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Shares opened higher on Thursday, unfazed by disappointing weekly jobless claims data as the Nasdaq looked to add a fourth day to its lead. The earnings news sent past purchase points to HubSpot, MercadoLibre, and Innovative Industries. China-based stocks were under pressure again. Meanwhile, the retail giants dominated the Dow Jones today, with Walmart rallying and Home Depot scoring a breakthrough.
X
Dow industrials quickly gained 155 points, up 0.45% but still standing just below 35,000. The S&P 500 climbed 0.3% to regain much of Wednesday’s decline. The Nasdaq Composite fought 0.35% higher as Free market (MELI) and Fox Corp. (FOX) led the Nasdaq 100 in early trade.
IBD 50 Moderna stock canceled its initial gains and fell 1% after second quarter sales and profits beat expectations. China-based stocks NetEase (DETECT), JD.com (JD) and Pinduo (PDD) traded at a low Nasdaq 100 level as erratic trading in the Chinese market continued.
On the S&P 500, HanesBrands (HBI) original 9.8%, Fleetcor (FLT) jumped 5.3% after releasing its results. Regeneron Pharmaceuticals (REGN) climbed 1.5% after its second quarter report. The biotech heavyweight fell just below a buy point of 595.58 in what IBD MarketSmith analysis presents as a 51-week handle-cup base. The stock briefly crossed the buy point on Wednesday, before retreating to close the pre-profit session down 1%.
Earnings news sent datadog (DDOG) up 17% and Adaptersanté (AHCO) at a gain of 15%. Beauty Elf (ELF) rose nearly 10%, heading towards a cutting base buy point at 31.39, after registering a budget pace in the first quarter on Wednesday night. Cigna (CI) plunged 12%, Cardinal Health (CAH) fell 11%, on earnings reports.
IBD 50 shares Year (YEAR), Hub Spot (HUBS) and Innovative industrial properties (IIPR) were all on the move near buying points on Thursday, following quarterly earnings reports.
Dow Jones Today: Walmart Upgrade, Home Depot Breakout
Home deposit (HD) jumped 1.6% at the head of the Dow Jones today. The move sent Home Depot stock – stock that tended to benefit during times of tighter Covid restrictions – in a buy range above an entry of 333.55, also in a 12-week cup with handle.
Walmart (WMT) climbed 1% after Wells Fargo overweighted the stock and raised its price target from 150 to 165, more than 16% above Wednesday’s closing price.
Walmart stock has assembled six straight weeks of tight gains, climbing above support at its 10-week moving average. The stock is arguably in the 10th week of a flat base, formed within greater consolidation. The shares are trading just over 1% below a buy point of 144.68, but Walmart’s relative strength rating is scratching the bottom of the barrel at 36.
Econ data: unemployment benefit claims, decline in job cuts
Initial claims for unemployment assistance fell to 385,000 during the week ended July 31, the Labor Department reported. This was down from 400,000 requests the previous week, not quite meeting expectations of a drop to 381,000 requests.
Consultant Challenger, Gray & Christmas’s monthly job cuts report showed that US employer layoffs in July fell to 18,942. This was the report’s lowest number since June 2000. Andrew Challenger, vice -Senior chairman of Challenger, Gray & Christmas, noted in the report that healthy labor markets typically include a high level of layoffs and employee turnover.
US economic outlook darkens as S&P 500 gains, fueling record divide
“Right now, things seem to be stagnating,” he said. “There are over 9.2 million job vacancies and 9.5 million unemployed. Jobs and workers do not connect,” he added.
Oil prices have strengthened and bond yields have remained relatively stable after the data was released. West Texas Intermediate futures gained 0.6%, topping $ 68 a barrel after slipping 3.4% on Wednesday. A three-day drop pushed WTI prices down 7.8% for the week, on track for the worst week since April 2020.
The 10-year rate firmed to 1.19%, after settling just above 1.18% on Wednesday.
Volatility in China continues
Chinese stocks traded in the United States were hit hard on Thursday, as Chinese markets continued to wobble. The Shanghai Composite fell 0.3% and the Hong Kong Hang Seng Index fell 0.8%. Both indices remained in positive ground after the Shanghai benchmark fell 4.3% and the Hang Seng plunged 5% last week.
Chinese markets began to sell aggressively on July 23, as authorities rolled out a series of reforms that reframed regulations for education companies, food delivery operations, and publicly traded companies outside of China. . Tech stocks and the internet fell sharply on Tuesday over fears that online gaming would be the next area the government would focus its growing crackdown on.
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Chinese markets rebounded on Wednesday even as the country imposed “massive travel restrictions,” with the cancellation of a large number of airports and train trips, according to the state-run Xinhua news agency. According to the Associated Press, the Delta variant of the rapidly evolving coronavirus has now presented China with its biggest challenge since the Wuhan peak last year. China’s strategy of isolating cities and individuals during last year’s outbreak was widely seen as a success, but has wreaked havoc on the country’s economy.
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Among Chinese gauges in the United States on Wednesday morning, the iShares MSCI China ETF (MCHI) fell 1.1% and the Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR) faded by 0.3%. KraneShares CSI China Internet ETF technology tracker (KWEB) fell 2.4% in early trade.
Five best Chinese stocks to watch
In Europe on Thursday, stocks were mixed in afternoon trading. The CAC-40 in Paris posted an increase of 0.4%. The Frankfurt DAX strengthened to a gain of 0.2%. London’s FTSE 100 fell 0.1% after the Bank of England left its rate and stimulus strategies unchanged. The SPDR Portfolio Europe ETF (SPEU) rose 0.6%, after falling 0.1% on Wednesday. The ETF is less than 2% below an entry of 44.06 in an eight week flat base.
IBD 50 Earnings: Roku, HubSpot, Innovative
At least a dozen IBD 50-listed companies have reported or will report earnings this week. Cloudflare (NET) is expected to close the IBD 50 list results for the week, following today’s closing bell. Among the companies reporting this week, Roku, HubSpot and Innovative Industrial Properties were close to points of purchase.
Roku fell 6.1% in pre-market trading, positioning the stock for a break below its 50-day moving average. The stocks had already undercut their 21-day exponential moving average, ending Wednesday around 9% below a buy point of 463.09 in a cup base with a grip.
HubSpot grew 8.9%. Mizhuo, Citi and Piper Sandler raised their price targets after the company reported strong second-quarter earnings and income on Wednesday night. Citi was aiming for the higher, setting its price target at 750, 27% above the stock close on Wednesday.
Thursday’s early gain pushed HubSpot out of a buy range above a base cup buy point at 574.93.
Marijuana share owner Innovative Industrial Properties slashed an initial rise from 7.5% to 3.5%. This placed the action just below an entry of 222.18 in a 24 week cut base, having passed the entry into the opening trade. The first stage base is bullish, forming well above support at the stock’s 10-week moving average.
Dow Jones Today: Blue Chip Breakout Watchlist
Home Depot isn’t the only blue chip leader worthy of being noted on the Dow Jones today. Microsoft (MSFT) is extended from a late June breakout. But seasoned chart readers are watching a small shelf model that offers a tentative entry at 299.09. Microsoft stock rose 0.5% Thursday morning.
Microsoft is a half-size position in the rankings and a member of the Long-Term 25 Leaders.
UnitedHealth Group (UNH) fell 2.6% at the start of trading. Shares closed 2% below a 422.63 buy point on Wednesday in a 12-week grip cup base.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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