The Dow Jones Industrial Average briefly rallied over 250 points early Monday, as the Senate passed President Joe Biden’s $1.9 trillion stimulus plan and Treasury yields climbed. Apple tumbled over 2%, while Tesla stock briefly reversed higher in morning trade.
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Among the Dow Jones leaders, Apple (AAPL) dropped 2.5% early Monday, while Microsoft (MSFT) moved down 0.6% in today’s stock market. Visa (V) is in buy range above a new buy point.
Tesla (TSLA) briefly reversed higher Monday, and could snap a four-day losing streak. Chinese EV leader Xpeng (XPEV) reported mixed fourth-quarter results ahead of the stock market open. Shares jumped nearly 6% in morning trade.
Among the top stocks to watch, Alphabet (GOOGL), Polaris (PII) and Vale (VALE) are holding up well in the current stock market correction.
Microsoft and Tesla are IBD Leaderboard stocks. Polaris is an IBD 50 stock.
Dow Jones Today: Senate OKs Biden Stimulus
After the stock market open Monday, the Dow Jones Industrial Average rallied 0.5%, while the S&P 500 gained less than 0.1%. The tech-heavy Nasdaq composite fell 0.5% in morning trade after briefly reversing higher.
On Saturday, the Senate passed the $1.9 trillion Biden stimulus plan. House Majority Leader Steny Hoyer said the House plans to vote Tuesday on the Senate version of the Biden stimulus plan. Then, it will go to Biden to sign.
Among exchange traded funds, the Innovator IBD 50 (FFTY) traded down 0.4% Monday. Nasdaq 100 tracker Invesco QQQ Trust ETF (QQQ) fell 0.5%. Meanwhile, the SPDR S&P 500 ETF (SPY) moved up 0.1%.
10-Year Treasury Yield
The 10-year Treasury yield climbed to 1.603%, near recent highs before paring gains to 1.592%.
On Friday, the 10-year Treasury yield jumped above 1.6% after the better-than-expected jobs report, topping out at 1.626% before closing at 1.554%.
Meanwhile, Federal Reserve Chairman Jerome Powell on Thursday said the recent surge in bond yields “caught my attention” but said policy remains highly accommodative and didn’t hint at a new “twist” in policy.
Stock Market Correction
On March 4, the major stock indexes were rocked with heavy selling, while top growth stocks also crumbled. The Nasdaq dived below last week’s lows, closing at its lowest level since Jan. 4 and turning negative for the year. The tech-heavy composite is down 1.3% in 2021 after rallying as much as 10% from Jan. 1 to its Feb. 16 record high.
IBD’s market outlook was downgraded to “market in correction” on March 4. During periods of severe stock market weakness, investors should be lightly invested — or even in 100% cash — until a follow-through day. Follow-throughs signal a new potential market uptrend and give the green light to start buying stocks again.
Use the downtime as a chance to take a mental break; however, don’t tune out. Be on watch for the next leaders to emerge. One of the best ways to identify the next cycle of leading stocks during stock market corrections is to use 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, the RS line angles upward. If a stock is performing worse than the broad market, then the line will point lower.
Friday’s Big Picture commented, “After a morning swoon knocked the Nasdaq to a loss of 2.6%, buyers came back into the market in late-morning trade and major stock indexes ended with bullish gains by the close.” Check out the IBD’s The Big Picture for more stock market commentary.
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Bitcoin Price
Bitcoin pared sharp gains Monday morning, after nearly topping $52,000 over the weekend. The price of Bitcoin traded around $50,800 in morning action, according to CoinDesk.
The price of Bitcoin hit an all-time high on Feb. 21, topping out at $58,332.
The Grayscale Bitcoin Trust (GBTC) ETF advanced 5.8% Friday, finding support at its 50-day moving average line. The Bitcoin-tracking ETF rallied 2% Monday.
Dow Jones Stocks: Visa
Inside the Dow Jones Industrial Average, Visa stock is in buy range past a 211.69 buy point in a cup with handle following a Feb. 23 breakout, according to IBD MarketSmith chart analysis. The 5% buy zone goes up to 222.27.
Shares gained 0.3% Monday, and remain in buy range.
Xpeng Earnings
Chinese electric-vehicle maker Xpeng reported mixed fourth-quarter results early Monday. The company lost 15 cents a share as revenue surged 345.5% to $437 million. Wall Street expected a loss of 12 cents a share on revenue of $411.38 million, according to Yahoo Finance.
XPEV stock jumped nearly 6% early Monday, on pace to snap a four-day losing streak. Shares ended Friday more than 60% off their all-time high.
Stocks To Watch: Alphabet, Polaris, Vale
FANG stock leader Alphabet is holding up well in the face of the stock market’s recent weakness. Shares remain extended from a 1,843.93 buy point in a flat base, and are about 2% away from a 2,145.24 entry in a three-weeks-tight pattern.
Shares dropped about 1% Monday.
Polaris broke out past a 129.10 buy point in a flat base Friday with a 5.7% surge. Shares are in the 5% buy zone that tops out at 135.56. Polaris stock rallied nearly 2% Monday.
According to IBD Stock Checkup, Polaris stock shows a solid 90 out of a perfect 99 IBD Composite Rating. The IBD Composite Rating helps investors easily measure the quality of a stock’s fundamental and technical metrics.
Thursday’s IBD Stock Of The Day, Vale, is tracing a cup with handle with an 18.57 buy point, according to IBD MarketSmith chart analysis. Shares closed Friday just below the entry amid a nearly 6% advance.
Vale stock fell about 1% Monday.
Keep in mind that the current stock market weakness should keep investors on the sidelines.
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Tesla Stock
Tesla stock looked to snap a four-day losing streak Monday. Shares briefly reversed higher in morning trade before again turning lower. Shares could be forming a new base, but it’s too early to identify a new entry.
On Feb. 22, the electric-auto leader broke down through its key 10-week moving average line, a critical support level.
On Jan. 25, Tesla stock hit a record high at 900.40, after climbing as much as 93% from a 466 buy point in a cup with handle. Shares are about 34% off that all-time high.
Dow Jones Leaders: Apple, Microsoft
Among the top Dow Jones stocks, Apple descended 2.5% Monday. Apple stock remains below its 10-week line, but a strong rebound back above the level would be bullish for the stock’s prospects.
On Feb. 18, Apple stock triggered the 7%-8% loss-cutting sell rule when it fell more than 7% below its 138.89 buy point in a cup with handle.
Meanwhile, Microsoft fell 0.6% early Monday. The stock remains below its 232.96 buy point despite retaking its 50-day line amid Friday’s 2.2% gain.
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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