Stocks jumped out of the starting gate Thursday, as a spike in homebuilding activity overruled a second straight rise in weekly jobless claims. In Washington, a federal coronavirus stimulus bill appeared close to completion, and an FDA panel prepared to review a second U.S. coronavirus vaccine.
XBitcoin continued its rally, spiking to a record high above $23,o00. Earnings news sent Accenture and Cerence past buy points. Homebuilder stocks rallied. Small cap Rite Aid spiked after its third-quarter report. Meanwhile, Visa jumped the head of the Dow Jones today.
The Dow Jones Industrial Average opened more than 150 point higher, grabbing an early 0.5% gain. The S&P 500 rallied 0.6%, and the Nasdaq pulled ahead with a 0.7% advance. Cognizant Technology (CTSH) and China's NetEase (NTES) jockeyed for lead on the Nasdaq, up more than 3% apiece.
Vaccine makers' stocks were mixed ahead of an FDA advisory panel review of Moderna's (MRNA) leading coronavirus vaccine candidate. FDA staff gave the vaccine a positive review in documents released Monday. An advisory panel recommendation could lead to a fast-track Emergency Use Authorization, and rapid rollout of a second U.S. Covid-19 deterrent. Moderna shares climbed 2.4%. Makers of the first approved vaccine, Pfizer (PFE) vaccine partner BioNTech (BNTX), dropped 2.5% in opening trade.
Gear up for Wednesday's market action by reading IBD's Investing Action Plan.
Unemployment Claims Jump, Again
First-time unemployment claims rose to 885,000 in the week ended Dec. 12. That was higher than the prior week's surprise jump to 862,000 claims, disappointing economist projections for a downturn to 806,000 new applications. The news followed data Wednesday that showed an unexpected 1.1% drop in retail sales during November.
Housing starts ramped up to an annualized rate of 1.547 million in November, the Commerce Department reported, a third-straight monthly advance and above expectations for 1.53 million starts. Building permits jumped to 1.639 million, the highest rate since 2006 and a strong indicator of upcoming activity. Permits clocked in at a rate of 1.545 million in October, and economists had projected an increase to 1.553 million.
The data stirred a rally among homebuilding stocks. On the IBD 50 list, D.R.Horton (DHI) jumped 3.8% and Builders FirstSource (BLDR) knocked out a 4.6% gain.
The Philadelphia Federal Reserve's Manufacturing Business Outlook Survey for Dec. 17 dropped by more than half, to 11.1 from November's tally of 26.3. The result showed manufacturing activity continued in the mid-Atlantic region, but growth was less widespread. Economists had forecast a pullback to 21.1. General activity, new orders and shipments were positive for a seventh-straight month, but "fell notably from their readings in November.," the report said.
Earnings Drive S&P 500 Leaders: Accenture Breaks Out, Lennar Rallies
Management and technology consultant Accenture (ACN) rallied more than 8% to lead the S&P 500 after squarely topping fiscal first-quarter analyst revenue and earnings targets, and raising guidance above expectations. The gain blasted past a 241.92 buy point in a 10-week flat base.
Also on the S&P 500, homebuilder Lennar (LEN) rallied 8%, with an added boost from the morning's housing starts data, and after a late-Wednesday report showed revenue slipping 2%, less than expected, while earnings popped 32% and cleared analyst projections. Lennar stock has been struggling since late October to regain 10-week support. Shares are approaching a nine-week base with an 86.90 buy point.
IBD50/Leaderboard: Cerence Tops Its Buy Point
Digital Turbine (APPS) powered to the head of the IBD 50 list, up more than 6%, aiming to add a sixth advance to its rebound from the 10-week line.
PayPal (PYPL), also an IBD Leaderboard stock, climbed 3%. PayPal ended Wednesday's session extended, after a Nov. 25 breakout above a 215.93 buy point. Leaderboard stock Zscaler (ZS) bolted more than 4% higher, extending its gain from a Dec. 3 breakout to 15%.
IBD 50 stock Logitech International (LOGI) tacked on a 2.7% gain, rising to within 2% of what MarketSmith chart analysis plots as a 95.81 buy point in an eight-week cup base.
Automotive digital assistant developer Cerence (CRNC) opened 2.5% higher, moving into a buy range above a three-weeks-tight buy point at 95.02. Cerence is an IBD 50 Stock To Watch.
Clock Ticking On Stimulus Deal
Reports that Congress was nearing a government stimulus deal, and its first show of bipartisan compromise in seven months, led to a wary market optimism. The $900 billion stimulus deal would reportedly include direct checks to Americans, but not the decisive issues of state and local government aid or a liability shield for businesses. The goal is to attach a stimulus deal to a must-pass government funding bill that faces a midnight-Friday deadline, in order to avoid a government shutdown, while allowing lawmakers to exit Washington for the holidays.
Get Alerts To Stocks Near Buy Points With IBD SwingTrader
Bitcoin Rally Continues; Oil And Copper Gain Strength
Bitcoin rallied briefly above $23,440 early Thursday, up 21% since the start of December and with a year-to-date gain of 226.5%. Oil price action remained positive, with West Texas Intermediate up 0.4% Thursday to trade near $48 a barrel — up almost 43% from an early November low and at its highest level since early March.
Stock Market ETF Strategy And How To Invest In The Current Uptrend
Copper gained 1%, pushing its year-to-date gain near 29% and to its highest mark since February 2013. Natural gas prices remained in check, up 0.4% Thursday to $2.69 per million British Thermal units. That's still down 20% from a late October high despite a severe winter storm pounding the Northeast. The Northeast is the nation's largest gas market.
Bonds traded relatively flat, with the 10-year-yield up one basis point to 0.92%. The dollar slipped versus both the euro and the yen.
Confirmed Uptrend Strengthenes, Small Caps Lead
The stock market remains in a "confirmed uptrend" status, and Wednesday's market action following the Federal Reserve announcement reassured some doubts. Growth stocks ran at the head of the market, with the Innovator IBD 50 ETF (FFTY) logging a 0.6% advance to close at a record high.
The Russell 2000 backed off slightly, down 0.,3% for the day. Small caps have emerged as a leading segment of the market, although the index's almost seven-week advance has left it extended more than 32% above its 200-day moving average. The widest gap in the index's history, a factor that can signal an overheating market.
For more detailed analysis of the current stock market and its status, study the Big Picture.
Improved Outlook Seen; Microsoft Paces Dow Jones
But the economic outlook appears to be set to improve, if not already improving. Wednesday's announcement from the Fed signaled that the benchmark interest rate would remain near zero through 2023. The release said asset purchases would continue at least at current levels until there's "substantial further progress" toward inflation and employment targets.
The Fed is currently buying about $120 billion in bonds per month. That includes $80 billion in Treasuries and $40 billion in government-backed mortgage securities.
That sent Microsoft (MSFT), Salesforce.com (CRM) and Intel (INTC) to the best performances among Dow Jones stocks. DynaTrace (DT), PayPal and ServiceNow (NOW) led the IBD 50 list. On the S&P Smallcap 600, Alarm.comHoldings (ALRM) and bitcoin-linked Microstrategy (MSTR) posted two of the top gains.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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Dow Jones Rallies Amid Rising Jobless Claims; Bitcoin Surges Past $23,000
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