June 28, 2022

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Dow Jones Today, Stocks Slip As China Crackdown Weighs; FDA Boosts Moderna, BioNTech; Tesla Downshifts On Earnings

Stocks opened lower Tuesday, coming off Monday’s round of new highs, as earnings news and intensifying reaction to new regulations in China stirred early trade. Vaccine maker BioNTech surged after an FDA request. Earnings news positioned Universal Health Services for a possible breakout. And McDonald’s led the Dow Jones today, on a pre-earnings analyst action.


The Dow industrials scrubbed off a quick 250 points, then narrowed to a 0.4{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} loss. The S&P 500 dropped 0.4{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0}. The Nasdaq Composite backed off 0.7{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0}, as Workday (WDAY), NetEase (NTES) and Intel (INTC) fell to the bottom of the Nasdaq 100.

The Dow industrials had pushed to a new high on Monday, exiting a 12-week consolidation. The Nasdaq and S&P 500 also clocked new highs, which they have done regularly for the past six weeks.

At the top of the Nasdaq 100 early Tuesday, satellite broadcaster Sirius XM Holdings (SIRI) climbed 5.6{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} after a solid second-quarter beat. Chip designed Advanced Micro Devices (AMD) rose 1.5{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0}, ahead of its quarterly results due after the close.

Tesla (TSLA) shed its premarket gain and dropped 1.5{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0}. The maker of electric vehicles topped expectations late Monday for second-quarter revenue and earnings. But the chip shortage outlook and other production delays tempered the report.

Shares of Google parent Alphabet (GOOGL) dipped a fraction early Tuesday, leading the IBD 50 list. The company is also due to report after Tuesday’s close.

Biotechs Moderna (MRNA) and BioNTech (BNTX) slipped 0.4{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} and rallied 1.3{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0}, 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.

Moderna is an IBD 50 stock. BioNTech is currently listed in IBD’s Leaderboard line up.

Among the stocks to watch, Pool (POOL), Icici Bank (IBN), Discover Financial Services (DFS) and CarMax (KMX) all  traded near buy points early Tuesday.

Dow Jones Today: 3M Leads, Intel Lags

McDonald’s (MCD) climbed 0.5{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0}, the strongest premarket move on the Dow Jones today. Guggenheim initiated coverage on the stock with a buy rating and a price target at 270 — 11{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} above Monday’s closing price. McDonald’s stock is in a buy range, which extends to 250.19, above a 238.28 buy point. The company is due to report second-quarter results on Wednesday.


Intel (INTC) slumped to the bottom of the index, down 2.7{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0}, after management mapped out plans to move production into more competitive territory. Intel had reported above-forecast second-quarter results on Thursday, but projections for narrower margins pressured the stock.

Earnings News: F5, Universal Health Rally

Furniture rental chain Aaron’s (AAN) leapt more than 4{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0}, while tobacconist Turning Points Brands (TPB) rallied 9{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} on earnings. Aviation leaders General Electric (GE) and Raytheon Technologies (RTX) rallied 1.8{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} and 3.5{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0}, respectively on their quarterly earnings reports.

Raytheon was nearing a 90.08 buy point in an eight-week flat base.

Meanwhile, Lamb Weston (LW) and United Parcel Service (UPS) slipped to the bottom of the S&P 500 following their earnings releases, down 9.9{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0}, and 9.1{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0}, respectively. Wynn Resorts (WYNN) dropped 2.9{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0}, potentially in reaction to market turmoil in China.

At the top of the index, F5 Networks (FFIV) rallied 5.9{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} after reporting an earnings win late Monday. Shares are back above support and climbing the right side of a 17-week consolidation.

Boston Scientific (BSX) was breaking out, up 1.8{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} and passing a 44.73 buy point.

Hospital owner Universal Health Services (UHS) perked 1.8{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} higher, after clearing second-quarter earnings and revenue expectations by wide margins. Shares ended Monday 5{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} 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{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} and the Shanghai Composite tumbled another 2.5{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0}, 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.

Five Best Chinese Stocks To Watch Amid China Crackdown

In Hong Kong, Meituan shares dived 14{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} Monday, and another 18{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} on Tuesday.

CNN reported that three tech giants — Tencent, Meituan and Alibaba — lost more than $237 billion over the two trading sessions. A 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 4.3{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} Monday, and was down 5.1{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} Tuesday. The Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR) fell 4.6{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} Monday, and was off 4.9{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} early Tuesday.

Technology tracker KraneShares CSI China Internet ETF (KWEB) tumbled 9.6{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} Monday. It was down another 4.2{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} in Tuesday’s opening trade.

Stocks To Watch: Pool, Icici, Discover, CarMax

Pool is in buy range from its 449.54 buy point. The swimming pool services and supplies leader retook the entry Friday, after pulling back to test support at its 50-day moving average. The buy zone runs to 472.02.

India-based Icici Bank narrowly topped an 18.27 cup-with-handle buy point on Friday. It remains in its buy range through 19.18.

Discover Financial ended Monday less than 1{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} below a 125.48 flat-base buy point. The stock has posted a couple of strong-volume dives below its 50-day line recently. But its relative strength rating remains a strong 93, and its relative strength line is hovering near new highs.

Auto retailer CarMax is trading just below a cup-with-handle base with a 137.63 buy point.

MSFT, AAPL and Visa Earnings On Dow Jones Today

Three heavies, Microsoft (MSFT), Visa (V) and Apple (AAPL), are scheduled to report earnings after the close on the Dow Jones today. Microsoft and Apple stock rose 0.2{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} in early trade Tuesday. Visa stock slipped to tight losses. All three stocks are extended above recent buy points.

Bond Yields, Fed Meeting, Econ Data

Bond yields slipped to 1.23{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0}, down from Monday’s settle just above 1.27{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0}. Yields remain in focus as the Federal Open Market Committee begins its 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{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} in April.

Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live

Growth in durable goods orders slowed to 0.8{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} in June, the Commerce Department reported. That was down from a 3.2{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} surge in May, and far below expectations for a 2.1{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} rise. Minus transportation, orders inched up 0.3{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} — equal to May’s increase but below estimates for a 0.8{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} rise. The core capital goods index increased 0.5{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0}, up from a 0.1{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} slip in May and above projections for a flat performance.

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 Steady After Upshift

Bitcoin shook off early losses and gained a fraction Tuesday, moving above $38,300 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.

Stock Market ETF Strategy And How To Invest In The Current Uptrend

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.” But Amazon later said it has no plans to accept Bitcoin as payment.

Nasdaq, S&P 500, Dow Jones Today

Coming down to the last few sessions of July, the S&P 500 has a 2.9{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} gain for the month and the Nasdaq is up 2.3{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0}. The Dow Jones today sets out with a 1.9{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} 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{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} in Julys going back to 2010. The S&P 500 averages a 2.5{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} gain. The Nasdaq’s average July gain over that period is 3.3{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0}.

For more detailed analysis of the current stock market and its status, study the Big Picture.

The Nasdaq, S&P 500 and Dow Jones today 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{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} gain in July since 2010, it averages a 0.7{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} decline in August. The averages for the S&P 500 are up 2.5{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} in July, down 0.5{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} in August.

The Nasdaq, which has averaged a 3.3{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} gain in the past 11 Julys, has managed only a 0.4{1c85f339815b3f699ae0fdee90a747b715d9a8e52ec31221581a933b2596fac0} increase for August.

Find Alan R. Elliott on Twitter @IBD_Aelliott


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