Stocks sputtered out of the starting gate Thursday, threatening to snuff the market’s two-day rally after an unexpected uptick in unemployment claims. Earnings fueled some dramatic premarket action, as railroads CSX and Union Pacific rallied and Crocs spiked. Floor & Decor and Bill.com advanced in buy ranges. On the Dow Jones today, Salesforce.com rose to an early lead.
The Nasdaq Composite struggled to a 0.2% gain. The Dow dumped 0.2%, while the S&P 500 wrestled with a fractional loss. Small caps lagged the overall market action, with the Russell 2000 slumping 0.8% in early trade.
Earnings news drove railroad CSX (CSX) to the top of the Nasdaq 100, rallying 3.7%. Competitor Union Pacific (UNP) also gained on earnings, rising 2.3% in opening trade.
Chip stocks were particularly weak, with Texas Instruments (TXN) down 4.5% to the bottom of both the Nasdaq 100 and S&P 500 — despite a healthy second-quarter beat, and robust third-quarter guidance. Chip stocks held the six worst early declines among Nasdaq 100 stocks.
However, IBD 50 and Leaderboard stock ASML Holdings (ASML) jumped 2%, aiming to extend its rebound from 10-week support to a third day.
IBD 50 stock Blackstone Group (BX) climbed 2.1% as distributable earnings cleared expectations for the second quarter. Blackstone stock is extended, up more than 65% since Dec. 31.
Shares of Uber (UBER) edged higher after announcing its Uber Freight unit would pay $2.5 billion to acquire Transplace from private investment firm TPG Capital. Transplace is a transportation management and logistics software developer.
Wednesday Stock of The Day Floor & Decor (FND) starts the day in a buy zone, above a cup-with-handle base buy point at 109.95. The same is true for IBD 50 Stock To Watch Bill.com (BILL), which is less than 5% above a cup-with-handle buy point at 192.99. Both stocks gained more than 1% at the starting bell.
Dow Jones Today: Dow Earnings, Microsoft Target Hike
Specialty chemicals maker Dow (DOW) reversed early gains and dropped 2.4% on the Dow Jones today, despite second-quarter revenue and earnings that easily rolled past analyst targets. Chief Executive Jim Fitterling projected “earnings momentum from additional improvements in consumer spending, international travel and industrial production,” and as the economic recovery broadens around the world.
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Salesforce.com (CRM) led among blue chips, up 1.6% shortly after the start of trade. The software heavyweight closed its $27.7 billion acquisition of Slack on Wednesday. Salesforce stock is rebounding from a test of support at its 10-week moving average, after a breakout faltered early this month.
Microsoft (MSFT) climbed 0.8%, as Citi raised the stock’s price target to 378, from 310. The new target comes ahead of the company’s fiscal fourth-quarter report, due on Tuesday. The IBD Leaderboard listing is extended after clearing a cup base in June.
Intel (INTC) reports after the close. Honeywell International (HON) and American Express (AXP) report on Friday.
Jobless Claims Rise, Chicago Fed Index Weakens
First-time claims for unemployment assistance rose to 419,000 in the week ended July 17, the Labor Department reported. That was a 16% jump from the prior week, and well above projections for a decline to 350,000 claims.
The Chicago Federal Reserve’s National Activity Index slumped to a reading of 0.9 for June, down from 0.29 in May and below expectations for an increase to 0.30. Two of the index’s three categories of economic indicators deteriorated during the month.
June existing home sales from the National Association of Realtors, and the Conference Board’s leading economic indicators, are set for release at 10 a.m. ET.
Earnings News: Crocs, OneMain, Chart Industries
In earnings news, First Energy (FE) jumped 4% and Resources Connection (RGP) surged almost 14%. Meanwhile, NetGear (NTGR), Texas Instruments (TXN) and D.R. Horton (DHI) were taking hard hits following their quarterly results.
Consumer lender OneMain Holdings (OMF) cut its premarket surge to 0.4% following a big earnings beat. The stock briefly peeked above a buy point in a brief consolidation. OneMain holds a best-possible Composite Rating of 99 from IBD.
Crocs (CROX) spiked almost 11%. The stock is extended above a flat base buy point, and after a rebound from support at its 10-week moving average.
Energy equipment manufacturer Chart Industries (GTLS) rose 1% after scoring a narrow second-quarter earnings beat and raising guidance. The stock finished Wednesday 6% below a 167.49 buy point in a 12-week cup base.
Global Stock Markets
Lights were green across worldwide markets Thursday. Hong Kong’s Hang Seng Index jumped 1.8%, snapping a three-day slide even as widespread floods killed at least 25 and displaced an estimated 1.2 million persons in central China. In Japan, markets are closed Thursday and Friday.
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Stocks turned mixed in Europe. In afternoon trade, London’s FTSE 100 shed early gains and dipped 0.3%. The CAC-40 in Paris was up 0.5%, while Frankfurt’s DAX traded 0.7% higher.
Vital Signs: Oil Prices, Bond Yields, Bitcoin
Oil prices flattened Thursday morning, with U.S. benchmark West Texas Intermediate up 0.4% to $7o.55 a barrel. That puts oil’s loss for the week right around 2%, up from a 9% decline, as prices resist adding a third week to their slide.
Prices dived Monday, after the Organization of Petroleum Exporting Countries and partners led by Russia, typically called OPEC+, agreed Sunday to a strategy to return production to pre-pandemic levels by 2022. Prices on July 6 reached $76.98, their highest level since October 2014.
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Bonds and yields flattened following a two-day rebound. The 10-year yield gave up early gains to trade at 1.27% early Thursday, after settling at 1.28% on Wednesday. Yields on Tuesday briefly fell to their lowest level since Feb. 2, then rose to retake support at their 200-day moving average on Wednesday.
Bitcoin traded almost 2% higher, above $32,200, after dipping to $29,327 on Tuesday. The cryptocurrency had traded above $36,000 in late June, and touched a record high near $65,000 in April. Bitcoin prices appeared to receive some uplift after Tesla CEO Elon Musk, Twitter (TWTR) CEO Jack Dorsey and ARK Invest’s Cathie Wood spoke about Bitcoin and cryptocurrencies at the Bitcoin event “The B Word.”
S&P 500, Nasdaq, Dow Jones Today
On Wednesday, the S&P 500 added a strong second day to its rebound from 50-day support. That left the index up 0.7% so far for the week, tracking toward its sixth-straight monthly gain, up 16% year to date and less than 1% from its record high set July 14.
The Nasdaq Composite also has a two-day bounce under its belt, though its pullback stopped well short of a test of 50-day support. The index is now back above its 21-day line, up 1.4% for the week and a little more than 1% off its July 13 record.
For more detailed analysis of the current stock market and its status, study the Big Picture.
The two-day revival in leading stocks and small caps shows investors overcoming concerns over possible economic impact from rising coronavirus infections.
Wednesday’s Big Picture market commentary noted airlines, hotels, casinos, restaurants and travel booking industry groups climbed more than 3% during the session. And the yield on the 10-year Treasury note rose 8 basis points to 1.28% Wednesday afternoon. That showed capital exiting safe-havens at least briefly, amid the bond market’s two-month rally.
Dow Jones Today: ETFs Near Buy Points
As for the Dow Jones today, the blue chip index has recovered support at its 50-day and 21-day moving averages. It has a 0.3% gain for the week, and it is also only about 1% off its record high. But the Dow set its record in mid-May, and the chart shows the index now in its 11th week of consolidation.
As a result, ETFs tracking the Dow Jones today are hovering near buy points. The SPDR Dow Jones Industrial Average ETF Trust (DIA) is less than 1% below its 348.75 entry. The leveraged ProShares Ultra Industrials (UXI) is 2% below its buy point at 34.07.
In addition, the SPDR S&P 500 ETF Trust (SPY) is in a buy zone on its rebound from its 50-day/10-week moving average.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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