Shares rose when it opened on Thursday and rose into the final trading session in both September and the third quarter. Lithium issues supported early trading, with Lithium Americas and Albemarle both rising on company news. Big drug companies were on the move too: Perrigo rose after settling a tax case, while Merck today led the Dow Jones after agreeing to a $ 11.5 billion acquisition.
The Nasdaq Composite led the early surge, up 0.5% on the stock market today. The S&P 500 fluctuated 0.3% higher. The Dow Jones Industrial Average defended a 0.1% increase, less than 50 points higher than Boeing (BA) drawn at the bottom of the index.
Generic drug manufacturer Perrigo (PRGO) surged more than 14% to trade high on the S&P 500. The Ireland-based company announced late Wednesday that it had settled a long-running tax dispute in its home country for $ 297 million, well below the government’s original demands. Jefferies is raising the stock to buy on hold and raising its target price to 63, nearly 45% above Wednesday’s closing price.
Specialty chemicals manufacturer Albemarle (ALB) grew by 3.4%. The North Carolina-based company said it will spend $ 200 million to expand its lithium operations through the acquisition of the China-based lithium converter Guangxi Tianyuan New Energy Materials.
Payroll Service Paychex (PAYX) rose 5% to top the Nasdaq 100 after beating analysts’ estimates for the first quarter. Other early win news was generally negative, with Bed bath in addition (BBBY) diving 25% and CarMax (KMX) down by more than 8% according to initial reports. IBD 50 bearings Jefferies Financial (JEF) reports after today’s close of trading.
Dow Jones today: Merck takes over, Salesforce wins
At the top of the Dow Jones today IBM (IBM) gained 0.8%, Merck (MRK) added 0.7%.
Merck rose on news it would pay $ 11.5 billion to acquire a manufacturer of rare disease treatments Acceleron Pharma (XLRN). The deal valued Acceleron at 180 per share. The Acceleron share, which has gained more than 41% since the beginning of September due to deal chatter, gained 0.6% in pre-market trading.
Salesforce.com (CRM) remains a blue chip stock on Thursday. Shares gained 0.3% prior to going public when the stock halted a three-day slide in price. Stocks had broken out of a 13-month mug with handle late last week after a buy point of 275.32. This week’s pullback left the stock less than 2% below its buy point on Wednesday.
GDP, job data; Infrastructure, budget law
Initial jobless claims rose to 362,000 in the week ended September 25, the Department of Labor reported. That was an increase from 351,000 requests in the previous week, countering expectations of a decline to 335,000.
The Commerce Department revised its final estimate for GDP growth in the second quarter up to 6.7%. That was more than its initial 6.6% growth estimate and was in line with economists’ expectations as the economy continues to recover from its pandemic slump. Private consumption and spending increased 12% year over year, revised up from an initial growth of 11.9%.
The Chicago Institute For Supply Management’s Purchasing Managers’ Index releases at 9:45 a.m. ET. In addition, speeches from six different Federal Reserve Bank presidents are scheduled during Thursday’s trading hours.
US economic optimism collapses amid the surge in Covid and fiscal shrinkage
On a day of exceptionally high political activity in the country’s capital, the House of Representatives and Senate voted on Thursday on a measure that the government would fund through early December. If a deal doesn’t come off, a gradual closure of federal offices and services would begin on Friday at 12:01 p.m. ET. Meanwhile, Democrats struggled to bridge internal divisions as House leaders tried to get a $ 1 trillion infrastructure spending package to a scheduled vote on Thursday.
Global Markets: China Vacation; Germany, Japan Political Change
China’s markets ended mixed in their pre-holiday session, with the Shanghai Composite gaining 0.9% and Hong Kong’s Hang Seng Index closing 0.4% lower. The Hong Kong Stock Exchange is on a three-day national holiday hiatus while the Shanghai Composite will be closed until next Wednesday.
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In Japan, the Nikkei 225 fell 0.3% in Tokyo, extending its retreat by a third day as the country prepares for new leadership, with former Foreign Minister Fumio Kishida taking over as prime minister on Monday.
Markets in Europe were also mixed, with the London-based FTSE 100 gaining 0.2% and the CAC-40 defending a slight gain in afternoon trading in Paris. The Frankfurt DAX lost 0.2% and thus remained 1.3% since the elections on Sunday showed the German leadership highly fragmented and insecure, when Angela Merkel resigned as Chancellor after 16 years.
Oil prices fell slightly. Natural gas futures, which were up nearly 7% for the week and 25% in September, rose 2.9% in early trading. Now on a seven-day rally, the 10-year bond yield rose 1 basis point to 1.53%.
Stocks to watch: Atkore, Lithium Americas
IBD 50 bearings Atkor (ATKR) rebounded 0.9% hoping to hit its two-day decline as it tests support on its short-term 10-day moving average. The electrical wiring and parts supplier broke briefly on Friday and Monday, then fell to 7% below its buy point of 98.10 and stopped just before the auto sell rule triggered.
Lithium america (LAC) rose 1.9% after JPMorgan started coverage of the stock with a buy rating and a target price of 28, nearly 37% above Wednesday’s closing price. The stock is on a nine-month cup-with-grip basis, with a buy point at 24.82.
Nasdaq, S&P 500, Dow Jones Today: Warning Lights
With the market coming to an end in September and the third quarter, the Dow Jones must decide today whether to get back to its 10-day short-term moving average. The index is up five of the last six sessions, down 2.7% in September as it heads for its first monthly decline in the third quarter.
The S&P 500 is down 3.6%. It is heading towards its first monthly loss since January and is about to test its September 20th low. But the Nasdaq Composite is the market’s warning light to watch out for. With a minus of 4.9% on the last day of September and a loss of 3.6% in the worst week since February, the Nasdaq has already fallen below its level of September 20th. It should now test previous lows – around 14,423 – from August.
For a more detailed analysis of the current stock market and its status, study the big picture.
What makes the Nasdaq more worrying is the sudden spike in sales days. Three days of intense sales weighed on the index with a weighty seven payout days. This means that the market status, which was shifted to “upward trend under pressure” on Tuesday, is close to being downgraded to “in correction”. Until the market breaks this tangled knot of sales and consolidation, investors should act with extreme caution.
Please follow Alan R. Elliott on Twitter @IBD_Aelliott
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