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Shares opened lower on Wednesday, after a weak report on housing starts for July and ahead of the release of the minutes of the Federal Reserve’s July meeting. The earnings news boosted Lowe’s, Tencent Holdings and ZIM Integrated Shipping. And Salesforce.com hit a buy point on the Dow Jones today, following a hike in analysts’ price target.
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Dow Industrials started off 0.25%. The S&P 500 fell almost 0.2%. The Nasdaq Composite lost 0.1%, the first gains of Match group (MTCH), You’re here (TSLA) and Trip.com (TCOM) supported the Nasdaq 100.
At the top of the S&P 500, home improvement retailer Lowe’s (LOW) jumped 7.5%, erasing its strong loss on Tuesday. The North Carolina-based company reported better-than-expected sales and profit growth, and raised its full-year profit forecast above analysts’ forecasts.
Big box retailer Target (TGT) fell 2.3% when trade opened. Modest profit and strong guidance were positive, offset by slower store and digital growth in its second quarter report. Owner of TJMaxx TJX (TJX) gained 2% after its report, climbing to a possible handle buy point at 72.04.
Media giant ViacomCBS (VIAC) also traded high among S&P 500 stocks, up more than 4% after Wells Fargo overweighted the stock with a price target of 60, or nearly 54% above. above Tuesday’s closing price.
Profit news sent to China Daqo New Energy (DQ) and Weibo (WB) to early losses. Meanwhile, the tech giant Tencent Holdings (TCEHY) rose 4.8%, despite a mixed report in the second quarter. that of Israel ZIM Integrated Shipping Services (ZIM) rose 6.5% on earnings, dropping just below a 50 buy point in the new issue’s first conventional basis since its IPO in January.
Chipmaker Analog devices (ADI) collapsed 2.1%, following its third quarter tax report. Chip designer Nvidia (NVDA) and Dow Jones shares Cisco Systems (CSCO) are major earnings reports after today’s close.
Dow Jones Today: Salesforce.com Target Rise
Salesforce.com (CRM) edged out the Dow Jones today, rising 1.2% after JMP Securities maintained the stock’s outperformance rating and raised its price target to 320, from 282. Salesforce stock has briefly surpassed a buy point of 253.60 on a five-week flat basis on Friday. . It is pulled back just below that entry, testing support at its 21-day exponential moving average.
July, housing starts slow sharply, permits increase
The Commerce Department reported that new housing starts slowed to an annualized rate of 1.53 million in July. This was significantly lower than June’s 1.64 million pace, lowering views for a slight dip to 1.61 million annualized housing starts. Building permits activity grew, however, with permits issued at a rate of 1.635 million during the month, up from 1.598 million in June and views exceeding 1.62 million.
The Energy Information Administration releases its weekly State of the Oil report at 10:30 a.m. ET. The minutes of the Federal Open Market Committee’s July meeting are due at 2 p.m. ET.
Vital signs: oil, bond yields, Bitcoin
Crude oil prices edged up Wednesday morning, seeking to stem a four-day decline. West Texas Intermediate added 0.4%, trading just below $ 67 a barrel and continuing to hover in a healthy $ 65 to $ 70 range. WTI prices have fallen nearly 10% so far for August and are heading for their first decline in five months.
The 10-year Treasury yield edged up to 1.27%, after settling just below 1.26% on Tuesday. Yields are down more than 14% since early August and are heading for a third consecutive monthly decline. Falling yields indicate buying activity in bonds, which are a safe haven and tend to reflect the outflow of capital from stocks. The 10-year rate hit its highest of the year, just above 1.76%, in early April.
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Bitcoin prices fell about 3%, trading around $ 45,210, after hitting $ 47,157 and as low as $ 44,248 in the past 24 hours, according to Coindesk. Bitcoin peaked above $ 64,829 in mid-April.
Apple remains in the Dow Jones buy range today
Apple (AAPL) opened 0.1% lower early Wednesday. IBD Leaderboard stock remains in a buy range up to 155.40, after crossing a trendline buy point. Stocks are up 9.5% from a breakout in early July.
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Following up on five of the best IBD stocks to watch this week, Communities of the century (CCS) added 0.4% at the start of trading on Wednesday. This puts the stock about 8% below a buy point of 72.60 in a cup base with handle. Wednesday’s rebound suggests the stock is finding support at its 50-day moving average. The Colorado-based builder has a composite IBD rating of 96, ranking it number one among shares in the residential homebuilders industry group.
Arch Capital Group (ACGL) gained 0.3%, moving higher in a buy zone, above an entry of 41.38 in a 15-week flat base. The stocks aim to extend their rally to a seventh day. The buy zone peaks at 43.45.
Chipmaker On the semiconductor (ON) gained 0.9% on Wednesday. The stock had climbed 15.9% in the first week of August, topping a buy point of 44.69 in a 16-week cup base. The stock has since fallen back to just below that buy point and is testing support for the chart’s 21-day exponential moving average. The base purchase range is 46.92.
Giant of maritime transport Matson (MATX) is working on adding a fourth week to its rally. Shares rose 1.8% on Wednesday morning, reaching about 5% below a buy point of 79.15. The stock also took three days to shape a possible grip, which could potentially lower the base entry to 75.75.
Supplier of industrial chemicals Element solutions (ESI) is testing support at its 21-day and 50-day converged moving averages, and is trading just below a buy point of 24.80 in a flat base. The base pattern hangs bullish on the chart’s 10-week moving average.
Powell: Implications of the Post-Covid Economy
The Dow, S&P 500 and Nasdaq rebounded Tuesday afternoon, in a sort of relief rally, after Fed chief Jerome Powell avoided making policy news during the virtual discussion of the Federal Reserve with educators and students. Powell has made it clear that the pandemic marks a historic inflection point in the U.S. economy.
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“We’re not just going back to the economy we had before the pandemic,” Powell said. “We need to carefully monitor the progress of the economy through the pandemic and try to understand how the economy has changed and what the implications are for our policy.”
The market was bracing for something potentially more severe, or news about the possible reduction in the Fed’s $ 120 billion monthly purchases of treasury and mortgage securities. The Wall Street Journal reported on Monday that Federal Reserve officials were on the verge of an agreement to begin cutting the program “in about three months.”
Nasdaq, S&P 500, Dow Jones today
The rebounds of the Dow and S&P 500 showed that both indices are finding support at their 21-day moving averages. The Nasdaq’s pullback stopped just before a test of support to its 10-week line. The S&P 500 and the Dow Jones are both heading towards the starting bell today with gains of 1.2% so far in August. The Nasdaq Composite dipped 0.1%.
The major landmarks are all near recent peaks. But data from China, the United States and Europe this week indicated slowing economic growth, giving investors something to think about before pushing the markets up.
For a more detailed analysis of the current stock market and its state, always study the big picture.
Tuesday was a more difficult session for small caps. Last week’s offer by the S&P Smallcap 600 to resume support on its 50 and 21 day lines has now collapsed. The Russell 2000 found support at its 200-day rising line, its second successful test since mid-July. But the index has been consolidating since March. And the pullbacks to the 200-day line mark new lows in that consolidation – perhaps the market’s assessment of the impact of the recent surge in Covid cases.
Tuesday’s sale occurred in a rising trade, building up a new distribution day. The overall number of distributions has remained the same, as a day of July 13 expired on both the Nasdaq and the S&P 500. But the arrival of new distribution indices is prompting investors to keep an eye out for a sudden increase in the. number of days of distribution, which may signal a change in market mood.
Chinese markets rebound, Europe under pressure
China-based stocks rallied as Tencent Holdings (TCEHY) rose after its second quarter report and the Hong Kong and Shanghai markets rebounded. The Shanghai Composite rebounded 1.1%. Hong Kong’s Hang Seng Index gained 0.4%. In Japan, Tokyo’s Nikkei 225 added 0.6%.
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Among Chinese gauges in the United States on Tuesday morning, the iShares MSCI China ETF (MCHI) gained 1.1% in morning action. The Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR) also climbed 1.1%. KraneShares CSI China Internet ETF technology tracker (KWEB) rose 1.7% in early trade.
European markets were under pressure around midday. The FTSE 100 in London fell 0.4%. The CAC-40 in Paris fell 0.7%, while the DAX in Frankfurt traded flat.
The ETF SPDR Portfolio Europe (SPEU) was inactive at the start of the session, after posting declines on Monday and Tuesday. A four-week lead has taken the ETF to 1.1% so far for August, just below a buy point of 44.06 on a stable nine-week basis.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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