Stocks leaned into an early rebound Wednesday, as oil prices continued to swing wild and the U.S. Senate approved a fresh round of stimulus to counteract effects of the coronavirus pandemic. Snap soared while Netflix slipped, both on earnings. Chip leaders Advanced Micro Devices and ASML Holdings rose toward buy points. Pfizer jumped high on the Dow Jones today, as a coronavirus vaccine candidate received testing approval.
XThe Nasdaq, S&P 500 and the Dow industrials all popped about 1.8% at the open on the stock market today. The Nasadq pushed its gain to 2.1% in early trade. Exxon Mobil (XOM) and Chevron (CVX) raced to the top of the Dow Jones today, as oil prices rebounded violently.
Expedia (EXPE) soared more than 8%, to the top of the Nasdaq 100. News reports late Tuesday said the online travel site was preparing to sell a possible $1 billion share of the company to private-equity firms Silver Lake and Apollo Global Management.
Facebook (FB) was also an early Nasdaq leader, up 5%. The social media giant announced Tuesday it has taken a $5.7 billion stake in Jio Platforms, about 10% of the company. Jio operates, among other things, a wireless mobile network boasting 388 million users.
Chip stocks lined piled into early gains after Teradyne's (TER) strong first-quarter report late Tuesday. ASML Holdings (ASML), Applied Materials (AMAT) and Advanced Micro Devices (AMD) all gained more than 3%. Lam Research (LRCX) vaulted 6.4%. ASML and AMD are below buy points. AMD is an IBD Leaderboard stock.
Gear up for Wednesday's market action by reading IBD's Investing Action Plan.
Earnings News: Chipotle, Netflix, Snap
Earnings provided some powerful input to Wednesday's premarket action. Snapchat parent Snap (SNAP) spiked 24% on a strong first-quarter performance. Delta Air Lines (DAL) angled up 0.9%, despite first-quarter results decimated by the coronavirus lockdowns.
Chipotle Mexican Grill (CMG) rallied more than 6% after a big earnings surprise. AT&T (T) edged 0.6% higher after its report.
Netflix (NFLX) dropped 3.3%, despite crushing expectations for new subscriber growth in the first quarter. The IBD 50 stock is extended 10% above a 393.62 buy point in a cup base.
Coronavirus Earnings: Quest, Thermo Fisher, Biogen
Thermo Fisher Scientific (TMO)— a key supplier of the reagents critical to coronavirus testing — jumped 3.4% after reporting above-forecast earnings and revenue for its first quarter.
Quest Diagnostics (DGX) gained more than 5% after its first-quarter revenue comfortably topped analyst estimates and revenue slipped less than expected. Management, which withdrew full-year guidance in March, suspended the company's share buyback through the end of the year. Quest stock is testing resistance at its 50-day moving average.
Quest announced on Monday it had begun testing patients for coronavirus antibodies. Antibodies potentially provide resistance to Covid-19 infections.
Biogen (BIIB) dived more than 8%, despite first-quarter earnings that easily topped analyst targets. Revenue stopped just short of estimates, however. The company said sales accelerated due to the coronavirus pandemic, and led to $100 million in additional revenue during the quarter.
Dow Jones Today: Pfizer Climbs, Boeing Restructures
Germany-based BioNTech (BNTX) spiked 14% in early action. The company's partnership with Pfizer (PFE) received permission from German regulators to begin clinical trials of a Covid-19 vaccine. Pfizer shares jumped 2.3%.
Moderna (MRNA), which began clinical trials on a vaccine candidate in March, powered up 3.5%.
Boeing (BA) advanced 2.6% after releasing plans late Tuesday to reorganize with an aim to shore up supply lines affected by the coronavirus pandemic. Boeing deemed the move preparation "for the post-pandemic industry footprint."
Coronavirus Update: $484 Billion In New Stimulus
The Senate on Tuesday passed a new round of stimulus that would boost federal small business support, as well as support for hospitals and coronavirus testing, by $484 billion. The measure would pour another $310 billion in the Paycheck Protection Program.
Another $60 billion would go to small business emergency grants and loans. Hospitals would receive $75 billion, with an additional $25 billion directed to expanded coronavirus testing efforts.
The new legislation, which goes up for a House vote on Thursday, lifts the total bill so far for fiscal coronavirus stimulus support to around $2.7 trillion.
Oil Prices Rally On Trump Tweet
Oil prices were highly active Wednesday — continuing two sessions' of chaotic action. The June futures contract for West Texas Intermediate swerved from losses to an 24% gain, trading at $14.43 a barrel early Wednesday. Teh impetus for the turnaround was apparently a presidential tweet, threatening swift action against any Iranian ships threatening U.S. vessels.
Europe's Brent crude benchmark jumped almost 11%, to $21.43, still trading nearly 24% below Friday's close.
Weekly oil inventory data due from the Energy Information Administration at 10:30 a.m. ET is not likely to help the situation.
The Saudis on Tuesday hinted at taking possible measures to trim output ahead of a planned production cut in May. The Texas Railroad Commission, regulator of the state's oil producers, delayed a vote on potential U.S. production curbs until at least May 5, exacerbating Tuesday's sell-off.
President Donald Trump tweeted, also on Tuesday, that he instructed his Energy and Treasury secretaries to work on a plan for making funds available to oil and gas companies.
Global Markets: Europe Rebounds, Japan Slips
Stock markets in China rebounded from early lows, ending higher on hopes of accelerated stimulus measures from the government. Hong Kong's Hang Seng Index gained 0.4%. The Shanghai Composite rose 0.6%. In Japan, Tokyo's Nikkei 225 shed 0.7%, notching its third straight loss as the index backs away from its 50-day moving average.
European markets were positive in afternoon trade, recovering after Tuesday's steep dive. London's FTSE 100 bounced 2.2% higher. Frankfurt's DAX gained 1.3%. The CAC-40 in Paris rose 1.1%.
Coronavirus Update: Global Cases Top 2.5 Million
Globally, another 7,308 persons died from coronavirus infections in the 24 hours to Tuesday morning. That 4.3% increase was up sharply from Monday's 2.8% rise, but below the 9% surge seen on Friday. There were 75,943 new infections reported during the period, a 3% increase, putting the cumulative total of persons infected since the beginning of the pandemic at 2.572 million. At least 701,509 of those patients are reported to have recovered. At least 178,548 of them have died.
Newly reported infections in the U.S. rose 26,237, a 3.3% increase, to 819,175 — holding steady at just below 32% of the global total. Reported new cases result only from the number of tests administered and processed by labs. They are a poor gauge of the actual spread of the virus, the extent of which remains largely unknown. Tuesday's tally in the U.S. included another 2,825 persons dead, raising the total lost to 42,518. That was a 6.6% jump in the number of deaths, down from Friday's 21% spike, but well above the 4% rate seen over the past several days.
Active cases in the U.S. — the number of patients who have tested positive and are currently being treated or quarantined for the virus — increased by 12,647. This gives an indication of increased pressure on hospitals and medical personnel. The number of active cases in New York decreased by nearly 2,700, to below 208,000, giving the state about 30% of the U.S. total of 690,859 active cases. New Jersey had about 13% of U.S. active cases. Pennsylvania, California, Michigan, Massachusetts and Illinois each dealt with between 3% and 5% of the total.
Coronavirus: Restart Status Of States
Most states have stay-at-home orders in force through April 30, and have closed schools through the end of the academic year. The Trump administration last week issued guidelines to assist governors planning to restart the economies of their various states. Georgia and South Carolina are preparing to restart portions of their economies at the end of April. Tennessee Gov. Bill Lee has announced that "the vast majority of businesses" in the state will be allowed to reopen on May 1. Florida permitted beaches to reopen for essential activities at the discretion of local leaders on April 17.
New York Gov. Andrew Cuomo has told his state it is time to start gradually reopening the valve. Stay-at-home orders hold until May 15. Upstate New York is likely to see a quicker restart than New York City. The largest U.S. state economy, California, has joined with Washington and Oregon to map out its reopening. There is no set end date for California's stay-at-home rules, which were the nation's first statewide order when they came on March 19.
Dow Jones Today: Defending A Pulled Back Stance?
After a two-day retreat from its 50-day moving average, the Dow Jones today is positioned to bounce off its 21-day line. The could be a positive, because it points to a possible level of institutional support. But it also hints at a situation where buying at the 21-day and selling at the 50-day sets up a kind of pulled back stance, awaiting more clarity in the markets.
Apple (AAPL) dropped below its 50-day line on Tuesday. That left it 7.4% below the 288.35 buy point in its cup-with-handle base. That is an easily surmountable margin. But the stock must now overcome resistance at the 50-day level — an added hurdle on the way to the breakout.
Microsoft (MSFT) took a 4.1% dip on Tuesday, but held above its 50-day line. Shares now sit nearly 14% below a traditional cup base buy point at 190.80. The move also drove shares back below what IBD MarketSmith chart analysis labels as a 175.10 buy point in a double-bottom base. Microsoft stock ended Tuesday's session about 1% below the 170.10 buy point sketched out for aggressive investors by IBD's Leaderboard service.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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