Shares opened in uneven losses on Wednesday as the reopening of pandemics soared and bond market sales continued. Federal Reserve Chief Jerome Powell headed for another round of virtual testimonials in Washington after propping up nervous markets with moderate comments on Tuesday. Standout stocks set the early tone on Wednesday, with Tesla and Maxlinear knocking out strong early moves. Meanwhile, Johnson & Johnson rose on the Dow Jones today, following positive comments from the FDA on its coronavirus vaccine.
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The Nasdaq Composite headlined the early slip, down 0.8% at the start bubble. The S&P 500 was down 0.3%. Dow’s industrials fell more than 50 points and held their loss in the stock market today at less than 0.2%. Pandemic reopenings led both the Nasdaq 100 and S&P 500, with Norwegian Cruise Line (NCLH) at 5.4% and United Airlines (UAL) with a profit of 3.7%.
Small caps advanced, pushing the Russell 2000 up 0.4%. Upwork (UPWK) and MicroStrategy (MSTR) traded high on the list. The iShares Russell 2000 ETF (IWM) scaled up 0.7%.
The sharp overnight losses in China and Japan reflected a still nervous mood in global markets. It also sent many China-based names down in the US premarket trade. Netease (TO DETECT), JD.com (JD) and Baidu (BIDU) weighed heavily on the Nasdaq 100. European benchmarks were mixed in afternoon trading. Frankfurt’s DAX led the region with a 0.5% lead, while London’s FTSE 100 and Paris’ CAC-40 were both narrowly in the red.
Early US trading showed Upwork, a 28-month-old IPO, up more than 16%. Two analysts raised the target price for the stock after the fourth quarter results. PubMatic (PUBM) – a developer of software for publishers, not drinking establishments – scored 27% higher after its first quarterly report as a public company.
Home improvement retailer Lowe’s (LOW) lost early gains and fell 3% despite reporting better-than-expected fourth-quarter results and announcing $ 9 billion in stock buybacks for 2021. Point-of-sale tech innovator Square (SQ) was down 6.8% as five analysts raised price targets, while two edged stocks down based on valuation after a mixed fourth quarter report.
Chipmaker and IBD 50 stock MaxLinear (MXL) was down 5.8% in early trading, leaving a buy range above a fixed buy point at 38.81, according to IBD MarketSmith’s analysis.
Dow Jones Today: J&J Covid Vaccine 66% / 85% Effective
Boeing (BA) and Chevron (CVX) flew to the top of the Dow Jones today, up 2.2% and 1.6% respectively. Johnson & Johnson (JNJ) climbed 0.6% 1.2% after the company reported that the U.S. Food and Drug Administration planned to release a detailed late-stage testing analysis of the company’s Covid-19 vaccine . An independent panel will meet on Friday to review the vaccine and submit a recommendation to the FDA.
The FDA found the vaccine to be 66% effective in protecting against coronavirus infections and 85% effective against severe cases of the disease, the company said.
A three-day pullback neatly balanced J&J shares on the 10-week moving average at the close of trading on Tuesday, and back into a buy range above a flat buy point at 155.57. The buying range is up to 163.35.
Salesforce.com (CRM), with its fourth-quarter gain after closing on Thursday, forms the right side of a cup base, but fell below its 21-day exponential moving average on Tuesday. The base was formed on the wreckage of a failed November escape from a double bottom cartridge. MarketSmith puts the buying point at 271.02. Salesforce stock was about 15% below that level at the end of trading on Tuesday, but is now facing potential resistance at the bottom of the 21-day line.
Bonds fall, copper climbs; Oil is floating high at 13 months
Among other US markets, bonds accelerated their declines, pushing 10-year yields up 8 basis points to 1.42%, up sharply from lows around 0.50% in August. Yields had started at about 1.8% in 2020, down from about 2.7% a year earlier. Federal Reserve Chairman Jerome Powell reaffirmed in Senate testimony on Tuesday a commitment to keep interest rates close to zero, triggering a recovery in the markets and mitigating inflation concerns. Powell is about to give a second day of virtual testimony in Washington, DC, which will speak with the House Financial Services Committee at 10 a.m. ET.
Oil prices held up Wednesday, with West Texas Intermediate crude up 0.5% at around $ 62 a barrel, hovering around its highest level since January 8, 2020. The European benchmark for Brent crude bounced above $ 66. Copper came back in its rally as futures rallied 0.6% to $ 4.21 a pound, the highest since July 2011.
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Bitcoin bounces, PayPal enters buying reach
Bitcoin recovered additional ground early Wednesday and held more than $ 50,000 after it dropped below $ 45,000 on Tuesday, according to CoinDesk. The cryptocurrency had soared to a record high of more than $ 58,000 on Sunday.
Among Bitcoin related stocks, Marathon Patent Group (MARA) recovered 13.5%, while MicroStrategy was more than 5% higher. The Amplify Transformational Data Sharing ETF (BLOK) added 7.1%.
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IBD Leaderboard Stock PayPal Holdings (PYPL) advanced 1.7% and wanted to end a five-day decline. PayPal shares have been affected by Bitcoin price swings since October, when the company launched a cryptocurrency trading service that trades Bitcoin. The stock’s pullback technically left PayPal shares in buy range as the stock rebounded from Tuesday’s support test on the 10-week line.
E-commerce contender Overstock.com (OSTK), an early Bitcoin game and owner of the Medici Ventures blockchain fund, climbed more than 4% as investors waited for the fourth quarter report. The stock is set up in a six-month cup-with-handle base, with a purchase point of 112.40. The base is nearly 64% deep, and the handle is stiff, dropping nearly 30% deep after Tuesday’s sell-out. Both are major flaws that add extra risk to an outbreak.
Coronavirus Update: A Leap in Vaccine Dose Delivery
The seven-day average for new Covid-19 cases reported daily in the US and worldwide ticked higher for a second day, after a 41-day downtrend ended Monday. New cases reported worldwide, averaging over the past seven days, rose to 369,614 on Tuesday. That’s about half of the daily high of 745,985 new cases recorded on Jan. 11.
In the US, the seven-day average for new reported cases rose to 70,255 Tuesday, still more than 72% lower than the peak of 255,258 reached on Jan. 11, according to Worldometer.
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The deaths tick higher for a third day. The seven-day mean for deaths reported daily rose to 2,126 on Tuesday. The daily mean for reported deaths fell for 25 days, through Saturday, after reaching a high of 3,447 on January 26.
The Centers for Disease Control and Prevention reports that the number of vaccine doses distributed so far rose to 82.114 million on Tuesday, a 9% increase from Monday’s numbers. About 65,032 million doses have been administered, which means that just under 20% of the US population has received at least one injection so far.
Under related stocks, Modern (MRNA) had risen sharply early Wednesday, looking like a steep two-day decline in an instant.
Leaderboard Stocks: Tesla, Upstart Climb
Among the IBD Leaderboard shares, Tesla and Upstart were early movers. Tesla jumped 3.8% and ended a four-day decline with a view to resuming support at the 50-day moving average. Tesla’s downturn narrowed the stock’s margin significantly above its 200-day moving average, from over 127% at the end of January to less than 54% at the end of Tuesday’s trading. Stocks that rise more than 70% above their 200-day limit typically show oversized warning signs.
Upstart climbed 3.3% in early trading, aiming to regain some ground following the sharp turnaround from the mid-morning lows on Tuesday. The cloud-based credit and lending platform has put investors to the test with its sharp dip during the final week of an eight-week hold rule. Shares remain nearly 42% above an IPO base buyout of 51.50 and are up 265% from the initial offering price of December 16.
Dow Jones Today: Microsoft’s Bounce
Dow Jones shares were almost unanimously higher early Wednesday, by only JPMorgan Chase (JPM) on the decliner list, down 0.2% in early trading. The bank extended its earnings streak to seven days amid Tuesday’s market turmoil, rising along with Caterpillar (CAT) and Disney (DIS). All three stocks have expanded from recent outbreaks.
Microsoft (MSFT) ended Tuesday at 0.5%, finishing in a buy range above a buy point of 232.96 after recovering from the 10-week line. Shares were up 0.4% during early trading on today’s Dow Jones.
Find Alan R. Elliott on Twitter @BuienRadarNL
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