Stocks jumped at Tuesday's open, then quickly trimmed gains, with the Dow industrials bucking for a fifth straight daily advance. Earnings news and optimism toward an economic restart stirred investor confidence. Coronavirus test makers continued their recent rally, sending Quest Diagnostics to an early breakout. Meanwhile, coronavirus mask-maker 3M soared on earnings, easily leading the Dow Jones today.
XThe Dow Jones Industrial Average came off its highs, but remained 1% higher as Pfizer (PFE), 3M (MMM) and Caterpillar (CAT) advanced on earnings results. Meanwhile, lowered full-year guidance sent Merck (MRK) to the bottom of the Dow.
The S&P 500 climbed 0.9% on the stock market today. The Nasdaq wrestled to hold a 0.3% increase, losing ground as Vertex Phamaceuticals (VRTX) and Regeneron Pharmaceuticals (REGN) veered lower on analyst downgrades. The Federal Reserve begins its two-day meeting in Washington. Starbucks (SBUX) and Google-parent Alphabet (GOOGL) are among the roster of big names set to report after Tuesday's close.
Harley Davidson (HOG) thundered up nearly 15%, despite a larger than expected earnings slip and cancelation of the stock's dividend. F5 Networks (FFIV) bolted 10% higher. The Seattle-based network solutions provider reported a strong fiscal second-quarter earnings beat, and boosted its third-quarter and full-year guidance.
United Parcel Service (UPS) tanked 3.7% after a mixed first-quarter report. Cincinnati Financial (CINF) dived more than 12%, to the bottom of the S&P 500, on an earnings miss.
NXP Semiconductors (NXPI) vaulted more than 6% higher as first-quarter earnings and revenue fell in line with expectations, setting the pace among Nasdaq 100 stocks. Ross Stores (ROST) popped 5% on an upgrade to buy from D.A. Davidson.
Gear up for Tuesday's market action by reading IBD's Investing Action Plan.
IBD 50/Leaderboard: Nvidia Briefly Clears Buy Point
On the IBD 50 list, Emergent Biosolutions (EBS) edged into the lead, up 3.7% in early action. Emergent announced on Thursday its had agreed to act as manufacturing partner for Johnson & Johnson vaccine candidate for Covid-19.
Emergent stock broke out of an eight-week cup base on Friday, and moved out of buy range during Monday's session. The stock was up 10.2% from the base's 71.29 buy point at Monday close.
Chipmaker Nvidia (NVDA) clawed out a 2.3% advance after Morgan Stanley boosted the stock's price target to 282, from 268. The target hike follows Monday's completion of Nvidia's $7 billion acquisition of Mellanox Technologies. Tuesday gain put the IBD Leaderboard stock briefly in a buy range above a 299.10 handle buy point.
Coronavirus Stocks: Quest Scores Breakout
Test labs Quest Diagnostics (DGX) trimmed an early surge to 1.7%, while LabCorp (LH) flattened its early surge. Both are stars in the coronavirus testing infrastructure universe. Morgan Stanley upgraded Quest shares to overweight, from equal weight, and raised the stock's price target to 139, from 95.
Quest snagged an opening bell breakout past a 118.68 buy point in a deep eight-week cup, according to IBD MarketSmith chart analysis. The buy range runs to 124.61.
Dow Jones Today: CAT, Pfizer, 3M, Merck Earnings
Pfizer and 3M rose highest on the Dow Jones today, as both companies reported healthy first-quarter performances. 3M withdrew its full-year guidance based on coronavirus uncertainties. Pfizer reaffirmed its full-year outlook, and said it had restarted recruitment of test subjects at all clinical sites which were currently operational.
Pfizer stock is working on adding a sixth week to a rally that has lifted shares more than 37% off a late-March low. Shares ended Monday 7% below what IBD MarketSmith chart analysis marks up as a 41.07 buy point in a long-term, double-bottom base.
Caterpillar reversed early losses and rose 1.3%, after reporting earnings above and revenue below analyst targets for its first quarter. CAT stock has been struggling throughout April to regain support at its 50-day moving average.
Merck slumped 2.5% in premarket trade. The New Jersey-based drug giant reported first-quarter earnings and revenue above expectations. But management trimmed its full-year earnings and revenue guidance to below analyst targets, citing coronavirus uncertainties.
Boeing's (BA) first-quarter report comes out early Wednesday, Microsoft (MSFT) reports late Wednesday, Apple (AAPL) delivers results after Thursday's close. Exxon Mobil (XOM) and Chevron (CVX) both report on Friday.
Global Markets, Fed Meeting, Consumer Confidence
Markets across Asia were mixed, whereas Europe's benchmarks moved sharply higher in afternoon traded on Tuesday. In the U.S., the Federal Reserve swings into its two-day meeting this morning, with a rate policy announcement scheduled for Wednesday afternoon.
Japan's central bank boosted its stimulus efforts on Monday, raising some expectations for how the Fed may choose to handle things in the U.S. Current expectations do not anticipate any change to the Fed's target interest rate, according to the CME Fedwatch Tool.
A passel of economic data from March rolled out early Tuesday morning that showed the trade deficit widened, retail inventories increased and wholesale inventories decreased more than expected in March. None of the numbers did much to move the market.
April Consumer Confidence estimates from the Conference Board due out at 10 a.m. could get a little more attention. Expected to drop from 120 to a consensus target of 90, investors will watching to see if it overshoots that mark. Confidence fell to 120 in March, down from February's 132.6 tally – but better than the tumble to 110 the economists had projected.
Oil Prices Volatile, But Impact Eases
Oil prices continued to swing wildly, but the impact on stocks had lessened. West Texas Intermediate oil prices traded below $12 a barrel, down nearly 9% in early action, after tumbling nearly 25% on Monday.
But energy leaders Exxon Mobil (XOM) and Chevron (CVX) on the Dow Jones today traded up 0.5% and 0.9%, respectively. On the S&P 500 — where oil stocks are typically highly sensitive to strong moves in oil prices — energy names posted only three of the 10 worst early declines.
Coronavirus Update: Europe Sees 57% Of Total Deaths
Worldwide, the total number of persons infected since the initial outbreak of the coronavirus rose to 3.075 million. Almost 212,000 persons have died. Countries of the European Economic Area – the European Union plus Iceland, Liechtenstein and Norway – saw their portion of total cases decrease to just above 35%. The region experienced more than 57% of the outbreak's total deaths.
The U.S. was host to about 33% of the cumulative worldwide coronavirus cases, including 27% of infection-caused deaths. The U.S. reported 23,185 new cases, raising its cumulative total of infected persons to 1.01 million. A reported 139,162 of those cases have recovered, 814,542 are listed as active cases and 56,803 have died.
Monday's mix of recoveries, deaths and new cases added 1,603 patients listed as active cases, under hospital care or personal care due to positive test results. That increase was an increase of less than 1%, a sharp slowdown from the recent rate of increase, and far below the 13% and 14% daily increases seen at the beginning of the month.
Coronavirus Update: States Reopening
More states have begun to reach the threshold of 14 days of declining new cases, the minimum requirement recommended by the Trump administration before states should consider a gradual restart of their economies. Eight states this week began to crack the door to recovery. In Montana, that means churches and retail stores are back in business. Restaurants and bars are set to follow on May 4.
Georgia restarted a larger piece of its economy on Friday. Minnesota permitted 100,000 workers in agriculture, industry and offices to head back to work Monday. South Carolina, Mississippi, Alabama, Oklahoma and Colorado are also among the first to begin coming back online. All states are moving cautiously, as testing and contact tracing capabilities are still lacking. That means data from any effort to monitor a resurgence will be incomplete.
"Our new normal is going to look different," Montana Gov. Steve Bullock said. "This virus isn't gone from Montana."
Dow Jones Today: Back Above The 50-Day
The Dow Jones today gets its first open above its 50-day moving average since the nostalgic, pre-lockdown days of Feb. 21. It is only 1% above the line, and only two days above the 20% bear market threshold, so no guarantees. But it is also notable that the the IBD 50 climbed 1.3% during Monday's session. And the Innovator IBD 50 ETF (FFTY) jumped 1.7%, to close above its 50-day line — also for the first time since Feb. 21.
The S&P 500 broke back above its 50-day line on Friday. The Nasdaq is showing a widening array of bullish signals, according to IBD's Weekly Stock Market Update.
The market remains in a confirmed uptrend, which means leading stocks breaking out past valid buy points are fair game for CAN SLIM investors. But it is important to recognize that many recent breakouts continue to lack conviction, suggesting institutional investors maintaining a wait-and-see stance.
For more detailed analysis of the current stock market and its status, study The Big Picture.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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