The Dow Jones Industrial Average remained higher at midday as the market digested moves made on the first day of the new Donald Trump presidency. Apple (AAPL) lagged on the stock market today while Tesla (TSLA) also tumbled despite a bullish call.
Stocks were off to a mostly positive start as they look to build on last week's bullish close. The Dow industrials rose more than 400 points, which equates to a rise of 1%. 3M (MMM) jumped more than 5% after an earnings beat. However, Apple fell more than 4% amid numerous downgrades and price targets cuts from analysts.
↑ X NOW PLAYING Trump Emergency Orders Signal Big Shift For Energy Sector. What Investors Need To Know.The Nasdaq composite lagged amid weakness in the tech sector. The composite was up 0.3% after reversing higher. It now sits about 1% above its 50-day moving average. Grail (GRAL) was a standout stock as it popped more than 7%. MongoDB (MDB) was also strong, rising 4%.
Bitcoin play MicroStrategy (MSTR) was off lows for the day, but remained down 1.5%. It had been down more than 5% earlier. It came after the cryptocurrency itself reversed higher, gaining 2%. It is now trading for just under $105,000 per token, according to CoinDesk.
The S&P 500 was up 0.4%. This allowed it to move further above its 50-day line, which it recaptured Friday. Dollar General (DG) and Moderna (MRNA) outperformed here with gains of nearly 6% each.
The Invesco S&P 500 Equal Weight ETF (RSP) rose more than 1% amid broad gains.
Another plus for the stock market today was that the S&P 500 sectors were mostly positive. Utilities, industrials and real estate were faring best. Only energy and technology stocks were lower.
Small caps built on early gains. The Russell 2000 index popped 1.6% as the small-cap index moved above the 2,300 level.
Growth leaders also giving the bears a bloody nose. The Innovator IBD 50 ETF (FFTY) outperformed with a gain of almost 2%. The fund reclaimed its 50-day moving average and sits nearly 2% above the benchmark.
While Wall Street analysts can often boost or harm a stock's performance in the short term, this wasn't the case for Tesla today.
The Magnificent Seven member skidded more than 2% despite being named a top buy-and-hold idea by Piper Sandler expert Alexander Potter. The analyst upgraded the stock to an overweight rating and also hiked his price target to 500 from 315.
Potter said in a note to clients that "investors are starting to appreciate Tesla's potential in 'real-world' AI" However he also said action in early 2025 could be "choppy."
Despite the bullish call, Tesla fell on the stock market today. The stock is down around 15% from its Dec. 18 high of 488.54.
However, investors may consider adding it to a watchlist as it consolidates above its 50-day moving average.
Tesla stock has a strong IBD Composite Rating of 91 out of 99, with price performance its strongest suit. Encouragingly, it has been finding support at the 21-day exponential moving average.
The overall bullish action was leading to a number of breakouts. It is currently a good time to be adding stocks.
Fabless chip play Ambarella (AMBA) has cleared an undefined pattern with an ideal buy point of 81.32, MarketSurge analysis shows.
The system-on-a-chip company has a mediocre EPS Rating of 59 out of 99, and is expected to lose money in 2024, 2025 and 2026. But it is among the top 6% of issues of price performance over the past 12 months.
Aerospace stock Embraer (ERJ) in the buy zone above a cup base entry of 40.34. It cleared the entry before forming a handle.
Overall excellent performance is reflected in its IBD Composite Rating of 98. Earnings are seen surging 387% in fiscal 2024, according to MarketSurge, with profits expected to hold stead this year.
Pipeline operator MPLX (MPLX) is actionable after clearing its own cup-base buy point of 51.94 in active trading.
The relative strength line has surged to fresh heights, a bullish sign. The midstream fuel distribution play is a solid all-around performer, with its Composite Rating coming in at 90.
Traders digested the first day of the new Trump administration.
He has already started the process of withdrawing the U.S. from the World Health Organization, issued almost 1,600 pardons related to the Jan. 6, 2021, Capitol riot and declared a national emergency at the U.S.-Mexico border.
He also issued an executive order pulling the U.S. out of the Paris Climate Agreement.
Crucially, Trump did not embark on a so-called shock-and-awe approach to tariffs. However, he did say 25% tariffs could be levied on Canada and Mexico starting Feb. 1.
Hopes are also rising that Trump may seek to reset relations with China, the U.S.' biggest economic rival.
"Trump wants a deal. Otherwise, he would have shot up China on Day One," Alicia Garcia Herrero, Natixis' chief economist for the Asia Pacific, told Reuters. "He ran a campaign which was very aggressive toward China, and then on Day One shied away from it."
She also believes that China will "offer Trump whatever he needs to do a deal." This could ultimately benefit both sides because, as trade tensions cool, economic activity could be boosted.
The prior Biden administration had increased the pressure on China with measure such as limiting AI chip exports. Nvidia (NVDA) had been critical of these measures.
China stocks were mixed, with a positive bias, in early action. E-commerce play JD.com (JD) reversed lower less than 1%, while Alibaba (BABA) trimmed gains to 0.3%. Temu parent PDD (PDD) also reversed lower.
Warren Buffett-backed electric vehicle play BYD (BYDDF) popped more than 4%. It has rallied clear of its 50-day line, which could be used as an early entry by aggressive investors. It has also formed an undefined pattern with an ideal buy point of 42, MarketSurge analysis shows.
The iShares MSCI China ETF (MCHI) saw initial gains fade but remained up 0.3%.
They say that fortune favors the bold. And that was certainly the case for ARK Invest Chief Executive Cathie Wood.
Her firm, where she also serves as chief investment officer, loaded up on Tempus AI (TEM) on Friday. It snapped up more than 159,000 shares for the ARK Innovation ETF (ARKK).
Friday's closing price of 35.15 was a 56% decline from its Nov. 12 high of 79.49.
Ark is already firmly in the green on the newly added shares, as the stock rocketed more than 30% on the stock market today.
Tempus uses data and artificial intelligence to improve health care. It aims to help drug discovery and genomic sequencing.
Nevertheless, it still looks like a risky investment. It has lost money in each of the past five years and holds an IBD Composite Rating of just 14 out of 99.
The Ark Innovation ETF also added nearly 126,000 shares in Crispr Therapeutics (CRSP). It sold shares of UiPath (PATH) and Roblox (RBLX).
Please follow Michael Larkin on X at @IBD_MLarkin for more analysis of growth stocks.
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