Stock futures turned sharply mixed Monday, as the Biden administration imposed a fresh round of travel restrictions and wrestled over the limits of a $1.9 trillion stimulus proposal. Meanwhile, on Saturday, Chinese bombers overflew the Taiwan Strait in a test of new U.S. leadership. Markets looked toward the heaviest reporting week of the fourth-quarter earnings season, as well as the two-day Federal Open Market Committee meeting. Apple and Microsoft led the Dow Jones today, ahead of their quarterly reports later this week.
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Dow Jones futures slipped 0.5%, feeling some drag as Merck (MRK) , Goldman Sachs (GS) and Walgreens Boots Alliance (WBA) all dropped more than 1%. S&P 500 futures gave up early gains and slipped a fraction below fair value. Nevertheless,
Nasdaq 100 futures scaled up 1% — boosted by rallying China-based stocks, as well as early gains from Apple (AAPL), and Regeneron Pharmaceutical (REGN). Facebook (FB), Amazon.com (AMZN) and Google Parent Alphabet (GOOGL) all climbed more than 1%.
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Chipmakers, China Stocks, Big Caps Boost Nasdaq
NetEase (NTES), JD.com (JD) and Baidu (BIDU) all traded at or near the top of the S&P 500, up between 2.5% and 5%. Chip stocks were in strong early standing, helping boost the Nasdaq as Skyworks Solutions (SWKS) and NXP SemiconductorsNXPI led an early advance. Skyworks following a price-target hike from Citi. The iShares PHLX Semiconductor ETFSOXX gained 0.9%.
Heavy truck maker Paccar (PCAR) jumped 4% to continue its breakout rally from last week, tripped by its move into autonomous vehicle technology.
Regeneron was an early mover, up more than 4% after BMO Capital upgraded the stock to outperform from market perform. The note held the stock’s price target steady at 630, about 17% above where the stock closed on Friday. Regeneron stock is climbing off the floor of a six-month consolidation that drove down its relative strength rating. Shares have regained support at their 10-week moving average, and ended Friday a bit more than 5% below their 200-day line, below which the stock has traded since Nov. 17.
Stimulus, China Rattle U.S. Markets
Market optimism eased toward a quick shot of coronavirus-related stimulus support as the Washington Post reported a bipartisan group of lawmakers were lobbying the White House to whittle down its $1.9 trillion proposal, to a more targeted and efficient approach. Meanwhile, the U.S. State Department issued a statement Saturday after China sent a sortie of aircraft, including bombers, over the Taiwan Straight in an assertion of its authority over the area. The State Department affirmed U.S. “commitment to Taiwan is rock-solid and contributes to the maintenance of peace and stability across the Taiwan Strait.”
Dow Jones Today: Apple, Microsoft, Merck
Apple and Microsoft (MSFT), two of nearly a dozen blue chips with earnings due this week, rose to early leads on the Dow Jones today.
Apple climbed 2.2% Monday after Raymond James boosted the stock’s price target from 140 to 150, about 8% above where shares closed on Friday. The stock is sitting on a four-day advance, and toying with a handle buy point at 138.89 ahead of its earnings report late Wednesday. The iphone maker posted the largest advance among Dow Jones stocks last week, up 9.4%.
Microsoft added 1.7% early Monday. Like Apple, Microsoft is sitting atop a four-day rally, and it briefly rose above a buy point at 228.22 on Friday. The stock has been consolidating since September, giving it a good long period of price consolidation following the 76% rebound form coronavirus bear market lows.
Both Apple and Microsoft are IBD Leaderboard listings.
Drugmaker Merck (MRK) slipped to the bottom of the Dow industrials, down 1% after announcing it would discontinue development of two coronavirus vaccines. The company cited disappointing trial results from its two Covid-19 candidate vaccines, and said it would refocus its efforts on potential Covid-19 treatments, being currently co-developed with privately held Ridgeback Biotherapeutics.
IBD 50 Stock Near Buy Points: SciPlay, Advanced Micro
Video-game developer SciPlay (SCPL) jumped almost 7% early Monday. The 20-month-old stock finished Friday 6% below a cup-base buy point at 18.60. The stock had briefly cleared that buy point, then pulled back more than 8% below the entry. That put the automatic sell rule into play. But if the stock retakes the buy point in strong trade, the breakout is buyable. Monday’s early move, if it holds up through the open, implies a starting bell breakout.
Ligand Pharmaceuticals (LGND) jumped 2.4% in premarket trade. The San Diego-based biotech is partnered with Merck on the development of a pneumococcal vaccine. The IBD 50 stock on Friday had gained almost 13% since clearing a cup base buy point at 127.90 on Monday.
Chip developer Advanced Micro Devices (AMD) climbed 0.8%, with an added boost from a nominal price target hike from RBC Capital. RBC set its new target at 105, up from 100 — a show of confidence in the stock ahead of its fourth-quarter report due after Tuesday’s close. The report said a beat and raise quarter was possible, due to above-forecast demand for graphics and central processing units.
AMD shares ended Friday in a buy range following a rebound from support at its 10-week moving average. The buy range runs to 100.65. AMD is listed in both the IBD 50 and the IBD Leaderboard line ups.
China: JD.com, Pinduoduo Near Buy Points
China-based stocks were poised to rally Monday, as Hong Kong’s Hang Seng Index rebounded 2.4% — punching back above the 30,000 level that has acted as long-term resistance since the Trump Administration’s start of the U.S.-China trade war in early 2018. The index had dived hard on Friday, posting its worst loss in eight weeks, as China widened lockdowns in an effort to clamp down on resurging coronavirus infections.
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Among China-based companies trading in the U.S., Futu Holdings (FUTU) spiked more than 16% early Monday. The online brokerage platform may have received a boost from the Wall Street Journal’s report that the coronavirus pandemic had aided China in overtaking the U.S. as the “world’s top destination for new foreign direct investment” last year.
Futu shares are up 118% so far in January, and three weeks into an eight-week hold rule triggered after a Jan. 5 breakout.
JD.com rallied 4.5% early Monday, after Bernstein initiated coverage on the stock with an outperform rating and a 120 price target. The early move implied the stock could move beyond the buy range of a 92.87 buy point. The buy zone runs to 97.71.
Bernstein also initiated coverage on IBD Leaderboard stock Pinduoduo (PDD), helping to send it 4.3% higher. The mobile e-commerce platform developer has been testing support, just below what IBD MarketSmith analysis reads as a 187.80 buy point in a 10-week ascending base.
Dow Jones Today: Looking Toward A Big Week
There are no earnings reports scheduled on the Dow Jones today, but Verizon (VZ) and American Express (AXP) kick off the index’s biggest reporting week of the season before the open on Tuesday. Microsoft reports after Tuesday’s close.
On Wednesday, Boeing reports before the open. Apple after the closing bell. McDonald’s (MCD) and specialty chemicals maker Dow (DOW) kick off Thursday’s early earnings calendar. Visa (V) reports after the close. Honeywell (HON), Caterpillar (CAT) and Chevron (CVX) all report Friday morning.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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