Stocks grumbled out of the starting gate in a mixed open Friday, with the final trading session of May pinned down, awaiting a press conference on China announced by the White House late Thursday. Earnings news generated big early moves from Zscaler and VMware. Zoom Video led the IBD 50 list. Coronavirus vaccine stocks Moderna and BioNTech gained. Intel and Microsoft battled for the lead on the Dow Jones today.
Stocks veered lower late Thursday after President Donald Trump announced a Friday press conference regarding China. No time for the event was given. Uncertainties have ramped higher regarding U.S.-China trade relations, which effectively evolved to Cold War status over the past week.
Tech stocks rose on the stock market today, possibly on expectations for trade restrictions against Chinese technology. The Nasadq jumped 0.5% at the open, as Zoom Video (ZM) and IBD Leaderboard stock Dexcom (DXCM) rallied more than 3% apiece.
The Dow industrials trimmed its opening loss to 0.3% as Boeing swung to the bottom of the index, down 3% in early trade.
The S&P 500 pared losses to less than 0.1%, as earnings drove some of the heaviest early declines among S&P 500 stocks, with DXC Technology (DXC) down more than 14% at the bottom of the list. Salesforce.com (CRM) and Costco Wholesale (COST) were also early losers.
ASML Holding (ASML) rallied 1.5% at the open. ASML stock ended Thursday in a buy range, just above a 319.32 buy point in a 13-week cup base. The buy range runs to 335.39.
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Dow Jones Today: Intel In Buy Range
Chip giant Intel (INTC) and MicrosoftMSFT each advanded more than 1% on the Dow Jones today. Both are potential beneficiaries if the White House opts to tighten restrictions on China-based technologies.
The early gain lifted Intel stock to just above a 62.23 buy point in a cup-with-handle base.
IBD 50 List: Zoom Video In Buy Range
Zoom Video Communications (ZM) led the IBD 50 list, trading 1.5% higher in early action. The video-conferencing tech leader bounced into a buy range on Thursday, after a touchback to its 10-week moving average. It is the third rebound from 10-week support since a cup base breakout in February. Shares are well beyond the 20% boundary that marks the beginning of a profit-taking zone.
Earnings News: VMware Eyes Breakout, Big Lots Spikes
Recent IPO Zscaler (ZS) rocketed more than 20% higher as analysts hoisted price targets following a strong fiscal third-quarter report late Thursday. Williams-Sonoma (WSM) also earned a price target hike, as earnings and revenue fell less than expected in its first quarter. Shares sailed 11% higher.
Big Lots (BIG) appeared set to continue its six-week rally, rising 3.6% in early trade. The closeout store chain reported earnings that were more than double analyst estimates, in its first earnings gain in five quarters. Shares ended Thursday up 56% in May, and with a year-to date gain of nearly 28%.
Trump Press Conference, Twitter War
Markets are likely to remain cautious ahead of a press conference that Trump said he would hold at an undetermined time on Friday to discuss matters in China. Markets reversed into sharp losses following the announcement of the remarks late Thursday.
Trump’s war with the media, at least social media, also intensified sharply on Thursday. After the market closed, the president signed an executive order that “seeks to curtail the power of large social media platforms by reinterpreting a critical 1996 law that shields websites and tech companies from lawsuits,” according to CNN. Whether the president has the legal authority to reinterpret laws enacted by Congress is likely to be hashed out in courts over the coming months.
On Thursday night, Twitter slapped a warning on another Trump tweet on the U.S. military potentially intervening in the riots underway in Minneapolis. Twitter shares traded down 0.3% early Friday, were down 3% for the week at the end of Thursday’s session, but still held a 10.2% gain for May.
Dow Jones Today: Catch-Up Rally Status
The Dow Jones today prepares to wrap up the second month of its rebound from coronavirus crash lows. The index ended Thursday with a 4.3% gain so far for the month. That makes it its best May performance since 2007. In what is normally s soft month for the market, the Nasdaq this year has climbed 5%, and the S&P 500 has a 4% gain.
But early action showed the Dow poised for a pullback, so it could lose some of that 4.3%. A drop to test the 25,000 mark and, more specifically, the April 29 high at around 24,800 would not be a surprise. Finding support at that level would be a bullish upshift for the market. A drop back below that line would signal that three days spent above that resistance was not enough to beat it.
On the small-cap side of the market, the Russell 2000 ended Thursday up 6.9% in May. That marks what is so far its best performance in May since 2003. It also faces the prospect of dropping back to test its April 29 high, right around 1,375, and determine whether that resistance has become support.
A good piece of May’s gains for the Dow occurred in the past week. Through Thursday, the Russell/Dow catch-up rally had to some degree narrowed the discrepancy in recent gains between the Nasdaq and the rest of the market.
At Thursday’s close, the Dow had narrowed its loss for the year to 12.3% vs. 16.6% a week ago. The Russell was still down 16.1% for the year, compared to 18.8% a week ago. The S&P 500 ended Thursday with a year-to-date decline of 6.2%. The Nasdaq is up 4.4% since Dec. 31.
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Coronvirus Update: A Surge In New Tests
The cumulative total of confirmed coronavirus cases worldwide rose by more than 112,000, a 1.9% increase, to more than 5.9 million. The number of deaths rose 1.3% to 362,555, according to Worldometer data. The share of those cases occurring in European Economic Area countries continued to decrease, falling to 23.4% on Friday. EEA countries had reported just over 45% of the total worldwide deaths from the virus, according to data from the European Center for Disease Prevention and Control.
The U.S. confirmed 22,697 new cases and reported another 1,230 deaths. That put the U.S. share of total coronavirus cases worldwide below 30%, to 29.8%. The U.S. share of total deaths from the disease held steady at 28.5%.
Brazil’s rate of infection accelerated sharply, surpassing the U.S. with more than 24,000 new patients reported in the 24 hours to Friday morning. Russia’s rate of increase held about steady, reporting 8,572 new cases.
Among U.S. states, new cases in New York, New Jersey and California continued to hover around the 2,000 level. Illinois, Texas, Maryland and Virginia all continued to report around 1,000 new cases per day.
Testing in the U.S. surged, with states reporting a total of 453,560 tests performed on Thursday. That is the highest daily number to date, and lifted the 10-day average for tests to 384,251 — the first increase in that average in two days, but still below Monday’s high above 392,000.
Coronavirus Stocks: Moderna, BioNTech, Pfizer Rise
Moderna shares bounced more than 6% on Thursday, after the company clinched an extended manufacturing deal for a potential coronavirus vaccine now in clinical testing. The move put shares in a buy range on a rebound from the stock’s 10-week moving average.
Germany-based BioNTech is partnered with blue chip drugmaker Pfizer (PFE), developing a Covid-19 vaccine candidate that is now in clinical testing in the U.S. BioNTech is looking to snap a five-day decline, and retake support at its 10-week moving average. Pfizer shares were up 0.6%, one of the top premarket advances on the Dow Jones today.
Find Alan R. Elliott on Twitter @IBD_Aelliott