Stocks opened to tight losses, then turned mixed Tuesday, as the market paused after a rally on Monday capped a three day run up. Big Lots vaulted to the head of the IBD 50 list. Beyond Meat spiked on a Walmart deal, and China-based Sohu soared on merger news. Among blue chips, Visa (V) took over to lead the Dow Jones today.
The Dow industrials, S&P 500 and the Nasdaq all opened to narrow losses. The Nasdaq and S&P 500 quickly toggled in and out of fractional gains on the stock market today.
At the top of the S&P 500, data storage device maker Western Digital (WDC) jumped 2.9% while brewer Molson Coors (TAP) popped 4.5%. Molson gained after landing an exclusive agreement with Coca-Cola (KO) to import Topo Chico Hard Seltzer to the U.S. Coca-Cola shares rose 0.4% on the Dow Jones today.
Also on the S&P 500, Abbott Laboratories (ABT) added 1.5%. The medical products maker picked up a boost from a demonstration of its rapid Covid-19 test kits at a White House Press conference on Monday.
Intuitive Surgical (ISRG), maker of robotic surgical instruments, rallied 2.8% after Argus initiated coverage on the stock with a buy rating and a 775 price target.
China-based Sohu (SOHU) soared 15% ahead of the open. Chinese Internet portal Sogou (SOGO) agreed to a takeover bid from internet content giant Tencent Holdings (TCEHY). The deal reportedly includes a buyout of Sohu's controlling interest in Sogou. Sogou gained 2.5%. Tencent shares added a fraction.
Early Movers: Big Lots, Beyond Meat
Beyond Meat (BYND) rocketed 12%, narrowly overtaking a buy point in a three-month cup base. The developer of meat subsitutes announced plans for Walmart (WMT) to expand its stocking of Cookout Classic products to 2,400 stores, up from the current 800. Walmart shares added 0.2%.
Russell 2000 listing Big Lots (BIG) gained lots early Tuesday, jumping more than 6% after revising its third-quarter earnings expectations above the FactSet analyst target. The jump lifted the IBD 50 stock beyond a buy range on a rebound from 10-week support.
Chip stocks were mixed, with the VanEck Vectors Semiconductor ETF (SMH) adding 0.5% in early trade. Nvidia (NVDA) edged up 0.6%. The IBD Leaderboard stock is in a buy range on a rebound from its 10-week moving averages.
United Airlines (UAL) and Zoom Video (ZM) fell between 2% and 3%, to the bottom of the Nasdaq 100. Tesla (TSLA) traded down 2%, also near the bottom of the Nasdaq, and ithium miner Piedmont (PLL) tumbled 9% lower, a modest pullback compared with Monday's 236% rally. Tesla announced a multiyear lithium supply deal with the Australia-based outfit on Monday.
Dow Jones Today: Boeing, Apple Lag
Boeing (BA) and Chevron (CVX) sagged to the bottom of the Dow Jones today, down more than 1% apiece. Apple (AAPL) slipped 0.9%. Apple stock regained its 50-day moving average on Monday, following three days of light-volume gains.
Visa (V) and Caterpillar (CAT) each climbed 0.5%. Caterpillar stock is attempting to regain a 150.65 buy point in a nine-month saucer base. Visa pulled back to retest a buy point, following an August breakout.
Inventories Rise, Trade Deficit Widens
The U.S. trade deficit widened to $82.9 billion in August, according to preliminary estimates from the Commerce Department. That was up from July's $79.3 billion deficit, and slightly wider than the average of economist views, which Econoday put at $82.6 billion.
Advance estimates for August retail inventories showed a 0.8% increase, a slowdown from July's 1.2% expansion. Wholesale inventories grew 0.5%, rebounding from a 0.1% slip in July, and beating the average of wide-ranging economist views, which Econoday put at $82.6 billion.
The July Case-Shiller Home Price Index is set for a 9 a.m. ET release. Conference Board consumer confidence numbers for September are due out at 10 a.m. ET.
Coronavirus Update: Progress In September
The total number of persons infected worldwide since the beginning of the coronavirus outbreak rose to more than 33.57 million by Tuesday morning. The death toll reached above 1 million. In the U.S., Tuesday-morning data showed total cases topping 7.36 million with almost 210,000 dead.
In the U.S., circumstances vary state-to-state. Nationwide, the progress in new cases and in testing has been positive for September, although there has been a slight uptick in new cases reported over the past two weeks. The 10-day average for new cases in the country peaked on July 24 and 25, at more than 70,000 per day. Entering August, new cases averaged around 67,000 per day. By Sept. 1, that number had dropped around 41,500, based on data collected by Worldometer.
The 10-day average for new cases in the U.S. hit a low of just below 36,000 cases per day on Sept. 15. Since Sept. 15, the number of new cases picked up, averaging generally between 40,000 and 44,000 cases per day since Sept. 18.
The rate of tests administered in the U.S. ebbed near mid-September, but has rebounded to show a substantial overall increase for the month. At the start of September, the 10-day average for tests administered in the U.S. was just over 700,000 per day, according to data collected by the COVID Tracking Project. On Monday, more than 1 million tests were performed, putting the 10-day average above 917,000. That is a 31% increase in testing, so far, during the month of September. The 10-day average for new cases of Covid-19 infections decreased 2.3% over that same period.
Dow Jones Today: Activating The Watchlist
The Dow Jones today and the S&P 500 will both attempt to hold their 50-day moving averages. The same is true for the Nasdaq, although it had punched up more than 1% above its 50-day line, giving it a little more wiggle room to work with after Monday's hefty advance. That advance led to a critical change in market status.
Now is a time to put watchlists to use. Only a handful of Dow Jones stocks qualify as leadership-grade growth stocks. But the overall picture shows a healthy environment for basing. And some breakouts, such as Nike's (NKE) from Aug. 10 and Procter & Gamble (PG) from late July, have held up.
For more detailed analysis of the current stock market and its status, study the Big Picture.
About half of the Dow Jones 30 stocks have or are forming bases of some sort. The fundamentals of many of those stocks continue to be depressed, so investors moving away from IBD stock screens such as the IBD 50 should be sure to perform an extra degree of due diligence.
Among the leaders of the Dow 30, Apple (AAPL) is pulled back and starting the fifth week of a consolidation. It needs at least two weeks before a proper buy point forms. The same is true for Microsoft (MSFT) and Salesforce.com (CRM).
Home Depot (HD) is also starting the fifth week of a consolidation. However, its pullback is only 10% deep. That means, if it holds within the pattern, it could finish a valid flat base by the end of this week.
Caterpillar (CAT) and McDonald's (MCD) are both tinkering with breakouts, essentially even with buy points. Verizon (VZ) and UnitedHealth Group (UNH) are basing. Procter & Gamble has formed an interesting chart, shaping a four-weeks-tight pattern as it holds its ground following a late-July breakout. The buy point is at 141.80.
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