The Dow Jones Industrial Average maintained steep losses in afternoon trading Tuesday. But the Nasdaq composite traded off its intraday lows and turned positive on the first day of trading after a long holiday weekend.
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Dow Jones Lags, Energy Plummets
The Dow Jones Industrial Average was down 1.4%, while the S&P 500 saw a decline of 0.9%. Both indexes were off their morning lows. Small caps also struggled, with the Russell 2000 down 0.8%. The Nasdaq fared the best and rose 0.7% after paring earlier losses. Volume was lower on the Nasdaq and on the NYSE vs. the same time Friday, according to IBD data.
Energy stocks fell sharply as oil plummeted 8.6%. The benchmark for crude oil traded below $100 a barrel for the first time since early May. The S&P 500′s energy sector was by far the worst performer, as the Energy Select Sector SPDR (XLE) lost 5.8%.
Dow Jones leader Chevron (CVX) lost 4.5% and led the downside among blue chips. Meanwhile, Permian Basin Royalty Trust (PBT) led the downside among IBD 50 stocks with a decline of 13%. PBT has dropped below its 50-day moving average, and has erased all prior gains from a recent 14.79 buy point.
Other notable decliners include Earthstone Energy (ESTE), down 11.5%, Marathon Oil (MRO), off 8.1%, and Halliburton (HAL), which fell 7.9%. All three oil giants are now below their 200-day lines.
Defensive Stocks Outperform
Recently, defensive stocks have outperformed with strength in industry groups such as food products, medical-related groups and tobacco stocks. Additionally, stocks in the alcoholic beverage group have shown strength. On Tuesday, MGP Ingredients (MGPI) broke out above a 104.10 flat-base entry. But the stock faded gains in afternoon trading and remains 3% below the entry.
MGPI broke out in stronger-than-average volume, a bullish sign. Additionally, the RS line notched a new high alongside the breakout. The stock also maintain both a Composite Rating and an RS Rating of 98 out of a best-possible 99 rating.
Elsewhere, biotech stock Exelixis (EXEL) rose 1.9% and neared a 22.55 cup-with-handle buy point. The stock’s handle formation occurred in lighter volume, which is ideal for the shakeout. Biotech stocks have also been outperforming recently with the iShares Biotech ETF (IBB) up 0.7% on Tuesday. The index recently reclaimed its 50-day line.
Auto Stocks On The Move
Shares of Tesla (TSLA) were up slightly on Tuesday after the automaker announced it delivered 254,695 vehicles in the second quarter. This was below estimates for 264,000 deliveries. The company noted that Covid lockdowns and restrictions significantly reduced Shanghai plant production for most of the quarter.
Tesla remains below its 50-day line while its RS line has also declined in recent months. The stock initially fall as much as 0.6% on the news but recovered losses in afternoon trading, according to MarketSmith chart analysis.
Ford (F) was also on the move as shares slumped over 2%. The automaker announced it sold 483,688 vehicles in Q2. Sales were up 1.8% year over year, outpacing a 21% decline for the overall industry in Q2 amid chip and other supply constraints, according to CFRA. However, Ford’s numbers also came in below estimates for 496,248 vehicles sold in Q2.
Shares of Ford are trading at fresh 52-week lows.
Follow Rachel Fox on Twitter at @IBD_RFox for more Dow Jones and stock market commentary.
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