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Shares rose at Friday’s open, then weakened rapidly as a positive move on the coronavirus front elicited a mixed reaction from the market. On the IBD 50 list, Jefferies Financial and Diamondback Energy headed for buying points. Merck topped the S&P 500 and Dow Jones today after reporting positive preliminary results for oral coronavirus treatment.
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The Dow Jones Industrial Average opened more than 150 points higher, then faded to a fractional gain. Merck (MRK) led the first advance, while Walmart (WMT) and Alliance of Walgreens boots (WBA) recorded the biggest drops.
Meanwhile, the S&P 500 gave up its early gains and slipped 0.3% in the stock market today. The Nasdaq Composite also reversed, falling 0.7% and heading for a sixth consecutive decline as Modern (MRNA) and Regeneron Pharmaceuticals (REGN) trailed at the bottom of the Nasdaq 100.
Marriott International (MAR) marked a 3.1% gain to lead the Nasdaq 100. Marriott traded 5% below a 160.08 buy point in a seven-month consolidation. Nice Dr. Pepper (KDP) was also a silver lining, up 1.9% after the announcement of a $ 4 billion share buyback initiative.
Focus on video communications (ZM) added 1.1%, after shareholders of customer service software provider Five9 (FIVN) killed a potential $ 14.7 billion merger deal. Five9 shares gained 0.4%.
Nasdaq 100 component You’re here (TSLA) retreated on its pre-market gains and fell 1.7% as investors wait for the automaker’s third-quarter deliveries report. IBD Leaderboard stock is in a buy range above a handle cup buy point at 764.55.
China-based electric vehicle makers backed off their opening gains and fell after reporting strong third-quarter deliveries. Nio (NIO) fell 0.6% and Xpeng (XPEV) was down 2.2%. Li Auto (LI) traded flat.
On the S&P 500, Southwest Airlines (LUV) increased 3.9%. JPMorgan upgraded the stock to overweight from neutral and increased its price target from 64 to 70.
Dow Jones Today: Merck’s Covid Breakthrough
Merck (MRK) climbed 9.5%, far leading the Dow today. Interim data from a Phase 3 clinical trial showed that molnupiravir, an oral therapy developed in conjunction with Ridgeback Biotherapeutics, reduced the risk of hospitalization or death in at-risk adult patients with mild COVID by approximately 50%. to moderate.
The companies plan to apply for emergency use authorization from the Food and Drug Administration and other regulatory agencies internationally. Merck aims to produce 10 million cures by the end of the year.
Merck shares had climbed around 6% through Thursday, after hitting a low in mid-September.
Producers of vaccines and other related stocks reacted negatively to the news, with Moderna falling nearly 16%. BioNTech (BNTX) faded by 15%, while Pfizer (PFE) recorded a decrease of 2.6%. Gilead Sciences fell 2.9% and Regeneron Pharmaceuticals fell 6.4%.
IBD 50: Jefferies in the buying range, Diamondback is getting closer to the point of purchase
Among the IBD 50 actions, Jefferies Financial (JEF) added 1.3%, increasing in a buy range after reporting a big third quarter profit beaten Thursday night. The stock entered a buy range as it rebounded from 10 week support on September 20. It is also trading just below an entry of 37.95 in a tight three week pattern.
Diamondback Energy (FANG) jumped 2.6%, advancing to a buy point of 102.63 on a 13-week cup basis.
Bitcoin Surges
Bitcoin-related stocks rallied as bitcoin jumped 9%. This lifted the cryptocurrency above $ 47,000, according to CoinDesk. Bitcoin fell about 8% in September and is up about 55% since December 31.
Among the actions related to bitcoin, MicroStrategy (MSTR) jumped 3.3%, trading just behind Merck on the S&P 500. Marathon Digital Holdings (MARA) also gained 3.3%.
August spending, prices exceed expectations
Personal expenses exceeded estimates while income grew less than expected in August, according to the Commerce Department. Spending jumped 0.8%, reversing July’s 0.1% drop and beating economists’ forecasts for an increase of 0.6%. Income rose 0.2%, down from a 1.1% increase in July and just below expectations of a 0.3% increase.
Price inflation accelerated to 4.3%, higher than the 4.2% increase recorded in July. Economists had forecast another 4.2% gain. Basic prices, less energy and food, rose 0.3% more modestly, against expectations for a gain of 0.2%.
The manufacturing sector slowed in September, with Markit reporting its final manufacturing PMI at 60.7, down from 61.1 in August and marking a five-month low. The memo cited continued material and labor shortages as the key.
Meanwhile, the Institute for Supply Management’s September Manufacturing PMI stood at 61.1, down from 59.9 and above 59.8.
The University of Michigan consumer sentiment survey in September beat expectations, with an index of 72.8 for September. It was above views for a result of 71, and down from a reading of 71 for August.
Overseas markets, oil, natural gas, bond yields
Abroad in Japan, Tokyo’s Nikkei 225 fell 2.3% as its fifth consecutive decline left the index down 4.9% in its worst week since April 2020. Markets Europeans turned mixed in afternoon trading, with London’s FTSE 100 down 0.7%, while Frankfurt’s DAX lost 0.2% and Paris’s CAC-40 struggled for a narrow gain. The Hong Kong and Shanghai markets were closed for the Chinese National Day.
Oil prices fell as West Texas Intermediate futures fell 0.7% to $ 74.53 per barrel. For the week, WTI is up about 1.5% and heading for a sixth consecutive weekly advance. WTI futures rose 9.7% in September.
Time the market with IBD’s ETF market strategy
Natural gas futures slipped 2.8% to $ 5.70 per million UK thermal units, after rising more than 36% in September. A six-month advance has pushed natural gas prices up 135% so far this year.
The bonds traded flat, leaving the 10-year Treasury yield unchanged at 1.49% after posting a seven-day advance on Thursday. Yields started at 1.30% in September and hit their year-high above 1.76% in April.
Dow Jones Today: A Good Month For Chevron, JPMorgan
Thursday’s sharp drop left the Dow Jones today leaning towards a test of recent lows around 33,613. The index ended on Thursday 1.5% above its 200-day moving average, thus lowering of this technical safety net is most likely in the cards. The Dow Jones’ previous 200-day support test took place at the end of October last year, in the midst of a two-month consolidation.
caterpillar (CAT), 3M (MMM) and Alliance of Walgreens boots (WBA) all fell more than 3% on Thursday. Shares of CAT and 3M are both infrastructure sensitive, falling after the House announced its vote on a $ 1 trillion infrastructure spending plan.
Walgreens dropped out following reports the company was in talks to acquire Evolutionary health (EVH). Shares of Evolent Health ended Thursday up 18.8% so far for the week.
For a more detailed analysis of the current stock market and its state, study the big picture.
Nike (NKE) recorded the Dow Jones’ biggest loss for September, down 11.8% after reporting lower than expected income in its September 24 earnings report. This is the worst month for the action since May 2019.
3M fell 9.9% for the month. Caterpillar fell 9%.
On the rise, Chevron (CVX) claimed a 4.8% gain in September as oil prices recovered. That left the oil giant with a gain of 24.6% year-to-date. JP Morgan (JPM) and Salesforec.com (CRM) each gained more than 2% over the month.
Nasdaq and S&P 500 seek bottom
A five-day drop has the Nasdaq feeling an uncertain bottom in its retirement. The S&P 500’s pullback was less pronounced, but on Thursday it fell below its September 20 low. This opened the door for deeper consolidation, with the next possible support level around 4,233 – around 1.7% below the index close on Thursday.
The Nasdaq on Thursday closed 3.6% above its 200-day moving average, a support level it has not touched since April 2020. The S&P 500 closed 4.2% above its 200 day line, a level it has been trading above since July of last year.
How to know when it’s time to sell your favorite stocks
Uncertainty about the extent of market consolidation suggests that investors are taking a strong defensive stance. This means quickly reducing losses in underperforming stocks. For stocks that have posted strong gains, rack up at least some profit, especially if they fall below their 10 or 40 week lines.
Now is the time to create watchlists and prepare for what the market is shaping a bottom and starting a new uptrend. To keep an eye on this process and the state of the market, read the Big Picture.
Please follow Alan R. Elliott on Twitter @IBD_Aelliott
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