Stock futures eased lower Wednesday as global markets advanced and as concerns rose regarding coronavirus infections and impact. Vaccine makers BioNTech and Moderna rallied. Earnings news positioned Paycom Software and Davita for possible breakouts. And, on the Dow Jones today, Home Depot and UnitedHealth traded just below buy points.
Dow Jones futures dipped 0.2% as markets awaited July hiring data from ADP (ADP). S&P 500 futures traded nearly 0.2% below fair value. Nasdaq 100 futures were down less than 0.1%, as earnings news sent Match Group (MTCH) and Amgen (AMGN) to the bottom of the Nasdaq 100.
Video game developer Activision Blizzard (ATVI) rallied 5.6% to lead the Nasdaq 100. The company reported second-quarter earnings late Tuesday. The company has been wracked by an employee walk-off and executive shake-ups tied to a lawsuit alleging widespread sexual harassment and discrimination within the company.
Paycom Software (PAYC) vaulted 7.5% to lead the S&P 500. The human resources software developer reported better-than-expected second quarter sales and earnings, and raised its guidance. The early move implies the stock could open above 404.87, a possible early entry or a double-bottom base buy point.
Delta variant concerns and news reports of a possible full approval from the Food And Drug Administration set vaccine makers in motion. BioNTech (BNTX) up 3% and leading the IBD Leaderboard list. BioNTech is in the third week of an eight-week hold rule. IBD 50 stock Moderna (MRNA) gained 1.4% early Wednesday.
In early earnings news, Donnelley Financial Solutions (DFIN) leaned toward an early breakout, up more than 4%. General Motors (GM) dipped 1.6% just after releasing its results. RingCentral (RNG) and Big Five Sporting Goods (BGFV) were just two of the names rallying after reporting results late Tuesday. Dialysis treatment leader DaVita (DVA) jumped 5.5%, suggesting an early breakout past a 124.98 buy point in a double-bottom base.
Dow Jones Today: Boeing Test Flight Delayed
Amgen slumped 0.9%, to the bottom of the Dow Jones today, after reporting above forecast second-quarter sales and earnings. But management trimmed its full-year earnings guidance.
Boeing (BA) dropped 0.4% after further delays to a test flight of the company’s autonomous, reusable space capsule. Boeing stock is attempting to add a third week to its advance off a mid-July low.
Home Depot (HD) — a stock that has benefited during periods of tighter Covid restrictions — edged a fraction higher. Home Depot stock rose 1.4% on Tuesday, ending less than 1% below a 333.55 entry, also in a 12-week cup-with-handle.
Econ Data: ADP Employment, Oil, Bond Yields
Early market vital signs remained fairly tame. Oil prices were down slightly, with West Texas Intermediate futures holding above $70 a barrel. The 10-year yield held steady at around 1.17%.
The ramp up to Friday’s July payrolls report from the Labor Department begins with the July National Employment Report from ADPADP, due out at 8:15 a.m. ET.
IHS Markit releases its final composite purchasing managers index for July at 9:45 a.m.ET. The Institute for Supply Management reports its July services PMI at 10 a.m.ET. And weekly petroleum inventories data are set for release from the Energy Information Administration at 10:30 a.m. ET.
China Ramps Up Covid Restrictions
China’s markets took a healthy bounce on Wednesday, with the Shanghai Composite and Hong Kong’s Hang Seng index each jumping 0.9%. That put the Shanghai Composite up 2.4% for the week as it rebounds from last week’s 4.3% dive. The Hang Seng ended Wednesday up 1.8%, vs. the prior week’s 5% fall. prior
The positive market action came even as China on Wednesday imposed “massive travel restrictions,” with a large number of airports and rail travel canceled, according to state-run media agency Xinhua.
Widespread testing regimens have also been implemented, and Beijing imposed strict entry and exit controls on Sunday. CNBC reported early Wednesday that China’s National Health Commission said it confirmed 96 Covid cases on Wednesday — the third straight day it reported 90 cases and above. Of the newly confirmed cases, 71 were locally transmitted, said the health commission.
The question of how far China will have to go to lock down the new spread of Delta variant coronavirus comes as a broadening regulatory crackdown left China’s markets reeling. China’s markets began selling off aggressively on July 23, as authorities rolled out a series of reforms that reframed regulations for education companies, food delivery operations and companies listing on exchanges outside of China.
Tech and internet stocks fell hard Tuesday, on fears that online gaming would be the next sector on which the government would focus its broadening crackdown.
Tracking Global Stock Markets
Among China gauges in the U.S. early Wednesday, the iShares MSCI China ETF (MCHI) and the Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR) were unchanged. Technology tracker KraneShares CSI China Internet ETF (KWEB) jumped 1.8% in premarket trade. The ETF fell 4% on Tuesday.
In Europe on Wednesday, stocks rallied higher through midday. The CAC-40 in Paris climbed 0.5%. Frankfurt’s DAX swung 0.9% higher. London’s FTSE 100 mustered a 0.4% gain. The SPDR Portfolio Europe ETF (SPEU) was inactive.
IBD 50 Earnings: Roku, HubSpot, Innovative
At least a dozen IBD 50-listed companies have reported or will report earnings this week. Of the companies due to report, Roku (ROKU), HubSpot (HUBS) and Innovative Properties (IIPR) are among those near buy points.
Roku dipped 0.2% in early trade, leaning toward a fourth straight decline. The stock had dropped below its 21-day exponential moving average on Monday, finishing Tuesday about 10% below a 463.09 buy point in a cup-with-handle base. Roku reports after Wednesday’s close.
HubSpot shares were down 0.3% Wednesday, testing support at their 21-day average. HubSpot stock remains in a buy range above a 574.93 buy point in a cup base. Its pullback to the 10-week line didn’t trigger the automatic sell rule. So the breakout remains in play. The buy zone extends to 603.68. The company reports after today’s close.
Nasdaq, S&P 500, Dow Jones Today
The stock market gave the U.S. economy a vote of confidence Tuesday, with the major indexes all rebounding from short-term support. The gains came even as concerns and restrictions increased, due to what appears to be the accelerating spread of the coronavirus Delta variant in the U.S.
As a result, the S&P 500 and Nasdaq Composite closed narrowly off record highs. The Dow Jones today also opens near its record highs, and back above the 35,000 level, which has acted as a cap on its progress since May.
For more detailed analysis of the current stock market and its status, study the Big Picture.
August is generally treated as a sleepy month for the market, a month in which traders take vacations before the kids head back to school. But for the past decade, August performances have been erratic. The Dow and S&P 500 have posted moves up and down of more than 1.5% in seven of the past 10 years. The Nasdaq has seen such moves in eight of the past ten years.
IBD’s Big Picture cautions that “after rising in eight of the past nine months, a stock market pullback would not come as a surprise. For now, though, there’s no clear sign of such a pullback.” Distribution days are somewhat elevated, particularly on the S&P 500. But Tuesday’s action showed institutional buyers remained engaged. And there has not been any new distribution for the past two weeks.
The stock market’s status remains in ‘confirmed uptrend.’
Find Alan R. Elliott on Twitter @IBD_Aelliott
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