Stocks were off to a mixed start Wednesday, as progress in coronavirus vaccines and federal stimulus negotiations helped bolster early trade. Vaccine makers Pfizer, BioNTech and Moderna all reversed lower, while IBD 50 stocks Cadence Systems and Floor & Decor advanced in their buy ranges. Meanwhile, Walt Disney stock jumped to the top of the Dow Jones today, ahead of Thursday's investors day conference.
XThe Dow industrials popped 120 points, up 0.4%, with Disney and Goldman Sachs (GS) leading the Dow Jones today. The S&P 500 added 0.2%, chalking up another record high. On the Dow, Home Depot (HD) added more than 1%, while rival Lowe's (LOW) jumped 5% to lead the S&P 500, after updating its Q4 and full-year guidance, and announcing a $15 billion share repurchase program.
The Nasdaq opened to tight losses, then firmed to a less-than-0.1% gain on the stock market today. Zoom Video (ZM) dropped to the bottom of the Nasdaq 100 after a downgrade to neutral from JPMorgan. Small caps outperformed premarket trade by a wide margin, with the Vanguard Russell 2000 Index Fund ETFVTWO jumped 1% in opening trade.
Airlines, one recent indicator for optimism toward an exit from the pandemic economy, traded high on the S&P 500. Oil producers, another coronavirus economy indicator, were also dominant in early trade, with oil producers holding seven of the S&P 500's top 15 early gains.
Rocket Pharmaceuticals (RCKT) was an early leader on the Russell 2000, spiking more than 80% after brokerage Chardan raised the stock's price target to 56, 75% above Tuesday's closing price. Another small cap and recent initial public offering, lithium battery innovator QuantumScape (QS), rallied 28% in the wake of a 13% jump on Tuesday. Shares cleared an IPO base buy point at 29.25 on Nov. 27.
In earnings news, Chewy (CHWY) gained tumbled 4%, and Lovesac (LOVE) ran up more than 13% after their reports. Lovesac, a thinly traded stock, is moving toward a cup base buy point at 38.03. Retailer Gamestop (GME) dived almost 19%, after sales growth missed analyst targets.
Gear up for Wednesday's market action by reading IBD's Investing Action Plan.
Dow Jones Today: Disney's Buy Zone
Walt Disney (DIS) jumped 2.4% on the Dow Jones today as analysts updated their ratings and price targets ahead of the entertainment juggernaut's investors day conference on Thursday. Wells Fargo upgraded from equal weight to overweight, hoisting its price target to 182 from 155. Loop Capital and Morgan Stanley both raised price targets to 175, with overweight and buy ratings, respectively.
Analysts will be closely tuned to details on subscriber growth in the streaming Disney+ service, and updated guidance on losses from coronavirus-affected theme parks.
Disney stock is technically in a buy range, as it climbs back above 153.51 buy point — the level of its pre-bear market high. The stock has carved a 12-month, 48% deep base, and will remain in a buy range through 161.19.
Coronavirus Vaccine News
Moderna (MRNA) shed premarket gains and dropped 2.6% early Wednesday. Switzerland increased its purchase commitment for Moderna's coronavirus vaccine candidate and Swiss drugmaker Roche (RHHBY) partnered with the biotech to provide Covid-19 antibody testing technology in its trials.
Moderna shares are working on their fifth-straight advance, up 78% since clearing in November what IBD MarketSmith chart analysis plots as a 95.31 buy point in a 17-week cup base.
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Pfizer (PFE) and BioNTech (BNTX) also reversed lower, with PFizer down 0.7% and BioNTech taking a 4.4% hit, as doses of their vaccine continued to be rolled out across the U.K. It comes ahead of a hearing on Thursday that could set the stage for Food and Drug Administration Emergency Use Authorization of the vaccine for use in the U.S.
Mnuchin Comes Off The Bench
Treasury Secretary Steven Mnuchin stepped back into the stimulus picture on Tuesday. Bloomberg reported that Mnuchin pitched a $916 billion coronavirus support package to House Speaker Nancy Pelosi in a Tuesday afternoon telephone call.
Mnuchin had backed away from the negotiations over the past month, leaving Senate Majority Leader Mitch McConnell to manage negotiations with Democrats. Talks led by McConnell broke down over coronavirus liability protections backed by the GOP but opposed by Democrats.
Both McConnell and House Republican leader Kevin McCarthy supported Mnuchin's new proposal, according to Bloomberg. Pelosi and Senate Democratic leader Chuck Schumer said the package showed progress. Details, including the balance of stimulus payments to individuals vs. supplemental weekly unemployment benefits, are still being negotiated.
Global Markets, Commodities, Bitcoin
Overseas markets moved generally higher. China's Shanghai Composite was the leading exception, ending down 1.1% Wednesday. Hong Kong's Hang Seng index climbed 0.8%, while Tokyo's Nikkei 225 jumped 1.3%. Frankfurt's DAX led markets higher in Europe, trading up 0.9% in the afternoon session.
Oil prices continued to bob, with West Texas Intermediate up 0.9% 60 just above $46 a barrel. Bonds eased slightly, lifting the 10-year yield 3 basis points to 0.95%. Bitcoin bounced off a low below $18,000, trading at $18,479 early Wednesday. Copper continued its advance, up 0.5% Wednesday to just above $3.51 a pound, with a year-to-date gain of more than 26%.
IBD 50/Leaderboard: Cadence Rises In A Buy Range
On the IBD 50 list, Floor & Decor (FND) jumped 1.9%, after a 3.7% gain Tuesday left the stock in a buy range above an 86.47 buy point in a seven-week cup base. Floor & Decor joined IBD's Leaderboard list on Tuesday.
Homebuilder D.R. Horton (DHI) added 0.4% early Wednesday. Shares are attempting to regain support at their 10-week moving average, below a 78.35 buy point in a nine-week cup-with-handle base.
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China-based stocks were once again active. Futu Holdings (FUTU) climbed 2.1%, as the stock trades above a cup base buy point at 41.09 and below a high of 51.10. The stock triggered the eight-week hold rule after a Nov. 13 breakout, but the hold rule for such volatile stocks comes with some specific conditions.
IBD Leaderboard listing Pinduoduo (PDD) dropped 2.6% early Wednesday, after spiking more than 10% to a new high during Tuesday's session. The stock is extended after a rebound from 10-week support, and after flashing a sell signal on a possible round-trip from an early November breakout.
Cadence Systems (CDNS) climbed 0.8%. JPMorgan upgraded the stock to an overweight rating and a price target of 145, up from 122. Cadence was among a handful of IBD 50 stocks retaking previous buy points, rising above a 117.69 buy point, in a buy range that runs to 123.57.
Dow Jones Today: December's Signals
The Dow Jones today is sitting on a 1.8% advance after these first six trading days of December. The Dow continues to peck out modest moves, rising in six of the past nine sessions, the index has not logged a gain or loss of 1% or more since Nov. 24.
That's perfectly normal consolidation following November's rousing performance. Meanwhile, the Russell 2000 ended Tuesday up 5.4% in December, while the Nasdaq is up 3.2% and the S&P 500 has a 2.2% gain.
For more detailed analysis of the current stock market and its status, study the Big Picture.
Despite the market's flattish moves, the recent trend of weak starts and stronger finishes sends a quietly bullish message. IBD's Big Picture noted on Tuesday that the Nasdaq 100-tracking Invesco QQQ Trust (QQQ) has forged higher for 11 straight sessions. The iShares Russell 2000 (IWM) racked up an all-time new high for a third day in a row.
The Big Pic notes at least three solid reasons to remain bullish and exposed in the current market, including a strong stable of continued breakouts and the broadening of market leadership.
But there are also several warnings worth noting. One is the Russell's extension above its 200-day line. The index closed 31.1% above its 200-day moving average on Tuesday. That is the largest divergence logged by the index since the 30% gap logged in March 2000, just before rolling over into a two-year dot-com decline.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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