Stocks scraped lower out of the starting gate Wednesday, dogged by coronavirus concerns, talk of U.S. trade tariffs vs. Europe and a downgraded global outlook from the International Monetary Fund. IBD 50 stock Nvidia popped higher in a buy range. Cloud software leader VMware leapt past a buy point, while Exxon Mobil and Boeing tumbled to the bottom of the Dow Jones today.
The Dow Jones sliced 1.4% lower, dropping 360 points just after the starting bell. The S&P 500 slunk to a 1.2% loss. The Nasdaq weakened to 0.8% drop on the stock market today, as Amazon.com (AMZN) and Netflix (NFLX) surrendered their early gains.
Markets in Europe were off lows in afternoon trade, after diving intially on news the U.S. Trade Representative said it was considering imposing tariffs on $3.1 billion worth of imports from France, Germany, Spain, and the United Kingdom. In addition, the IMF updated its World Economic Outlook, dropping expectations for global GDP to a 4.9% loss for the year, down from its April estimate for a 3% decline.
Stocks hurt by the coronavirus economy plowed deepest in early trade. Cruise lines Carnival (CCL) and Norwegian Cruise Line Holdings (NCLH) tumbled more than 6% each, to the bottom of the S&P 500. United Airlines Holdings (UAL) was down more than 3%, the biggest drop among Nasdaq 100 stocks.
Dell Technologies (DELL) bolted ahead 8%, after the Wall Street Journal reported late Tuesday the company was considering a possible spin off of its 81% stake in virtualization software leader VMware (VMW). VMware shares spiked 8%, sending the stock into a buy zone above a 157.10 buy point.
Gear up for Wednesday’s market action by reading IBD’s Investing Action Plan.
IBD 50, Leaderboard: Nvidia In Buy Range, Amazon’s New Price Target
IBD Leaderboard stock PayPal (PYPL) edged down 0.3% in opening action. BTIG downgraded the stock from buy to neutral, while KeyBanc Capital and Barclays announced price target hikes.
Graphics chip leader Nvidia (NVDA) climbed 0.5% in early trade. The Leaderboard name, also an IBD 50 stock, is in a buy range above a 367.37 buy point in a three weeks tight pattern.
Amazon ticked 0.4% higher after a Webush price target increase to 3,050 from 2,750. The new target is 10% above where shares ended on Tuesday. Amazon stock, an IBD Leaderboard listing, is working on its eighth straight weekly advance, extended above buy points at 2,186.05 and 2,525,55.
Dow Jones Today: Nike Stock
Nike (NKE) had jumped for a second day on Tuesday, moving to within 3% of a 101.79 buy point in a cup-with-handle base. The company reports its fiscal fourth-quarter results after Thursday’s closing bell. Expectations for the quarter are low, with analyst consensus targeting an earnings drop of 85%, and a 26% decline in revenue. Three analysts hiked their price targets on the stock on Tuesday, with estimates ranging from 113 to 130.
Nike stock traded down 0.1% in early trade on the Dow Jones today.
Active IPOs: Peloton, Translate Bio
Hotshot fitness IPO Peloton Interactive (PTON) popped 3.8% following a third, straight price target hike. Shares finished Tuesday up 89% from their September initial offering price.
Translate Bio (TBIO) leapt another 7.6%, trading near the top of the Russell 2000. Jefferies boosted the stock’s price target to 29. from 17, to reflect the vaccine partnership with France’s Sanofi (SNY), announced Tuesday. Shares spiked 46% on Tuesday. Sanofi slipped 1.9% early Wednesday.
Coronavirus Update: Global
Worldwide, as coronavirus infections slowed or remained low in Europe and countries including Canada and South Africa, testing confirmed more than 167,000 new cases of coronavirus infections in the 24 hours to Wednesday morning. That 1.8% increase lifted the global total of persons infected since the beginning of the outbreak to more than 9.377 million.
The death rate rebounded to 1.1%, with another 5,422 person dying, placing the total number of deaths at 480,220. Cases among countries of the European Economic Area held steady at about 16% of the global total. Deaths in EEA countries were just under 37% of the total, based on data from the European Center for Disease Prevention and Control. U.S. cases were also steady as a percentage of the global total, at 26%, and 26% of the deaths.
Brazil, Mexico, Chile and Peru reported large numbers of new cases and rising infection rates. In addition, India confirmed nearly 16,000 new cases. Also, the number of new cases in Russia remained large, but continued to slow. Spain lifted its state of emergency after a three-month lockdown.
Coronavirus Update: U.S.
In the U.S., 36,268 new cases raised the cumulative tally of coronavirus infections 1.5% to above 2.424 million. The death count rose 0.7%, another 865 deaths, to 123,476, according to Worldometer data.
Texas and California both reported more than 5,000 new cases on Tuesday, record highs. The Washington Post also reported that record highs were also set in Arizona, Nevada and Missouri. Washington Gov. Jay Inslee imposed a statewide mandate that residents wear masks when outside their homes. Connecticut Gov. Ned Lamont was considering requiring proof of negative test results for anyone traveling from a high infection state.
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But new cases numbers are tricky, and tend to rise and fall with levels of tests administered by a state or a country. U.S. testing increased on Tuesday, with the COVID Tracking Project reporting 511,484 tests administered for the day. That was well below recent highs.
The critical number continues to be the active case count, which jumped 1.4% on Tuesday to yet another record high above 1.28 million. Active cases are patients hospitalized or under supervised quarantine, and Arizona, Arkansas, California, North Carolina, South Carolina, Tennessee and Texas all reported hospitalizations rose to record levels on Tuesday.
Dow Jones Today: The Divided Market
The stock market’s confirmed uptrend remains divided, with the Nasdaq setting new record highs and holding above 10,000. Meanwhile, the Dow Jones industrials remain roadblocked below the index’s 200-day moving average — right around the 26,000 level. The S&P 500 is building a cushion above the 3,000 mark as well as its 200-day line and has, in fact, set itself up in a fairly neat cup-with-handle chart pattern.
The Dow has thus far clocked a 19.3% gain for the second quarter. That lags far behind the Nasdaq, but marks a nice recovery after its worst first quarter on record. Similarly, the S&P 500 has a 21.2% gain in Q2. The Nasdaq has turned in a blistering 31.6% run, on track for the second-best quarter in its history, topped only by its 48.2% advance in Q4 of 1999.
For more detailed analysis of the current stock market and its status, study the Big Picture.
The message is that either a mesa or a pullback would be no surprise at this stage and, in fact, sorely needed. Tuesday’s Big Picture market analysis noted, “growth investors should be prepared for future days in which the leaders cool off, move sideways, reverse off their highs and eventually create new bases.”
Breakout Watch: Taiwan Semiconductor, VMware
Cloud-based VMware hurtled more than 5% higher Wednesday, on reports that Dell Technologies was considering options for its 81% stake in the company. That placed VMware stock in a buy range above a 157.10 buy point in a deep cup-with-handle base. The buy range runs to 164.96.
IBD 50 Stocks To Watch pick Taiwan Semiconductor (TSM) inched up early Wednesday. The heavyweight chip foundry, which handles manufacturing needs of fabless chip makers like Nvidia and Advanced Micro Devices (AMD), ended Tuesday 2% below a 58.14 buy point in a cup-with-handle base.
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