Stock futures soared on Wednesday amid weak global trade, with positive eurozone manufacturing data and news from the US chip industry helping to boost pre-market action. Intel led the Dow Jones today, shipping most chip stocks on the rise in a $ 20 billion manufacturing initiative. Meanwhile, investors will be on the lookout for Washington this morning, where Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell face the Senate Banking Committee this morning on a second day of Congressional testimony.
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Dow Jones futures remained at a gain of 0.4%, with the 29 0f 30 Dow components being traded horizontally and upwards at the start of the stock. The S&P 500 futures were also traded 0.4% above fair value. Nasdaq 100 futures were up 0.7% on the stock exchange today.
Chip makers were in a good mood, as Intel (INTC) led a comprehensive demonstration. Applied Materials (AMAT), Lam Research (LRCX) and KLA (KLAC) led the S&P 500, up about 4% each. ASML Holding (ASML) led the Nasdaq 100 and the IBD 50 list with a gain of 5.2%. VanEck Vectors Semiconductor ETF (SMH) added 1.5%, iShares PHLX Semiconductor ETF (SOXX) jumped 2.6%.
Small caps were also about to rise, with Russell 2000 futures showing a 1.3% gain. Winnebago (WGO) jumped 3.8% after reporting a major fiscal hit on earnings and revenues in the second quarter, and noting “strong retail momentum” going into the recreational vehicle shopping season.
Biotechnology Dynavax Technologies (DVAX) increased 1.7%, following the launch of clinical trials of a Covid-19 vaccine developed in conjunction with Clover Biopharmaceuticals of China. The initial move positioned Dynavax’s shares just below a buying point of 11.79 on a seven-week cup basis.
IBD Leaderboard List Adobe (ADBE) gained 1% after reporting strong fiscal performance in the first quarter on Tuesday. JPMorgan raised the target price of the stock from 585 to 595 and maintained its overweight rating. Adobe shares are struggling to resume support on their 50- and 200-day converging moving averages, while trying to shape the right side of a six-month consolidation.
Yellen / Powell Day 2; Durable goods, March PMI
Treasury Secretary Yellen and Fed chief Powell face questions from the Senate Banking Committee this morning after a similar session before the House’s Financial Services Committee on Tuesday. The country’s two most powerful financial voices agreed on Tuesday that while market valuations were high in many cases, they did not point to a sudden rise in inflation. In addition, both said the economy remains on the road to a strong recovery, but restoring full employment will require time and monetary support.
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The Department of Commerce’s durable goods order data was well below expectations, falling 1.1% in February, compared to the 3.5% increase in January and disappointing forecasts for a 0.8% increase. Without transportation, orders fell 0.9%, against projections of a 0.6% gain. The main orders for capital goods – orders not related to defense, excluding aircraft – fell 0.8%, reducing views to a gain of 0.5%.
Researcher Markit releases his preliminary reading of the March composite purchasing managers’ index on the U.S. economy at 9:45 am Eastern Time.
Intel leads Dow Jones today in foundry push
Chip maker Intel recovered from Tuesday’s strong retraction, rising 3.6% to lead the Dow Jones today at the start of the action. Chief Executive Pat Gelsinger announced that the company would spend $ 20 billion to start two factories in Arizona to start a chip smelting operation to face industry leaders. Taiwan Semiconductor (TSM) and Samsung Electronics.
TSMC’s shares fell 1.9% in pre-market trading. Taiwan Semi is a stock of the IBD Leaderboard.
Intel’s shares have been fluctuating above and below a 63.64 buying point in what IBD MarketSmith’s analysis classifies as a seven-week corded cup base. The stock closed on Tuesday less than 3% below that buying point.
Coronavirus update
After a two-month decline, the seven-day average for new Covid-19 cases reported daily in the United States has flattened out and started to increase in recent days, according to the Worldometer. The current plateau has reached the lowest level at just over 55,000 new cases per day, well above the low of around 36,000 new cases during the previous valley, which occurred in September.
New cases reported worldwide have been on the rise since mid-February. The new reported cases, on average in the previous seven days, increased to 500,524 on Tuesday. This was above 361,619 on February 19, and below the 745,985 new cases recorded on January 11.
Deaths continued to decline in the U.S., with the seven-day average dropping below 1,000 to 975 on Tuesday – the lowest level since November 5. Deaths in the US peaked at 3,470 on January 26. of deaths increased on March 13, after a six-week decline. Registered deaths increased to 8,932 on Tuesday, from an increase of 14,462 on 26 January.
The Center for Disease Control and Prevention reports that the dose count of vaccines distributed so far has increased to 164.3 million. About 128.21 million doses were administered, leaving 13.7% of the total population fully vaccinated.
Bitcoin, oil prices, bond yields
Asian stock markets fell sharply on Wednesday, and Europe’s stock markets were under mixed pressure in the afternoon trade, despite the reversal of Germany’s plans to block Covid-19 over the Easter holiday, as well as data showing a healthy recovery in manufacturing activity in the euro area in March.
Cryptocurrency stocks rose with Bitcoin’s recovery to close to $ 57,000 after dropping to less than $ 54,000 on Tuesday, according to CoinDesk. The cryptocurrency reached a record high of $ 61,556 on March 13.
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Oil prices have recovered, aided by a stranded freighter blocking the mouth of Egypt’s bustling Suez Canal, effectively reducing the world’s oil supply. West Texas Intermediate jumped 2.7% to above $ 59 a barrel. WTI fell 3.8% on Tuesday, well below its March 8 high of close to $ 68, and reducing support on its 50-day line for the first time since early November.
The bonds were practically stable, with the 10-year Treasury yield rising 1 basis point to 1.63%. Yields had a rapid rise from record lows during the pandemic, from about 0.50% in August. They approached pre-pandemic levels at the end of last week, rising above 1.75% – the highest level since January 2020. Yields started in 2020 at around 1.8%, which was around 2.7% a year earlier.
Dow Jones Today Flexes Muscle, Small Cap Flash Alert
The Dow Jones today continues to flex some muscles while still hovering well above its 21-day exponential moving average. Meanwhile, the S&P 500 is managing to maintain support while testing its 21-day line. Nasdaq now faces clear resistance in its 50-day line and, moreover, fell below its 21-day support levels on Tuesday. The next critical technical marker is Friday’s low, around 13,039. A lower cut of this marker leaves the door open for a deeper recoil.
For a more detailed analysis of the current stock market and its status, study the big picture.
Small caps also issued a worrying signal on Tuesday, with the Russell 2000 plunging sharply below its 50-day moving average. The index had previously cut the line earlier in the month. But the move was intraday, with the index closing the session again above support, and recovering sharply the next day. Yesterday, the Russell 2000 closed at the bottom of the session’s trading range, more than 1% below its 50-day line.
Russell 2000 futures were outpacing Wednesday’s premarket by a wide margin, but GamestopGME’s 14% post-profit dip (GME) waved a yellow flag as it passed out to the bottom of the index.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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