Stock futures slipped back into mixed trade Tuesday as Dow Jones futures weakened, and after a Senate vote late Monday moved a federal coronavirus stimulus bill to President Donald Trump’s desk for a signature. Apple stock was the market’s early leader, rallying on autonomous vehicle news. And merger news sent fitness gear maker Peloton Interactive soaring.
Dow Jones futures rose briefly, then slipped back to a fractional loss as Chevron (CVX) and Visa (V) weighed on the index. S&P 500 futures clung to narrow gains, while Nasdaq 100 futures rose 0.4% above fair value. Among small caps, Russell 2000 futures showed a 0.5% advance on the stock market today.
Apple (AAPL) led the Dow industrials, S&P 500 and the Nasdaq early Tuesday. Apple stock rose in a buy range following Monday’s electric vehicle/autonomous car news. Baidu (BIDU) traded just behind Apple on the S&P 500. Network storage gear maker NetApp (NTAP) gained 1.5%, suggesting an early move above a 65.48 buy point in a 50-week base.
The rollout of vaccines expanded, with Moderna’s vaccine joining the battle in the U.S. on Monday. European Union regulators also approved the first doses for delivery in Europe, even as the region shuttered its borders against the fast-moving strain of the virus overtaking the U.K.
The U.K., meanwhile, found itself facing a highly uncertain “hard Brexit” from the EU in 10 days. Its last attempts at a deal declined as essentially all its trade with EU countries shut down against the spread of the virus.
Peloton Interactive, IBD Leaderboard stock Nike (NKE) and Exact Sciences (EXAS) all ended Monday in buy ranges. IBD 50 stocks Logitech (LOGI), Fortinet (FTNT) and Dynatrace (DT) were all basing, and trading less than 5% below valid buy points.
Earnings news had some impact on early trade, as CarMax (KMX) dropped 3.3% after a mixed third-quarter report. Cintas (CTAS) and Neogen (NEOG) each rose less than 1% after delivering results. Neogen ended Monday 2% below an 82.16 buy point in an 18-week cup base.
Apple Leads Dow Jones Stocks
Apple snapped higher late Monday, helping to trigger a market turnaround, after Reuters reported that the company aimed to build its own self-driving automobile. Plans call for the company to build its own battery/powerpack technology, while partnering with outside developers for some other aspects of the project.
Bloomberg reported Apple had scaled back early efforts at driverless technology in 2017, but had continued developing the underlying autonomous system. Shares of China-based Baidu soared a week ago, on news the company discussed with automakers an expansion of its Apollo autonomous electric vehicle development efforts, centered around Baidu’s expanding autonomous taxi service Go Robotaxi.
Apple stock has cleared a couple of early entry points, at 120 and 125.49 over the past week. It is in a buy range that runs to 131.76. It still trades below a conventional cup base buy point at 138.08.
Another Dow Jones leader, Boeing (BA), received an early bump. Boeing stock jumped 2.2% after Alaska Airlines Group (ALK) increased its order for Boeing 737 Max aircraft by 23 jets. Alaska announced orders for 68 of the new jets, up from its initial order of 32. Alaska has options to buy another 52 planes.
Boeing shares are in the third week of a pullback, struggling to hold support at their 21-day exponential moving average.
Q3 GDP Revision Tops Forecasts
Third-quarter GDP rose 33.4% as the economy bounced out of its coronavirus slump, according to revised data from the Commerce Department. That was slightly above the original estimate for a 33.1% gain, beating economist expectations for no change. Consumer spending rebounded 41%, above initial estimates for a 40.6% bounce.
December consumer confidence data from the Conference Board, the National Association of Realtors’ existing homes sales numbers for November and the Richmond Federal Reserve’s December manufacturing index are all due out at 10 a.m. ET.
Mergers/Index Changes: Peloton, Sportsman’s Warehouse, Kinsale
Workout gear innovator Peloton (PTON) announced late Monday plans to buy competitor Precor for $420 million. Goldman Sachs, Stifel and JMP Securities all raised their price targets on the stock following the news. A JPMorgan note said the deal would bring much needed “manufacturing capacity and should help expedite delivery times while establishing Peloton’s first domestic manufacturing presence.”
Peloton shares ended Monday in a buy range, above a 139.85 buy point in an eight-week cup-with-handle base.
On the Russell 2000, Utah-based Sportsman’s Warehouse (SPWH) flew 36% higher after Great American Outdoors said it would take the company private at 18 a share, 42% above Monday’s closing price. Great American owns Bass Pro, Cabela’s and White River Marine Group.
Nutritional snack maker Simple Good Foods (SMPL) rallied 14%, after Standard & Poor’s announced the Denver-based outfit would replace insurer Kinsale Capital Group (KNSL) on the S&P SmallCap 600 as of Dec. 29. Kinsale will move to the S&P MidCap 400 on that date.
Simple Good Foods stock ended Monday in a buy range above a 25.06 buy point in what MarketSmith charts as a 14-week cup-with-handle base. Kinsale, an IBD Long-Term Leaders listing, is extended after a faltering breakout in October and November. Kinsale shares dropped 3.7% in early trade.
Blank check company Big Rock Partners (BPWR) appeared set to soar for a second day, up 34% early Tuesday after announcing late Monday it was merging with NeuroRx, a clinical stage, small molecule pharmaceutical company. NeuroRX develops novel therapeutics for the treatment of Covid-19 and bipolar depression. Big Rock spiked nearly 30% Friday and 61% Monday, technically breaking out from what MarketSmith chart analysis plots as a flat base with an 11.95 buy point.
Stimulus Package Awaits Trumps Signature
A $1.4 trillion spending bill and a $900 billion Covid-19 relief package were affirmed in a 92-6 Senate vote just before midnight on Monday. The bill now needs only a signature from President Trump to turn loose the broad-based funding directed toward individual consumers, small businesses and industries, and detailed in the bill’s 5,593 pages. White House spokesman Ben Williamson said Sunday the president intends to sign the legislation.
The measure pushes Congressional spending on emergency pandemic relief to $3.3 trillion in 2020, according to the Washington Post. The package has “a little bit of everything for everybody,” Treasury Secretary Steven Mnuchin told CNBC on Monday, but has been criticized by a number of economists as not going far enough to counteract the impact of the coronavirus-related economic shutdowns.
The rollout of Pfizer (PFE)/BioNtech (BNTX) vaccines continued in the U.S. and the U.K. A second vaccine from Moderna (MRNA), which was granted Emergency Use Authorization by the U.S. Food and Drug Administration on Friday, was also being distributed with the first doses being administered on Monday.
Pfizer and BioNTech announced that the European Commission approved the partners’ vaccine for use across all of the 27 European Union member states. The companies said distribution and administration of the doses were to begin immediately.
In the U.S., the number of new coronavirus infections reported — measured on a seven-day average — hovered above 218,500. That was up from 165,421 on Dec. 1, 84,203 on Nov. 1, and 43,311 on Oct. 1. Deaths reported daily rose to 2,665 on Monday, up 68% from the start of the month. The daily average for deaths reported on Dec. 1 was 1,587. On Nov. 1 it was 850. On Oct. 1 it was 732.
Global Markets: Europe’s Lockdown, U.K.’s Brexit Fail
Tuesday was a mixed day across global markets. Benchmarks across Asia fell hard in response to Europe’s lockdown in an attempt to contain a new virulent strain of coronavirus spreading in the U.K. The Shanghai Composite dived 1.9%. In Japan, Tokyo’s Nikkei 225 dropped 1%.
Europe’s markets gained strength in afternoon trade, despite the widening coronavirus border closures and after the European Union flatly denied U.K. Prime Minister Boris Johnson’s last moment bid to land a Brexit trade agreement. EU leaders had set a Sunday deadline for a deal, saying anything later would not provide time for a review, discussion and vote on the matter ahead of the final U.K. exit from the trade union on Dec. 31.
Frankfurt’s DAX and the CAC-40 in Paris each climbed 1.1%. London’s FTSE 100 added 0.5%.
IBD 50/Leaderboard: Palantir Jumps, PayPal Target Hiked
Deutsche Bank raised PayPal’s price target to 275, from 234 on Tuesday. The note said a survey of 817 tech savvy U.S. participants showed an accelerating adoption of e-commerce and mobile payment services. PayPal, Venmo and Square (SQ) were key beneficiaries, and the note pointed to incursion by those into traditional financial services, and taking share from what are now standard banking markets.
Palantir Technologies (PLTR) rose 3.7% to pace the Leaderboard list in premarket trade. The data management software developer bolted 9.8% higher on Monday. The September initial public offering is up 147% from an early November breakout, and down about 15% from a late November high.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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