Stock futures moved sharply up Thursday, boosted by earnings reports and a notable improvement in weekly jobless claims. Taiwan semiconductor (TSM) and Bank of America (BAC) were the first to top the earnings news. On the Dow Jones today UnitedHealth Group (UNH) led after the release of positive results for the third quarter.
Dow Jones futures rumbled 0.9% higher, while S&P 500 futures also fluctuated 0.9% above fair value. Nasdaq 100 futures were up 1.1% in today’s stock market, enough to push the index into positive territory for the week.
Chip equipment manufacturers topped the Nasdaq 100, supported by strong third quarter results from Taiwan Semiconductor. ASML stocks (ASML) was at the top of the list, up 3.1%. Applied materials (AMAT) and COMPLAIN (KLAC) won more than 2%, Lam research (LRCX) gained 1.9%. The VanEck Semiconductor ETF (SMH) climbed 1.7% in pre-trading.
Taiwan Semi rose 3.9% after its third quarter earnings report which raised its guidance for the current quarter. The stock is aiming for a five-week decline.
Vaccine manufacturer Modern (MRNA) was strong, up 2.2% before advisors to the Food and Drug Administration vote to approve a third shot of the company’s Covid-19 vaccine. Moderna stocks are struggling to break the bottom of a nine-week correction.
Also received an FDA boost, Biotech Regeneron Pharma (REGN) rose 2.7% after the agency reportedly accepted the company’s application for its monoclonal antibody treatment for non-hospitalized Covid-19 patients. Regeneron stocks test 200-day support after a steep four-week collapse.
Network storage leader NetApp (NTAP) rose more than 3% and led the S&P 500. The stocks are technically in a buy range on a rebound from their 10-week moving average.
United Parcel Service (UPS) ramped up by 2.7%. Stifel upgraded Hold’s stock to Buy and raised its price target from 210 to 224.
Dow Jones Today: Walgreens, UnitedHealth Earnings
UnitedHealth Group and Walgreens Boots Alliance (WBA) led the Dow Jones today and did well on quarterly earnings news.
UnitedHealth added 2.6%, positioning the stock for a possible resistance test at its 50-day moving average. The managed care giant narrowly exceeded analysts’ revenue and earnings targets for the third quarter and raised its earnings forecast for the full year in line with Wall Street expectations.
UnitedHealth stock is recovering from a support test on its 200-day line. It faces potential resistance on its 50 day moving average as it attempts to move up the right side of the IBD MarketSmith analysis, which is presented as a flat base.
Walgreens was up 2.2% after it announced its fourth quarter earnings and revenue exceeded estimates. US sales rose 6.6% to $ 28.8 billion. International sales rose 62% to $ 5.5 billion.
Walgreens stock is in a six month consolidation and trading below its 10-week and 40-week moving averages.
IBD 50: Callon Pete, Diamondback Lead
On the IBD 50 list, Callon Petroleum (CPE) and Diamondback energy (FANG) used to lead as oil prices tended to rise for the sixth consecutive day.
Callon ended Wednesday down more than 7% since the beginning of the week and pulled back after briefly exceeding a buy point of 60.61. The pullback went well beyond the 8% loss threshold that triggers the auto sell rule, kicking out investors and sending out a buy warning while the market outlook is “in correction”.
Diamondback was less didactic, breaking above a buy point of 102.63 on October 4. Stocks are expanding just above the cup base entry after finding support on their short-term 10-day moving average on Wednesday.
Econ News: Unemployment claims fall, oil rises
The Department of Labor reported that initial jobless claims fell to 293,000 in the week ended October 9. This represented a decrease of 10% from the previous week and below the forecasts of economists for 320,000 applications.
The second consecutive drop in weekly requests was also the lowest since March 2020 when the pandemic began.
The Energy Information Administration reports weekly natural gas supplies at 10:30 a.m. ET and weekly oil supply estimates at 11 a.m. ET.
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Oil prices soared, with West Texas Intermediate Futures up 1.2%, trading above $ 81 a barrel, and pushing to extend their surge for an eighth week. Copper rose 1.5% after seeing a 4.6% increase on Wednesday. Bond yields were broadly unchanged after two days of sharp declines, while 10-year government bond yields were unchanged at 1.54%.
Meanwhile, Bitcoin rose nearly 5% to over $ 57,500, according to CoinDesk. The cryptocurrency rose to $ 58,518 and to $ 54,554 in the past 24 hours.
Merit: Bank of America, Morgan Stanley Climb
Financials were on the move on earnings news after a tough day of trading on Wednesday.
Bank of America rose 2.7% and traded high on the S&P 500 after reporting a better than expected 67% increase in earnings. Revenue also exceeded analyst estimates, and asset quality improvements resulted in a release of $ 1.1 billion in reserves. Bank of America stock is being pulled back to test support at its 21-day exponential moving average after resurrecting a failed breakout in August.
Morgan Stanley (MS) was up 2.5% as third-quarter earnings growth of 28% beat analyst forecasts. Revenue rose 20%, also above forecast, as profits increased by releasing $ 1.7 billion in reserves for potential outages.
A surge to new highs in late September broke Morgan Stanley’s base pattern. Stocks are currently consolidating below their 10-week moving average.
Nasdaq, S&P 500, Dow Jones today
The Dow Jones is heading for the starting bell today with a 1.1% loss for the week. The S&P 500 is down 0.6%. For the month, the Dow is up 1.6%. The S&P 500 is up 1.3%.
Meanwhile, the Nasdaq composite is down less than 0.1%. If the index holds near the current level, it would mark a second close of the week within 0.1% of the previous week. On a weekly chart that shows up as a three week tight pattern is a bullish marker typically found in stocks.
Both the Nasdaq and S&P 500 made three-day withdrawals on Wednesday. Both have now found five days of support on their 10-day short-term moving averages, but remained well below their 50-day longer-term moving averages.
The Dow remains on the fence, with a flat end on Wednesday that essentially added a fourth day of bearish to its chart. However, the Dow made up for previous losses. The stock market outlook is still in “correction” but the rally attempt built on the October 4th lows for the Nasdaq and S&P 500 remains in effect.
For a more detailed analysis of the current stock market and its status, study the big picture.
It takes a day after – a big increase in the Nasdaq or S&P 500 with increasing volume – to start a new uptrend and raise the market outlook to a “confirmed uptrend”. Until then, the best place for investors to have cash, make watch lists, and wait for the market status to change.
Alan R. Elliott is on Twitter @IBD_Aelliott
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