The Dow surged more than 400 points and stocks bolted higher Thursday, after the Labor Department’s payrolls report clocked a 4.8 million-worker rebound in June. Tesla spiked on Q2 deliveries. China stocks flexed early muscle after strong sessions in Hong Kong and Shanghai. Akamai Technologies nailed an early breakout, while Caterpillar and American Express rallied hardest on the Dow Jones today.
The Dow industrials plowed up a 1.7% gain, up 440 points and rising for another test of resistance at the index’s 200-day moving average. The S&P 500 popped 1.4%. The Nasdaq climbed nearly 1.4% on the stock market today, as Tesla (TSLA) spiked more than 9% to the top of the Nasdaq 100. Also on the Nasdaq 100, Liberty Global (LBTYA)soared 3.4% on an upgrade from Redburn.
HaynesBrands (HBI) vaulted more than 7% to lead the S&P 500. Oil stock packed the top of the S&P 500, as U.S. benhmark oil bounced back above $40 per barrel. Akamai Technologies (AKAM) also traded high on the S&P 500, sweeping 6% higher after an upgrade to outperform from Cowen. The move sent the stock into a buy zone above a 108.35 buy point.
China-based names posted some strong early moves, after that nation’s markets broke important ground in Thursday’s session. They apparently got a boost from Pfizer’s positive news regarding a potential coronavirus vaccine. Hong Kong’s Hang Seng Index punched up 2.9%. The Shanghai Composite jumped 2.1%. The Hang Seng notched its highest close since March 11. The Shanghai broke past its March high to its best close in more than five months.
Gear up for Thursday’s market action by reading IBD’s Investing Action Plan.
June Hiring Soars, Weekly Jobless Claims Steady
The holiday-shortened week delivered investors two pieces of normally market-moving data — the Labor Department’s June payrolls report, as well as the weekly unemployment claims numbers.
Non-farm employers added 4.8 million workers in June, up from 2.51 million new hires in May and far above expectations for a payrolls increase of 2.699 million. Manufacturing jobs surged by 356,000, vs. estimates for a 180,000-job gain. The unemployment rate dropped from 13.3% to 11.1%, undercutting economists’ target of 12.4%.
First-time weekly unemployment claims came in at 1.427 million for the week ended June 27. That was just above forecasts for 1.4 million claims, but continued a downtrend in weekly claims. Total of those who have applied for or are receiving unemployment insurance came in at 19.29 million, an increase of 59,000 over the prior week.
Dow Jones Today: 5 Blue Chips Rise More Than 2%
Pfizer stock rallied 2% early Thursday, helping boost the Dow Jones today as optimism continued over the drugmakers potential coronavirus vaccine, under development with biotech partner BioNTech (BNTX). Pfizer (PFE) shares gained 3.2% Wednesday following positive trial results. BioNTech stock gained 1.5% Thursday, and was trading 5.2% higher in a volatile week.
IBD 50 List: China Names Rally
China-based stocks easily led the IBD 50 list in early trade. Trading platform provider Futu Holdings (FUTU) spiked 11% after benchmark indexes in both Hong Kong and Shanghai shifted to multi-month highs.
Online education provider GSX Techedu (GSX) perked up more than 6%, boosting shares easily to a new high. Both Futu and GSX are extended.
Leaderboard Stocks: Tesla, Shopify
Tesla swept up 9%, siezing another new high and looking toward a fourth-straight advance. The company reported second-quarter deliveries of 90,650 vehicles, crushing estimates. Earlier, Wedbush hoisted the stock’s price target to 2,000, up from 1,250, citing stronger-than-expected demand for Tesla’s Model 3 heading into the summer season. The IBD Leaderboard stock ended Wednesday up 16.7% for the week, and 29% above a buy point following an early June breakout.
Shopify (SHOP) rallied 3.2% in opening action. Baird raised its price target on the cloud-based e-commerce site to 1,100, from 820. The note said channel checks showed strong growth in new merchants, gross merchandise volumes and adoption of the company’s Shopify Payments service. The IBD 50 stock has a year-to-date gain of 156%.
Coronvirus Update: Global
Globally, nearly 220,000 new coronavirus cases were confirmed by countries in the 24 hours to Thursday morning. The 2.1% increase boosted the number of cases recorded since the beginning of the outbreak above 10.829 million. Deaths rose by more than 4,900, a 1% increase lifting the total death toll to 519,397.
The share of cases recorded in countries of the European Economic Area slipped below 15%, with the EEA accounting for 34% of the deaths, according to the European Center for Disease Prevention and Control. Thursday morning’s U.S. case count was almost 26% of the global total, and slightly more than 25% of the deaths.
Infections in the U.S. continued to outpace all other countries, with another 52,156 new patients confirmed during the 24-hour period, according to Worldometer data. Brazil confirmed almost 45,000 new infections. New cases in India rose by nearly 20,000. South Africa reported a spike of more than 8,000 new patients. Russia’s new cases rose by 6,700. Other countries reported 5,000 new cases or less on Thursday morning.
Coronavirus Update: U.S.
The coronavirus in the U.S. continued to spread at a 1.9% rate from Wednesday to early Thursday. The rise in deaths held steady at around 0.5%. New York and New Jersey continued to hold their increase in new cases to less than 0.2% apiece. California reported a 3.2% rise on Wednesday. New cases in Texas rose 4.9%. Cases in Florida rose 4.3%. Arizona’s growth rate rose to 6.2%.
States hit by rebounding case counts and narrowing healthcare capacity are adjusting their economies ahead of the July 4 weekend. Reopening policies, particularly in bars, are seen as one source of the virus’ rebound following May’s Memorial Day weekend.
At least 13 states have reversed policy, tightening restrictions on bars, restaurants and other businesses. Governors in California, Texas and Arizona have ordered newly reopened bars to shut down, allowing only takeout service. Other states have ordered shut downs on regional bases.
Active cases continued to surge to new highs, rising more than 2% Wednesday to a new record above 1.48 million. This gives some sense of the increase in pressure being placed on hospitals and health care workers. After falling to a rate of 1.5% or lower through much of May and June, active cases have now climbed more than 2% in five of the past seven days.
Testing continues to hold at a high rate, with more than 620,000 tests administered on Wednesday, according to the COVID Tracking Project. Daily testing has also hit record levels above 600,000 in four of the past seven days.
Dow Jones Today: A Big Two-Hearted Market
A couple of good things about the Dow Jones today. First, despite Wednesday’s weak performance, the index heads into Thursday’s session up 2.9% for the week and high in the week’s trading range. That’s a potentially bullish sign, if it can hold or improve on that position through Thursday’s closing bell.
A weekly chart shows the Dow ping-ponging back and forth between 50-day support on the low side, and 200-day resistance up top. The 50-day had been climbing toward the 200-day, narrowing the index’s range. But now the 50-day is leveling off, which means the industrials may be getting comfortable just where they’re at.
For more detailed analysis of the current stock market and its status, study the Big Picture.
Does it matter? A three-day rally left the Nasdaq toting a 4.1% gain for the week through Wednesday, at a new closing high and comfortably above 10,000. The S&P 500 is up 3.6% this week, and appears to have a firm hold on the 3,000 level, as well as support at its 200-day level.
Growth stocks are also hammering away, with the Innovator IBD 50 Fund (FFTY) now turned positive for the year, up 7% in June and poised neatly below a buy point in a cup-with-handle base. The ETF gained 3.3% for the week through Wednesday. Investors tracking the stock market’s confirmed uptrend can obviously book profits even while the Dow lags.
Within the Dow, Apple (AAPL) gained 14.7% in June. Microsoft (MSFT) grabbed an 11.1% gain. It was the third-straight monthly advance for both stocks. Nike (NKE), Visa (V) and Home Depot (HD) remain poised near buy points. Cisco Systems (CSCO) has arrived below a new buy point in a four-month bottoming base.
But the parallel, lagging action among most blue chips and small caps, as reflected in the very similar charts of the Dow industrials and the Russell 2000, represents friction worth keeping an eye on. It suggests a large portion of the market is maintaining a wait-and-see stance as the U.S. and global economies work their way through the impact of the coronavirus pandemic.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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