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Shares opened lower Thursday, as Federal Reserve Chief Jerome Powell began a second day of testimony in Congress. China-based stocks traded high on the Nasdaq, with chips and biotech weighing on early trade. On the Dow Jones today, UnitedHealth Group plunged after releasing its second quarter results.
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The Nasdaq Composite dipped 0.2%, moving further away from the new high reached on Wednesday morning. The S&P 500 also fell from a record Wednesday, down 0.3%. The Dow Jones fell 0.3% into the red, as Salesforce.com (CRM) and UnitedHealth Group (UNH) dragged down the list.
JD.com (JD), Pinduo (PDD) and Baidu (BIDU) led the Nasdaq 100, up about 2% each.
Netflix (NFLX) climbed 1.2% after reporting a shift to video game development. The company announced on Wednesday evening that it had hired Facebook (FB) game director Mike Verdu, who is also a former Electronic arts (EA) executive. A four-day rally saw Netflix stock head towards a buy point of 563.66.
Insurer American international group (AIG) climbed 2% to the top of the S&P 500. The New York-based company announced the sale of a 9.9% stake in its life insurance and pension business for $ 2.2 billion dollars, to an asset manager Blackstone Group (BX). Blackstone, an IBD 50 stock, rose 2.7%.
Delta Airlines (DAL) jumped nearly 3%, after Raymond James improved the stock to a strong buy.
Also on the S&P 500, Progressive (PGR) plunged 5.4%, despite surpassing analysts’ revenue and profit targets in the second quarter. Insurers reported a sharp increase in auto accident claims during the quarter.
Dow Jones Today: Honeywell, UnitedHealth
Honeywell International (HON) led the Dow Jones today, up 1.5% following news that it would join the Nasdaq 100 index from July 21. Honeywell will replace Alexion Pharmaceutical (ALXN).
Honeywell stock rose above its 10-week moving average this week. It’s less than 3% from a buy point of 234.12 in a seven week cup base.
Managed Care Provider UnitedHealth Group (UNH) posted a decline of 1.2%, after reporting accelerating revenue growth and weaker-than-expected profit declines for the second quarter. The stock closed on Wednesday less than 3% below an entry of 426.08 in a 10-week cut base.
Mixed Chips, Meme Stocks Slide
Chips felt some selling pressure as Advanced micro-systems (AMD) lost its pre-market gain and slipped a fraction. Taiwan Semiconductor (TSM) was down 4.2%.
AMD rose following an upgrade to neutral, sales, by Citi. The rating raised the chip share price target to 95, from 17. AMD is trading just below what IBD MarketSmith analysis indicates as a buy point of 95.54 on a basis of. cup with handle of 26 weeks.
Taiwan Semi fell 2.8% after posting mixed results in the second quarter. The company said it expects chip shortages in the auto industry to begin to subside in the current quarter.
TSM stock is trying to climb on the bright side of a 22 week consolidation.
IT consultant based in India Wipro (WIT) jumped 3% after releasing first quarter results. The stock ended Wednesday up more than 4% so far for the week. The gain took stocks above their 50-day / 10-week moving average, threatening to post a four-week decline.
Small caps remained under pressure after a difficult day on Wednesday. The Russell 2000 opened on a loss of 0.6%. Meme’s shares improved significantly at the start of trading. Carver Bancorp (CARV) climbed 17% as it appeared to stem a steep three-day drop. AMC Entertainment Holdings (AMC) reversed its pre-market losses and increased 4%. GameStop (GME) fell 1.4%.
Econ: drop in unemployment claims, data spikes in New York
Initial claims for unemployment assistance fell to 360,000 in the week ended July 10, the Labor Department reported. The number was the lowest since March 2020, dropping from 386,000 claims the week before and below economists’ target of 368,000 claims.
Manufacturing activity slowed sharply in the Mid-Atlantic region, while regional manufacturing action in New York City accelerated.
The Philadelphia Federal Reserve’s Manufacturing Outlook Survey index fell to 21.9 for July, from 30.7 in June. Economists had projected a reading of 28.5. New orders and shipments fell, while prices rose and 63% of companies reported plans to increase employment over the next six months.
Meanwhile, the New York Federal Reserve’s Empire State Manufacturing Survey index jumped to 43 – a record – from 17.4 and beating earlier expectations for a reading of 18.3. Both new orders and shipments indexes posted strong gains. Backlogs and lead times have increased, indicating that businesses are operating at full capacity.
The Federal Reserve’s June industrial production figures are expected to be released at 9:15 a.m.ET.
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Federal Reserve Chairman Jerome Powell addresses the Senate Banking Committee just as the market opens at 9:30 a.m. ET. Tariff policy issues were largely settled ahead of Powell’s House testimony on Wednesday. And markets will be eager to glean further information on the Fed’s thinking about changing its asset buying strategy, although Powell has made it clear that the Fed will signal well in advance of any change of course.
Vital signs: oil prices, bond yields
Oil prices continued to decline, after falling 2.8% on Wednesday. West Texas Intermediate slipped 1.6% to trade at $ 72 a barrel. WTI oil futures are heading for a second consecutive weekly decline, after a six-week advance last week took prices on July 6 to their highest level since October 2014.
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Bond yields also eased after stopping a three-day rally on Wednesday. The 10-year bond yield hit a four-month low on July 8, then climbed back above 1.41% on Tuesday. Early Thursday, the 10-year rate fell to 1.33%, down from Wednesday above 1.35%.
S&P 500, Nasdaq Dow Jones today
The S&P 500 and the Nasdaq hit new highs on Wednesday. The S&P 500 is heading for a fourth consecutive weekly advance, up 1.8% so far in July. The Nasdaq ended Wednesday down 0.4% so far for the week, threatening to break its three-week lead. The Nasdaq has gained 1% since early July.
For a more detailed analysis of the current stock market and its state, study the big picture.
The Dow Jones opens today less than 0.5% below its May 10 high. The Dow Jones gained 0.2% for the week to Wednesday, and is up 1.3% so far in July.
American Express (AXP) and Goldman Sachs (GS) remain the two fastest in the Dow Jones for the year, up more than 42% each. American Express is extended after a breakout in April and a rebound in support in June.
Goldman Sachs is sitting well at its 10-week moving average, 5% below a buy point of 393.36 in a six-week flat base.
Both the Dow Jones Industrial Average ETF Trust (DIA) SPDR and the ProShares Ultra Dow30 (DDM) are in buy zones above the base double bottom buy points.
China rallies; Europe, Japan Weakening
Overseas action has been mixed, as Chinese markets rebounded quickly after second-quarter GDP data met expectations. The economy grew 7.9% during the period, putting the country on track to meet its annual growth target of 6%. Meanwhile, the Nikkei 225 in Tokyo closed down 1.15% after the US dollar fell sharply on Wednesday.
Stocks in Europe dug deeper into losses entering afternoon trading as energy issues lingered in the market. The Frankfurt DAX fell 1%. The CAC-40 in Paris slipped 0.8%. London’s FTSE 100 lost 0.7%.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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