The Dow Jones Industrial Average gained as Warren Buffett flagged why progress has been difficult for Berkshire Hathaway (BRKB). Famed investor Cathie Wood bought a diving stock. Tesla (TSLA) fared best among the Magnificent Seven as Apple (AAPL) and Alphabet (GOOGL) lagged.
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Meanwhile, some noteworthy names are trading near buy points. Ollie’s Bargain Outlet (OLLI) and Dream Finders Homes (DFH) tested entries while Qualcomm (QCOM) moved toward a potential but point.
Nasdaq Steady, Small Caps Flex
The Nasdaq composite was making slight progress, rising 0.2%. Palo Alto Networks (PANW) fared best as it jumped about 6%, though it remains stuck below its 50-day moving average.
The benchmark S&P 500 was up less than 0.1%. Domino’s Pizza (DPZ) fared best, rising more than 8% on strong earnings. The firm is also raising its dividend by a quarter and increasing its share buyback program.
The S&P 500 sectors were mixed. Consumer discretionary and financials were faring best rose on the stock market today. Communication services and utilities struggled the most.
Small caps reversed higher, the Russell 2000 rising 0.6%. Growth stocks fared best though, the Innovator IBD 50 ETF (FFTY) rising more than 1%.
Dow Jones Today: Walmart Shines As Stock Splits
The Dow Jones industrials outshined the other major indexes despite only rising around 100 points. This equates to a gain of 0.3%.
Walmart (WMT) was among the strongest performers. It climbed around 1% as a 3-for-1 stock split came into effect.
However, it was Salesforce (CRM) that was faring best of all as it gained more than 2%.
Verizon Communications (VZ) struggled the most on the Dow Jones today, falling nearly 2%. 3M (MMM) and Honeywell International (HON) also lagged.
Warren Buffett Cites Buyout Troubles
Berkshire Hathaway stock inched higher in early trading, rising nearly 1%, following its report over the weekend. It is trading at all-time highs.
Buffett also took time in his annual letter to shareholder to explain how difficult it is for the firm to find good takeover candidates in an era of plentiful capital.
“Size did us in, though increased competition for purchases was also a factor,” he said.
In the past, Berkshire was able to make transformative deals such as purchasing insurance giant Geico and the BNSF railroad. Buffett also said Berkshire has “no possibility of eye-popping performance.”
One knock-on effect of the environment has been a continual increase in the firm’s gigantic cash pile. Berkshire’s cash hoard swelled to a fresh record of $167.6 billion in the fourth quarter, up from Q3’s $157 billion.
Nevertheless, Berkshire Hathaway earnings rose 28% on an operating basis vs. a year earlier to $8.48 billion, as underwriting and investment income offset some weakness at its railroad, energy and utility operations. Operating profit per class A share swelled 30% to $5,881, topping the FactSet consensus of $5,717.
Cathie Wood Snaps Up Diving Roku Stock
One investor who is never afraid to buy stock well off highs is Wood, the Ark Invest CEO. She used a massive pullback in a streaming stock to snap up shares.
Her firm, where she also serves as chief investment officer, snapped up nearly 99,000 shares of Roku (ROKU) Friday for the ARK Innovation (ARKK) exchange traded fund.
Roku stock was up less than 1% Monday and currently trades below its 50-day and 200-day moving averages, MarketSmith analysis shows. This is a distinctly bearish look. Roku stock fell as much as 43% from its Dec. 14 high of 108.84 last week. It now sits about 41% below this level.
Other moves made by the fund Friday included selling around 23,000 shares in Twilio (TWLO) and cutting loose around 362,000 shares of Teledoc (TDOC). Both were up fractionally Monday morning.
While snapping up stock market laggards can be tempting, IBD recommends buying stocks with strong earnings and price performance. This prevents people getting locked in a value trap. Look for leaders in strong industries that are showing superior earnings growth and sales.
Magnificent 7: Tesla Stock In Front
So-called Magnificent Seven stocks were having a mixed start to the week Monday.
Tesla was faring best as it rallied 3%. Nevertheless, the EV stock remains stuck below its 50-day and 200-day moving averages. It has been trading relatively tightly of late, though.
Nvidia (NVDA) was also in positive territory, rising less than 1%. The Leaderboard stock is extended past its most recent entry. The chip stock, a leader in artificial intelligence, is testing resistance at the 800 level.
Google parent Alphabet struggled most as it fell nearly 3%. Dow Jones stock Apple fell 0.5%.
Microsoft (MSFT), Meta Platforms (META) and e-commerce giant fell fractionally. Amazon.com (AMZN) edged up.
China EV Stock Soars
Chinese EV stock Li Auto (LI) was charging higher in early action, surging around 15%. Li turned in strong fourth-quarter earnings early Monday.
It earned 60 cents per ADS, a 1,400% increase on the 4 cents it reported a year earlier. Revenue soared 130% to $5.88 billion. It was also well clear of Wall Street views. Analysts expected Li Auto earnings per ADS of 44 cents on revenue of $5.5 billion.
It was not all good news, though. It guided for Q1 revenue of $4.4 billion to $4.53 billion, up 66%-71% vs. a year earlier in local currency terms, but under analyst forecasts.
Deliveries are expected to be 100,000-103,000, up 90%-96% vs. a year earlier but down from Q4’s record 131,805, which was also light of expectations.
Li stock remains shy of a double-bottom base entry of 42.35. However, the stock topped an alternative entry at 38.48.
Ollie’s Stock Among Breakouts
Ollie’s Bargain Outlet is just below a buy zone after earlier clearing a consolidation entry of 83.19. This is a first-stage pattern, a bonus.
All-around performance is good, but not ideal, with its IBD Composite Rating coming in at 90 out of 99.
Dream Finders Homes is in a buy zone after clearing a cup base entry of 37 in big volume. Earnings performance is very strong for the homebuilder. It is also in the top 3% of issues in terms of price performance over the past 12 months.
Qualcomm is one to watch as it eyes a flat base buy point of 157.98. This is a first-stage base.
Big Money has been snapping up QCOM stock of late, with its Accumulation/Distribution Rating coming in at A-.
Please follow Michael Larkin on X, formerly known as Twitter, at @IBD_MLarkin for more analysis of growth stocks.
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