry in morning trade.
According to IBD Stock Checkup, AMD stock boasts a perfect 99 IBD Composite Rating. The Composite Rating — an easy way to identify top growth stocks — is a blend of key fundamental and technical metrics to help investors gauge a stock’s strengths.
Tuesday’s IBD Stock Of The Day, FedEx, broke out above a 293.40 buy point in a flat base Tuesday, but shares closed below the new buy point after paring gains. Shares fell over 1%, falling further below the buy point Wednesday morning.
Top stock to watch Zumiez is in the 5% buy zone after Monday’s breakout above a rare buy point in an ascending base at 35.64. The 5% buy range tops out at 37.42. Shares fell 1.5% Wednesday, but are still holding above the buy point.
The retail leader was featured in Friday’s Stock Spotlight column.
Chinese EV Stocks: Li Auto, Nio, Xpeng Motors
Chinese EV stocks sold off sharply Wednesday after Reuters reported that China’s state planner told local governments to investigate new energy vehicle projects linked to property developers Evergrande Group and Shenzhen Baoneng.
Li Auto skidded 9% in morning trade, while Nio stock tumbled 3.7%. Xpeng Motors sold off 9.6%.
Tesla Stock Reverses Higher
IBD Leaderboard stock Tesla briefly slid after the National Highway Traffic Safety Administration said Tesla filed to recall 9,136 Model X electric SUVs due to an adhesive failure. Shares reversed 1.5% higher Wednesday midday to hit another record high.
On Nov. 18, shares broke out above a 466 buy point in an awkward cup with handle. The 5% buy zone tops out at 489.30, so the stock is well extended. On Tuesday, Tesla stock set a record high at 565.00.
Nikola plunged as much as 17% before cutting losses after CEO Mark Russell, in a CNBC interview, disappointed investors seeking assurance that the company’s $2 billion deal with General Motors (GM) would still go through. If the deal isn’t finalized by Dec. 3, then either side can pull out.
Nikola stock is nearly 70% off its 52-week high.
Dow Jones Leaders: Apple, Microsoft
Among the top Dow Jones stocks, Apple gained 1% Wednesday, on pace to add to Tuesday’s 1.2% rally. Shares are trying to retake their 50-day line after closing below that key level on Monday.
Apple stock continues to trace a new base with a 138.08 buy point. An early entry exists at 125.49. But the top Dow Jones stock is starting to show signs of significant weakness.
The blue-chip giant is the No. 2-performing Dow Jones stock for 2020, with a 56.9% advance through Tuesday.
Software giant Microsoft moved up 0.3% Wednesday, moving further above the 50-day moving average line. Shares regained that critical level on Tuesday.
Year to date, Microsoft is one of the top Dow Jones stocks, advancing 35.6% through the Nov. 24 close.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.
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