Stocks opened to uneven gains Thursday, as investors navigated earnings news, a House vote on coronavirus stimulus and mixed economic data. PayPal Holdings and eBay spiked on earnings. EBay, tech services leader CDW and chip stock Kulicke & Soffa rallied past buy points. And Cisco scrambled to the head, Merck to the bottom, of the Dow Jones today.
The Nasdaq Composite opened up 0.4% on stock market today, with eBay and Align Technologies surging on earnings, while Qualcomm dived to bottom of the index. The S&P 500 added 0.3%.
The Dow Jones Industrial Average gained strength in early trade, rising 200 points, 0.7%, tacking toward a fourth straight advance as Cisco Systems rallied 2.2% to lead the index.
EBay scored an early breakout. IBD Leaderboard stocks Pinduoduo and ZoomInfo Technologies added to their breakouts on Wednesday, with Pinduoduo exiting its buy range. Dow Jones stock Apple, also an IBD Leaderboard listing, climbed toward its new buy point.
Small caps ran alongside the Dow, with the Russell 2000 up 0.65%. Biotech Anavax Life Sciences spiked 130%. IBD 50 stock Digital Turbine traded 19% higher. Biotech Cassava Sciences bolted ahead 22%. The company on Wednesday announced positive interim trial results from its simufilam Alzheimer's treatment. Shares gained 343% for the week through Wednesday.
Jobless Claims Improve; Productivity/Labor Costs Worsen
The Department Of Labor reported 779,000 Americans filed applications for first-time unemployment assistance in the week ended Jan. 30. The final piece of weekly jobless data from 2020 was 8% lower than the prior week's surprise dip to 847,000 claims, and was well below the 835,000 new applications projected by economists.
It was the second piece of improved news ahead of Friday's payrolls report for January. On Wednesday, ADP had reported that U.S. private employers added 174,000 workers in January, more than triple the 50,000 new hires estimated by economists.
Fourth quarter productivity and labor cost data was less optimistic, with productivity declining 4.8% and unit labor costs up 6.8% for the quarter. That was compared to the third quarter's 4.6% rebound in productivity, and a 6.6% decline in unit labor costs. Economists estimated a 2.8% decline in productivity, and a 3.5% rise costs, for Q4.
Dow Jones Today: Apple's Buy Point, Frazier To Exit Merck
Cisco Systems stock gained 2% in early action, leading Apple's 1.1% advance on the Dow Jones today. Apple edged shares closer to a cup-with-handle buy point at 138.89. Apple pulled back after briefly clearing the entry in late January, and has been weaving above and below support at its 21-day exponential moving average.
Shares have moved up and down on news from multiple sources this week that the company was pursuing a possible deal with South Korea's Hyundai-Kia, regarding Apple's self-driving electric vehicle, dubbed Apple car. Bloomberg rfeported that Apple planned to invest 4 trillion won ($3.6 billion) to build the Apple car at a Kia facility in Georgia.
Merck shares dropped 2.1%, taking up the low spot on the Dow industrials. Fourth-quarter earnings and revenue came in well short of analyst estimates, although full-year earnings guidance was well above expectations. Chief Executive Ken Frazier, CEO since January 2011, will exit his role at the end of June, and hand the reins over to CFO Robert Davis.
Earnings: EBay, PayPal, Digital Turbine
EBay fourth-quarter earnings and revenue neatly cleared analyst targets, and management's first-quarter guidance called for a better-than-expected 28% revenue gain. The stock rallied almost 7% early Thursday, blasting past the buy range above a 58.44 buy point in a double-bottom base. The move set up a breakaway gap buying opportunity.
IBD Leaderboard issue PayPal Holdings popped 6% higher after fourth-quarter results topped expectations and the company reported adding 16 million active users during the quarter, bringing its total accounts worldwide to 377 million. PayPal stock ended Wednesday in a buy range above an alternate entry at 232.22. The buy range extends to 255.32.
In other earnings gains early Thursday, Align Technology climbed 10% and Silicon Motion jumped 7.6%.
IBD 50 stock Digital Turbine rocketed 16% higher in premarket trade, after announcing late Wednesday fourth-quarter earnings shot up 320%, while revenue soared 146%. Ladenburg upgraded the stock to buy, from neutral and placed its price target at 73. The stock's premarket action implied it would open above that level.
Chip equipment supplier Kulick & Soffa jumped more than 7% after its fiscal first-quarter report. That set shares up for a starting bell breakout past a 39.78 buy point in an ascending base, an unusual and bullish chart pattern. The buy zone extends to 41.77.
Stimulus Progress, Oil Prices
In Washington, the House on Wednesday passed a budget bill in a tight 218 to 212 party-line vote, paving the way for the Senate to pass President Biden's $1.9 trillion coronavirus stimulus plan with a simple majority. Biden is seeking bipartisan participation in the measure, while also working with Congress to make clear that they have the wherewithal to pass the plan with or without GOP support. A group of 10 Republican senators had pitched a $620 billion counterproposal to Biden's plan on Sunday.
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In commodities, oil prices continued to push further into their highest levels since late January, after providing a significant prop to Wednesday's market's action. West Texas Intermediate futures traded up 0.8% to above $56 a barrel early Thursday. The United States Oil Fund gained 0.6% in premarket trade. The Energy Select Sector SPDR added 0.2%.
GameStop Short Squeeze
Volatiel trade in GameStop shares continued, as early gains reversed into a 17% dive. AMC Entertainment also reversed, to a 10% decline. Koss dropped more than 15%. GameStop stock ended Wednesday down more than 70% so far this week, and up 390% from Jan. 1. Also showing possible short-squeeze characteristics early Thursday was DavidsTea, jetter 10% higher in morning trade.
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Coronavirus Update
The average number of new cases of coronavirus reported daily in the U.S. have been declining from a peak of 255,126 reached on Jan. 11. The seven-day average for daily new cases on Wednesday fell to 136,003 — down almost 47% to the lowest level since Nov. 11, after 24 straight days of declines. Deaths reported have been more up-and-down, but started to trend lower after hitting a high of 3,421 on Jan. 17.
Bulls Back Off
The Investors Intelligence sentiment survey reported Wednesday that bullish sentiment among stock market newsletter writers fell to 57.8% after a small increase to 61.2% the prior week. IBD's Big Picture market analysis pointed out that "falling bullish sentiment is actually good for the confirmed market uptrend because excessively bullish readings above 60% have been seen near market tops in the past. The latest reading ended nine straight readings above 60%."
Dow Jones Today: Nike, Caterpillar
In addition to Apple, Nike and Caterpillar are stocks to watch on the Dow Jones today.
Caterpillar remains in its buy zone on a rebound from 10-week support. Four analysts raised price targets on the stock this week, following the company's solid fourth-quarter performance, reported Friday. Analyst price targets ranged from 190 to 240. CAT stock closed at 191.45 on Wednesday. Its buy zone runs roughly to 200.
Nike stock is six weeks into a flat base with a buy point at 148.05. Shares are working to regain support at their converged 50-day and 21-day moving averages, after the 41% advance that followed a mid-August breakout.
Find Alan R. Elliott on Twitter @IBD_Aelliott
