Stocks defended modest gains Tuesday, as earnings news helped boost the S&P 500 to another fresh record high, but China-based stocks helped hold back the Nasdaq. General Electric and AudioCodes were early earnings winners. IBD 50 stock DRHorton and IBD Leaderboard stock PayPal remained in buy ranges, while earnings sent Johnson & Johnson to the head of the Dow Jones today.
XThe Dow Jones Industrial Average popped 140 points at the starting bell, then halved its advance to 0.3%. The S&P 500 edged up 0.1%, briefly touching a new high. The Nasdaq Composite wobbled back and forth, trading 0.1% higher about a half hour into the session on the stock market today. Fox Corp. (FOXA) led with a 3% gain. China-based NetEase (NTES) and JD.com (JD) dipped to the bottom of the Nasdaq 100 — each down about 2%.
On the S&P 500, General Electric (GE) rallied more than 6%, as a surprise surge in cash flow counteracted an otherwise mixed fourth-quarter report. Craft and trade e-commerce site Etsy (ETSY) swung 3.9% higher, after Tesla Chief Executive Elon Musk tweeted out compliments to the company.
Plant-based protein maker Beyond Meat (BYND) shares rallied more than 29%, after announcing a production partnership with PepsiCo (PEP). Pepsi shares gained 0.5%.
At the bottom of the Dow, Verizon (VZ) fell 2.8% on earnings and American Express (AXP) dropped 2.6%, despite reporting a lesser-than-expected drop in fourth-quarter earnings. Johnson & Johnson (JNJ) sprang to the top of the Dow, up 1.6%, as fourth-quarter revenue rose 8%, and earnings slipped 1%, less than forecast by Wall Street.
Gear up for Tuesday's market action by reading IBD's Investing Action Plan.
Earnings News: GE, AudioCodes, Autoliv
On the earnings front, snow and off-road vehicle maker Polaris (PII) vaulted more than 6% higher. Earnings topped expectations and management's 2021 outlook was healthier than expected, although revenue came up a bit short of analyst targets. The stock ended Monday extended, up 8% after clearing a cup-base buy point at 110.40 on Jan. 19.
Israel-based AudioCodes (AUDC) popped 5%, then flatted to a 0.7% gain, after reporting fourth-quarter revenue and earnings comfortably above analyst estimates. Shares ended Monday 3% below a 35.43 buy point in 16-week cup base.
Sweden-based Autoliv (ALV), a maker of seatbelts and airbag systems, swung 4% higher as fiscal first-quarter sales and earnings easily topped views.
Senate, Federal Reserve, Housing Data
Markets acted cautiously Tuesday after Monday's steep reversal. U.S. stocks finished Monday's volatile session showing a number of positives for the current confirmed uptrend. However, the Nasdaq remains extended above its 50-day line, flagging a possible consolidation. The Senate late Monday sorted out the leadership standoff that had threatened regulatory progress, and it confirmed former Federal Reserve Chair Janet Yellen to head the U.S. Treasury.
Bloomberg reported Senate Majority Leader Chuck Schumer saying a coronavirus stimulus bill could be delayed as long as mid-March.
For more detailed analysis of the current stock market and its status, study the Big Picture.
The Federal Open Market Committee swings into its two-day meeting this morning, with a policy announcement and press conference set for Wednesday afternoon. Homebuilder and mortgage stocks are not likely to see much impact from the release of November housing data from Case-Shiller and the Federal Housing Finance Agency at 9 a.m. ET.
The Conference Board's January Consumer Confidence Index and the Richmond Federal Reserve's Manufacturing Index are due out at 10 a.m. ET.
IBD 50: Etsy Gets Some Musk Love, DRHorton In Buy Range
DRHorton ran at the head of the IBD 50 list, up almost 4% after above-forecast fiscal first-quarter results. The move sent shares high in the buy range above a double-bottom base buy point at 78.35. The buy range runs to 82.27.
Etsy spiked 8% at the open, then narrowed gains to less than 2%. Tesla (TSLA) CEO Musk sent an early morning tweet saying "I kinda love Etsy." In a subsequent tweet, he said "bought a hand-knit wool Marvin the Martian (helmet) for my dog." Etsy stock has held near highs, up 35% since clearing a 154.98 buy point in late November.
China-based IBD 50 name 360 Digitech (QFIN) bolted ahead 6.3% in early action, aiming to extend its rally to a ninth day. It will take another run at what IBD MarketSmith analysis charts as a cup-base buy point at 18.16. Shares briefly topped the entry on Monday, then pulled back sharply to end 11% below the buy point.
China Stocks To Watch: Tencent, Futu, Baozun
China-based stocks were mixed, after a tough day on China's markets. Hong Kong's Hang Seng Index dropped 2.6%, the Shanghai Composite closed 1.5% lower. Tencent Holdings (TCEHY) fell sharply on regulatory concerns, helping to trigger the sell-off. In the U.S., Keybanc downgraded Tencent shares to sector weight, from overweight. The stock was down 2.6% in early U.S. trade.
IBD Live: A New Tool For Daily Stock Market Analysis
Among China-based names trading in the U.S., Futu Holdings (FUTU) continued its eruptive advance, rising another 8.9% early Tuesday. The wildcard stock staged a huge reversal Monday, paring a 32% gain to 2%. Still, shares have advanced more than 123% since the start of January. The stock is beginning the fourth week of an eight-week hold rule. In the case of Futu, a volatile, non-U.S. based stock, the hold rule comes with some clear caveats.
E-commerce software leader Baozun (BZUN) rallied 3.2% in early action. Shanghai-based Baozun announced a $17.2 million agreement with marketing technology outfit iClick Interactive (ICLK). Baozun, which has a Composite Rating of 99 from IBD, ended Monday 18% below a 43.50 buy point in an 11-week cup base. Shares of iClick jumped 12% early Tuesday.
Bitcoin Trades Lower, Overstock Spikes, PayPal In Buy Range
Bitcoin slumped 8% early Tuesday to trade well below $32,000. The cryptocurrency is down 25% from its high near $41,500 on Jan. 8. It has a 12-month gain of 274%.
Bitcoin-related stocks moved generally lower, with the exception of Overstock (OSTK), which rallied more than 12% early Tuesday. The early Bitcoin adopter has rebounded 40% so far in January, following a steep fourth-month decline. Overstock announced late Monday it would convert is blockchain-based subsidiary Medici Ventures to a limited partnership, with investor Pelion Venture Partners contributing $45 million, and assuming operational control of the unit.
IBD Leaderboard stock PayPal Holdings (PYPL), which began handling Bitcoin transactions in October, dipped 0.3% and remained in a buy range, above an alternative buy point at 244.35. The stock has been behaving nicely, hugging its rising 21-day exponential moving average, since exiting a three-month consolidation in early December. The buy zone runs to 256.57.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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