Stocks opened lower, but reversed into mixed trade Thursday. Another round of weekly unemployment claims came in heavy, but showed slowing impact from the coronvirus pandemic. Marijuana stock Aurora Cannabis spiked on acquisition news. Facebook added its breakout gain. Meanwhile, an analyst report sent Boeing sharply higher on the Dow Jones today.
Strengthened by Boeing, the Dow industrials led the reversal with a 0.3% gain. The Nasdaq rallied 0.3% early, then slipped into narrow losses. The S&P 500 struggled to hold a narrow gain on the stock market today.
Retailers led and lagged on the S&P 500. Earnings news sent TJX (TJX) and Ross Stores (ROST) up 6.6%and 3.9%, respectively. At the bottom of the S&P 500, Under Armour (UAA) took a 7% dive after announcing a $400 million debt offering. Medtronic (MDT) and Take-Two Interactive (TTWO) both stumbled more than 3% on earnings.
On the Nasdaq 100, Netflix (NFLX) tumbled 1.8% after Citi kept its neutral rating on the stock, while raising its price target to 450, from 350. Expedia (EXPE) shed its opening gain and dropped nearly 3% after a steep first-quarter earnings miss. Expedia shares were up 19% for the week through Wednesday, and about 56% below their February high.
Facebook (FB) rose 2%, trading high on the IBD 50 list, as it tacked toward a sixth-straight advance. Facebook stock exited a buy range on Wednesday, above a 215.38 handle buy point. The social media giant also is an IBD Leaderboard listing.
Marijuana stock Aurora Cannabis (ACB) continued its recent volatility, spiking 26% on plans to acquire a foothold in the U.S. retail CBD market.
Nvidia Leads Chip Stocks, China Names Take Hits
Nvidia (NVDA) rose 0.4%, but chip stocks were otherwise generally quiet after a big day Wednesday. China-based names were taking hard hits in early action. ZTO Express (ZTO) dived more than 8% after its earnings report. The stock is working on a fourth-straight monthly advance, up more than 15% so far in May. China-based gaming platform Huya (HUYA) toppled more than 6%, threatening to snap a six-day rally that has left shares up more than 11% for the week through Wednesday.
Another China-based name, GSX Techedu (GSX), dropped 4.2% to the bottom of the IBD 50 list.
Gear up for Thursday’s market action by reading IBD’s Investing Action Plan.
Jobless Claims — Above Forecasts, But Slowing
Jobless claims for the week ended May 16 came in slightly worse than expected, with 2.438 million first-time unemployment applications rolling in during the week. That was down more than 500,000 from the prior week’s claims, but still 63,000 above economist projections. The number brings the nine-week tally to almost 39 million, it shows weekly applications slowing to far below April’s weekly peak above 6.6 million.
The Philadelphia Federal Reserve’s Business Outlook Survey for May showed the region’s contraction easing slightly. The survey index tallied a minus 43.1 reading for the month, worse than the economist consensus target of minus 41, but up sharply from minus 56.6 in April. New orders, shipments, and employment improved, the report said, and firms expect the current slump in manufacturing activity to last less than six months.
Preliminary composite estimates from IHS Markit showed the overall index improving to 36.4 in May, up from April’s 27 reading and above consensus projections for 30, but still in dire territory. Firms continued to report significant decreases in client demand as customers further postponed the placement of orders, the report said.
Dow Jones Today: Apple, Microsoft Near Buy Points
Flooding caused by dam failures in in Midland, Mich., led specialty chemicals maker Dow (DOW) on Wednesday to shut down plants across the area. A spokesman for the company, which is headquartered and has its core operations in Midland, told the New York Times that floodwaters had reached the Dow site’s outer boundaries and had flowed into retaining ponds. Dow shares gained 0.7% in early trade.
Earnings News: Take-Two Retreats
Video game maker Take-Two Interactive (TTWO) pulled back almost 3%, despite blowing past analyst targets for its fiscal fourth quarter. Management provided weak full-year guidance, however, and four analysts raised their price targets on the stock — but only to near current levels. Take-Two shares ended Wednesday up more than 10% so far for the week, after a five-day rally.
Gold Dips; Oil Prices, Stocks Rebound
The recovery in oil prices continued, with West Texas Intermediate trading almost 3% higher Thursday at $34.43 a barrel. That put WTI up 16% for the week, and 78% higher since the start of May — tracking toward its first monthly advance since December.
The oil price gains have lifted stocks, giving an added prop to the Dow and S&P 500. The integrated oil industry group, home to Dow Jones stocks Exxon Mobil (XOM) and Chevron (CVX), is up more than 7% for the week through Wednesday.
The domestic oil and gas producers group, with names like EOG Resources (EOG) and Pioneer Natural Resources (PXD), has soared more than 16% in the three days through Wednesday — pointing the group toward potentially its strongest week since October 2008.
Gold prices slipped 0.8%, with the June futures contract holding around $1,737 an ounce. That’s down less than 1% on the week, and a bit more than 2% below Monday’s 7-1/2 year high at $1,775.
Coronavirus Update: Michigan Set For Phased Reopening
The global number of cumulative coronavirus cases has now climbed above 5.1 million, with almost 330,000 deaths. Countries of the European Economic Area have been home to 26.5% of the total cases and almost 49% of the deaths, as of Monday, based on data from the European Center for Disease Prevention and Control.
The case count in the U.S. rose above 1.59 million, more than 31% of the world total. Deaths approached 95,000, a bit less than 29% of the global number, according to Worldometer data. While a number of critical metrics in the U.S. have appeared to improve, according to the White House Coronavirus task force, the U.S., Brazil and Russia are seeing the largest increases in new cases.
The White House task force coordinator said that while overall U.S. conditions were improving, Chicago, Los Angeles and the Washington D.C. metro area were exceptions — areas where coronavirus data has plateaued, rather than declined.
Stay at home orders have been released in all states except Michigan, Illinois, Delaware and New Jersey. Michigan’s stay-at-home rule expires May 28, but restaurants, bars and retail stores will be permitted to reopen on Friday in some counties.
Dow Jones Today: Big Cap Vs. Small Cap Momentum
The Dow Jones today is set for a fourth open above the 24,000 level, and starting to hint that its 21-day moving average may be starting to act like a level of support. The Nasdaq continues to plow to new high ground, blasting on Wednesday to its best closing level since Feb. 21. That left the Nasdaq within 5% of its Feb. 19 record high.
The stock market uptrend confirmed by the S&P 500 on April 2 remains in good standing, and is not currently flashing any notable warning flags. The S&P 500 does face a sort of double test of resistance at the 3,000 level, which is also the current level of its 200-day moving average. A pause or a pullback in the face of such a test would not be unusual.
A move above the April 29 high for the Dow would provide an added shot in the arm for the market’s rally. The Dow closed on Wednesday less than 0.8% off that mark.
Similarly, the Russell 2000 small cap gauge is also approaching its high from April 29. The Russell ended Wednesday 2% below the marker. Thursday and Friday could give some sense of whether both indexes could again be turned away by resistance, or whether small caps or large caps step up to throw added momentum into the Nasdaq’s advance.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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