Stocks shook early weakness and gained strength on Wednesday as investors kept a vigilant eye on approaching federal deadlines in Washington. Dollar Tree rebounded strongly after a strategic move. Netflix showed up on a video game acquisition. Chip stocks were mixed according to Micron Technology’s Q4 report. Boeing made the Dow Jones easy today with an analyst upgrade on the outlook for the travel sector.
The S&P 500 was up as much as 0.5% in the stock market today, while the Dow Jones Industrial Average climbed 0.4%. The Nasdaq Composite rebounded 0.7%, recovering part of Tuesday’s 2.8% decline as the market entered the final two days of September and the third quarter.
Discount retailer Money tree (DLTR) led the S&P 500 and Nasdaq 100, rising 14%. The company announced late Tuesday that it would raise prices above $ 1 on its nearly 16,000-store chain. Vaccine manufacturer Modern (MRNA) rebounded 2.4% when trying to contain a three-day slide.
Netflix (NFLX) was up 3.4% after announcing late Tuesday that it was continuing to expand its video game presence and agreed to buy video game maker Night School Studio. The profit brought Netflix shares back over a record of 593.39 in a 31-week consolidation.
Even among the small caps, bitcoin miners Greenidge Generation Holdings (GREE) increased by almost 20%. B. Riley began reporting the stock with a buy rating and a target price of 78 – nearly 240% above the stock’s closing price on Tuesday.
Dow Jones today: Boeing upgrade, Salesforce Buy Point
Boeing (BA) led the Dow Jones today, up 4.2% as Bernstein moved the stock from market performance to outperformance and raised its price target from 252 to 279. In addition, the grade improved ratings in much of the aerospace sector as improved traffic forecasts indicate a “turning point for global travel”.
Apple (AAPL) rose 0.8% after falling 2.4% on Tuesday.
Salesforce.com (CRM) gave up its pre-trading gains and lost 0.1%. The major consumer relationship management software provider fell 4.6% on Tuesday, falling below a buy point of 284.60, which IBD MarketSmith analysis identifies as a 55-week cup base. You could also read the chart as a cup-and-handle pattern with a buy point at 275.32. This would put Salesforce stock 1% below the entry.
Chips mixed according to Micron Q4
Micron technology (MU) has thinned its early decline to a fraction. The chipmaker surpassed Wall Street’s revenue and earnings targets for its fourth fiscal quarter, but its guidance for the first quarter fell well short of expectations. Also an oil producer EQT (EQT) fell 4.6% to the bottom of the S&P 500 as investors responded to an offer of more than 25 million shares announced late Tuesday.
Despite Micron’s losses, several chip stocks appeared higher, with IBD leaderboard stocks Nvidia (NVDA), Entegris (ENTG) and Marvell Technologies (MRVL) on the rise. In the Dow Jones today Intel (INTC) fell 0.3%.
Additionally, the iShares Semiconductor ETF (SOXX) lost 0.1% in early trading.
Some leaders avoided a difficult day for growth stocks on Tuesday. Under these, Sea Limited (SE) and Jefferies Financial (JEF) rose near buy zones early Wednesday.
Federal closure, deadlines for infrastructure laws
A critical deadline on Thursday evening, followed by a deadline for a possible US debt default in mid-October, jeopardized the political maneuvers of the week in Washington. A Republican Senate vote on Monday held Democrats responsible for passing a measure to fund government and prevent federal closings, due to begin Friday if lawmakers fail to pass a budget.
US economic optimism collapses amid the surge in Covid and the fiscal fade
Additionally, Democrats must now find a legal, one-party route to raising the debt ceiling or facing the risk of a first US default in mid-October. Treasury Secretary Yellen told the Senate Banking Committee that a US default without raising the debt ceiling was likely by October 18, and gave the first time a specific date.
On Sunday, House spokeswoman Nancy Pelosi put a vote on a $ 1 trillion infrastructure bill on Thursday, ending attempts to link that move with much broader, larger spending on social services by progressives Democrats are pushed forward. This decoupling is positive for parts of the market associated with the $ 550 billion new spending represented by the bipartisan infrastructure plan.
Meanwhile, Fed chief Jerome Powell, who testified at the same Senate banking hearing as Treasury Secretary Yellen, said inflation will stay higher for longer than previously expected. Powell will be participating in a discussion with the European Central Bank Forum on Central Banking from 11:45 a.m. ET today.
IBD 50: Sea Limited, AutoNation, Jefferies near purchase areas
Among the IBD 50 shares, In mode (INMD) led early trading, up 4.7% as it could reclaim part of Tuesday’s 12.8% sell-off. Confirm the hold (AFRM) also wanted to make up ground and rose 4.2% in opening trading. Affirm’s 10.8% drop on Tuesday fell more than 8% below a buy point of 126.56, which triggered the automatic sell rule. Snap also triggered the auto sell rule, falling more than 8% below its buy point of 80.95.
Upstart Holding (UPST), bag (TASK), Asana (ASAN) and Sea Limited were also early leaders among IBD-50 growth stocks. A spike in strong volume would technically put Sea Limited in buy zone with a rebound from its 10 week moving average.
Also on the IBD 50 list, AutoNation (AN) rose more than 4% to hit a buy point at 125.31. Morgan Stanley upgraded the stock from underweight to equal weight and set a target price of 116 versus 70. The stock has a buy range of 131.58.
Jefferies Financial IBD-50 stock was up 0.6%, still in a buy range over a three week narrow buy point at 37.95. Investors may also have entered the stock after a rebound on September 22nd from support at the 10-week moving average.
Vital parameters: Oil, NatGas, bond yields, Bitcoin
US crude oil prices offset their early losses on Wednesday after falling 0.2% on Tuesday for a five-day lead. West Texas Intermediate crude oil traded 0.9% lower to $ 74.65 a barrel. That puts it 3% below its seven-year high of $ 76.98 set in early July.
Natural gas prices in Europe have risen nearly 500% in the past 12 months, with this price pressure spilling over into US trade, compounded by low natural gas inventories ahead of the winter heating season. U.S. natural gas futures plunged another 5% to $ 5.59 per million British thermal units early Wednesday after rising to $ 6.28 on Tuesday.
Stock market ETF strategy and how to invest in the current uptrend
Bond yields also fell after rising to their highest level since late June on Tuesday. The 10-year government bond yield fell two basis points to 1.51% on Wednesday. The return remains well below the annual high of over 1.76%, which was reached in April.
Bitcoin’s early gains faded and slipped to just over $ 42,000, according to CoinDesk. The cryptocurrency has traded up to $ 42,578 and up to $ 40,783 in the past 24 hours.
Nasdaq, S&P 500 and Dow Jones today
With two trading days remaining in September, heavy losses on Monday brought the market’s major benchmarks to their worst monthly performance in a year.
The Nasdaq is down 4.7% for the month and the S&P 500 is down 3.8%, with both indices trailing their largest monthly declines since last September. The Dow Jones is down 3% for the month today, making it its worst month since last October. That is for a month where the S&P 500 has risen an average of 0.25%, the Nasdaq has risen an average of 0.4%, and the Dow has risen an average of 0.7% over the past 10 years.
While Monday’s losses technically didn’t interrupt the market’s attempt at a new uptrend, they left the benchmarks with some chart damage. The Dow, Nasdaq and S&P 500 all fell significantly below the 50-day support, with the Nasdaq testing its September 20th lows.
Growth stocks, market status
Additionally, growth stocks took some heavy losses on Monday. The innovator IBD 50 ETF (FFTY) lost 9.5% in the three sessions up to Tuesday. The iShares Russell 1000 Growth ETF (IMF) lost 3.8% in those three days. Both funds broke below their 50-day moving averages.
Another factor among the larger indices: Tuesday’s results increased the number of payout days for both the Nasdaq and the S&P 500 to a weighty six, which put increasing pressure on the status of the market. According to Tuesday’s Big Picture market analysis, this means that new purchases carry a much higher risk. Raising capital by leaving the biggest losers in your portfolio and taking profits with your winners can help protect your portfolio from further damage.
Please follow Alan R. Elliott on Twitter @IBD_Aelliott
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