The Nasdaq rose while other stock futures scratched out narrow losses Tuesday, as earnings news and reaction to increased regulation in China drove early trade. Vaccine makers BioNTech and Moderna surged after an FDA request. Universal Health Services set up for a possible breakout. The Dow Jones today braced for a raft of late, heavyweight earnings reports.
Dow Jones futures dipped 0.2%, S&P 500 futures edged 0.1% below fair value. Nasdaq 100 futures scrapped early losses and fought to a fractional gain. China-based NetEase (NTES), JD.com (JD), Pinduoduo (PDD), Baidu (BIDU) and Trip.com (TCOM) posted the five deepest losses on the Nasdaq 100.
The Dow industrials had pushed to a new high on Monday, climbing out of a 12-week consolidation. The Nasdaq and S&P 500 also clocked new highs, which they have been doing regularly for the past six weeks.
At the top of the Nasdaq 100 early Tuesday, satellite broadcaster Sirius XM Holdings (SIRI) jumped 2.5% after a solid Q2 beat.
Tesla (TSLA) rose 1.7%, leaning toward a second straight advance. The maker of luxury electric vehicles topped expectations late Monday for second quarter revenue and earnings. But the chip shortage outlook and other production delays tempered the report.
Biotechs Moderna (MRNA) and BioNTech (BNTX) rallied 1.4% and 2.2%, respectively. The U.S. Food And Drug Administration requested that Pfizer (PFE), Moderna and BioNTech expand the scope of Covid-19 vaccine trials involving children, specifically seeking to identify rare potential side effects, according to the New York Times.
Dow Jones Today: 3M Leads, Intel Lags
3M (MMM) climbed 0.8%, the strongest premarket move on the Dow Jones today. Intel (INTC) slumped to the bottom of the index, down more than 2%, after management mapped out plans to move production into more competitive territory. Intel had reported above-forecast second-quarter results on Friday, but projections for narrower margins pressured the stock.
S&P 500: F5, Universal Health Rally
Rockwell International (ROK) and United Parcel Service (UPS) slipped to the bottom of the S&P 500 following their earnings releases, down 3.3%, and 2.5%, respectively. Wynn Resorts (WYNN) dropped 2.4%, potentially in reaction to market turmoil in China.
At the top of the index, F5 Networks (FFIV) rallied 6,5% after reporting an earnings win late Monday. Shares are back above support and climbing the right side of a 17-week consolidation.
Hospital owner Universal Health Services (UHS) perked 6% higher, after clearing second-quarter earnings and revenue expectations by wide margins. Shares ended Monday 5% below what IBD MarketSmith analysis pinpointed as a 162.61 buy point in a nine-week flat base. UHS carries a 91 Composite Rating from IBD.
China Market Woes Deepen
The global focus on China’s markets sharpened as investors ramped up their response to increasingly tight regulations. Hong Kong’s Hang Seng plummeted 4.2% and the Shanghai Composite tumbled another 2.5%, each extending their slides to a third day.
Chinese authorities rolled out a raft of clampdowns and new rules over the weekend. The rules required highly successful education companies to adopt non-profit models. And they demanded delivery operations, led by food delivery giant Meituan, to raise wages and increase safety initiatives for its drivers.
In Hong Kong, Meituan shares dived 14% Monday, and another 18% on Tuesday.
CNN reported that three tech giants — Tencent, Meituan and Alibaba — lost more than $237 billion over the two trading sessions. Goldman Sachs analysis found shares of overseas-listed Chinese tech firms have, since February, erased $1 trillion in value.
In the U.S., the iShares MSCI China ETF (MCHI) dived 5.6% Monday, and was down 5.1% in Tuesday’s premarket trade. The Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR) fell 3.6% Monday, and was off 4.9% early Tuesday.
Technology tracker KraneShares CSI China Internet ETF (KWEB) tumbled 9.6% Monday. It was down another 5.6% in Tuesday’s premarket session.
Bond Yields, Fed Meeting, Econ Data
Bond yields relaxed to 1.26%, down slightly from Monday’s settle just above 1.27%. Yields remain in focus as the Federal Open Market Committee begins it two-day meeting, which ends on a rate policy announcement on Wednesday. Yields have fallen sharply for the past 10 weeks, after touching a high above 1.76% in April.
June durable goods orders data are due from the Commerce Department at 8:30 a.m. ET. The Federal Housing Finance Agency’s Housing Price Index and the S&P Case Shiller Home Price Index, both for May, are set for release at 10 a.m. ET, along with the Conference Board’s July Consumer Confidence numbers.
Bitcoin Eases After Upshift
Bitcoin eased 2% early Tuesday, holding above $37,600 after Monday’s surge to $39,544, its highest level since June. The cryptocurrency has traded generally below $34,000 in July, after touching a record high near $65,000 in April.
Bitcoin and other cryptocurrencies jumped, after an Amazon.com (AMZN) job posting fueled speculation that the e-commerce giant may be preparing to accept Bitcoin as payment. The recruitment posting sought a “digital currency and blockchain product lead.”
Nasdaq, S&P 500, Dow Jones Today
Coming down to the last few sessions of July, the S&P 500 has a 2.9% gain for the month and the Nasdaq is up 2.3%. The Dow Jones today sets out with a 1.9% gain since the start of July, but that is no surprise.
The Dow typically lags in the middle summer month, averaging a gain of 2.01% in Julys going back to 2010. The S&P 500 averages a 2.5% gain. The Nasdaq’s average July gain over that period is 3.3%.
For more detailed analysis of the current stock market and its status, study the Big Picture.
The Dow, Nasdaq and S&P 500 head into these final four trading sessions sitting on five-day advances. For the S&P 500 and the Dow that is not all that unusual. But it is the Nasdaq’s first five-day run since January. The Nasdaq has not had a six-day rally since August last year.
August has, in recent history, been a tougher month. While the Dow has averaged a 2% gain in July since 2010, it averages a 0.7% decline in August. The averages for the S&P 500 are up 2.5% in July, down 0.5% in August.
The Nasdaq, which has averaged a 3.3% gain in the past 11 Julys, has managed only a 0.4% increase for August.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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