Stock futures leaned higher Wednesday, amid weak global trade, as positive Eurozone manufacturing data and U.S. chip-sector news helped bolster premarket action. Intel led the Dow Jones today, sending most chip stocks sharply higher, on a $20 billion manufacturing initiative. Meanwhile, investors will be tuned to Washington this morning, where Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell face the Senate Banking Committee this morning in a second day of congressional testimony.
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Dow Jones futures defended a 0.3% gain juist ahead of the open. S&P 500 futures also eased to 0.3% above fair value. Nasdaq 100 futures climbed 0.6% on the stock market today.
Chipmakers were in a mood, as Intel (INTC) spearheaded a wide-ranging rally. Applied Materials (AMAT), Lam Research (LRCX) and KLA (KLAC) led the S&P 500, up about 4% each. ASML Holding (ASML) topped the Nasdaq 100 and the IBD 50 list with a 5.2% gain. The VanEck Vectors Semiconductor ETF (SMH) added 1.5%, the iShares PHLX Semiconductor ETF (SOXX) jumped 2.6%.
Small caps were also poised to rally, with Russell 2000 futures riding a 1.3% gain. Winnebago (WGO) leapt 3.8% after reporting a big fiscal second-quarter earnings and revenue beat, and noting “strong retail momentum” heading into the recreational vehicle shopping season.
Biotech Dynavax Technologies (DVAX) popped 1.7%, after launching clinical trials of a Covid-19 vaccine jointly developed with China’s Clover Biopharmaceuticals. The early move positioned Dynavax stock just below an 11.79 buy point in a seven-week cup base.
IBD Leaderboard listing Adobe (ADBE) gained 1% after reporting a strong fiscal first-quarter performance late Tuesday. JPMorgan notched the stock’s price target to 595, from 585 and kept its overweight rating. Adobe stock is struggling to retake support at its converged 50-day and 200-day moving averages, as it attempts to fashion the right side of a six-month consolidation.
Yellen/Powell Day 2; Durable Goods, March PMI
Treasury Secretary Yellen and Fed chief Powell face questions from the Senate Banking Committee this morning, after a similar session before the House Committee on Financial Services on Tuesday. The country’s two most powerful financial voices agreed on Tuesday that, while market valuations were in many instances high, they did not point to a sudden surge in inflation. In addition, both said that the economy remains on track toward a powerful recovery, but restoring full employment will take time and monetary support.
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Durable goods order data from the Commerce Department came in sharply below expectations, falling 1.1% in February, down from January’s 3.5% surge and disappointing forecasts for a 0.8% increase. Minus transportation, orders slipped 0.9%, vs. projections for a 0.6% gain. Core capital goods orders — non-defense orders excluding aircraft — dropped 0.8%, undercutting views for a 0.5% gain.
Researcher Markit releases its preliminary March composite purchasing managers index reading on the U.S. economy at 9:45 a.m. ET.
Intel Leads Dow Jones Today On Foundry Push
Chipmaker giant Intel rebounded from Tuesday’s sharp pullback, surging 3.6% to lead the Dow Jones today in early action. Chief Executive Pat Gelsinger announced the company would spend, to start, $20 billion to build two manufacturing plants in Arizona, creating a chip foundry operation to go head-to-head with chipmaking leaders Taiwan Semiconductor (TSM) and Samsung Electronics.
TSMC shares dropped 1.9% in premarket trade. Taiwan Semi is an IBD Leaderboard stock.
Intel stock has been seesawing over and under a 63.64 buy point in what IBD MarketSmith analysis charts as a cup-with-handle base lasting seven weeks. Shares closed on Tuesday less than 3% below that buy point.
Coronavirus Update
After a two-month decline, the seven-day average for new Covid-19 cases reported daily in the U.S. flattened, then began to creep higher over the past several days, according to Worldometer. The current plateau bottomed out at just above 55,000 new cases per day, well above the low of around 36,000 new cases during the previous valley, which occurred in September.
New cases reported worldwide have been ticking higher since mid-February. New cases reported, averaged across the prior seven days, increased to 500,524 on Tuesday. That was up from 361,619 on Feb. 19, and below the high of 745,985 new cases recorded on Jan. 11.
Deaths continued lower in the U.S., with the seven-day average dropping below 1,000, to 975, on Tuesday — the lowest level since Nov. 5. U.S. deaths hit a high of 3,470 on Jan. 26. Worldwide, the seven-day average for deaths turned higher on March 13, following a six-week decline. Reported deaths rose to 8,932 on Tuesday, down from a high of 14,462 on Jan. 26.
The Centers for Disease Control and Prevention reports the count of vaccine doses distributed so far rose on Tuesday to 164.3 million. Some 128.21 million doses have been administered, leaving 13.7% of the total population fully vaccinated.
Bitcoin, Oil Prices, Bond Yields
Stock markets across Asia fell hard Wednesday, and Europe’s bourses were under mixed pressure in afternoon trade, despite Germany’s reversal of plans for an Easter holiday Covid-19 lockdown, as well as data showing a healthy rebound in Eurozone manufacturing activity during March.
Cryptocurrency stocks ran higher as Bitcoin rebounded to near $57,000, after dipping below $54,000 on Tuesday, according to CoinDesk. The cryptocurrency climbed to a record high at $61,556 on March 13.
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Oil prices rebounded, aided by a grounded cargo ship blocking the mouth of the busy Suez Canal in Egypt, effectively pinching the world’s oil supply. West Texas Intermediate jumped 2.7% to above $59 a barrel. WTI dropped 3.8% on Tuesday, leaving it far below its March 8 high near $68, and undercutting support at its 50-day line for the first time since early November.
Bonds were effectively flat, with the 10-year Treasury yield up 1 basis point at 1.63%. Yields had staged a quick rise from record lows during the pandemic, of around 0.50% in August. They approached pre-pandemic levels late last week, climbing above 1.75% — the highest level since January 2020. Yields had started 2020 at around 1.8%, which was down from about 2.7% a year earlier.
Dow Jones Today Flexes Muscle, Small Cap Flash Warning
The Dow Jones today continues to flex some muscle as it continues to hover well above its 21-day exponential moving average. Meanwhile, the S&P 500 is successfully holding support as its tests its 21-day line. The Nasdaq now faces clear resistance at its 50-day line and, in addition, dropped back below its 21-day levels of support on Tuesday. The next critical technical marker is Friday’s low, at around 13,039. An undercut of that marker leaves the door open to a deeper pullback.
For more detailed analysis of the current stock market and its status, study the Big Picture.
Small caps also flashed a worrisome signal Tuesday, as the Russell 2000 dived hard to below its 50-day moving average. The index had previously undercut the line early in the month. But the move was intraday, with the index closing the session back above support, then rebounding sharply the next day. Yesterday, the Russell 2000 closed at the bottom of the session’s trading range, more than 1% below its 50-day line.
Russell 2000 futures were outpacing Wednesday’s premarket action by a wide margin, but Gamestop‘s (GME) 14% post-earnings dive waved a yellow flag as it swooned to the bottom of the index.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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