Stock futures clawed out tight early gains Thursday as earnings news drove premarket trade and investors waited on weekly jobless claims data. China-based stocks were once again under pressure. Earnings news positioned HubSpot and Regeneron for possible early breakouts. Walmart led the Dow Jones today, following an analyst upgrade.
Dow Jones futures and S&P 500 futures moved 0.2% above fair value. Nasdaq 100 futures edged up 0.3%, as MercadoLibre (MELI), Electronic Arts (EA) and Booking Holdings (BKNG) led the Nasdaq 100 in early trade. Electronic Arts was a premarket leader on Wednesday, but slipped back to finish effectively flat during regular trade.
China-based stocks NetEase (NTES), JD.com (JD) and Pinduoduo (PDD) fell to the bottom of the Nasdaq 100. Advanced Micro Devices (AMD) was also near the bottom of the index, down 1.2%. AMD and new issue Robinhood Markets (HOOD) have received rising attention from the Reddit investor trading crowd. Robinhood shares dropped 10% in premarket action.
On the S&P 500, Regeneron Pharmaceuticals (REGN) rallied 3.3% after its second-quarter report. The gain positioned the biotech heavyweight to retake a 595.58 buy point in what IBD MarketSmith analysis charts as a 51-week cup-with-handle base. The stock briefly cleared the buy point on Wednesday, before pulling back to end the pre-earnings session down 1%.
Earnings news sent Datadog (DDOG) and BioCryst Pharmaceuticals (BCRX) to double-digit gains. Elf Beauty (ELF) was set to open just below a cup base buy point at 31.39, after turning in a spritely fiscal first-quarter beat late Wednesday.
Dow Jones Today: Walmart Upgrade
Walmart (WMT) rose 1% to the ahead of the Dow Jones today, climbing after Wells Fargo upgraded the stock to overweight and lifted its price target from 150 to 165 — more than 16% above Wednesday’s closing price.
Walmart stock has stitched together six straight weeks of tight gains, creeping back above support at its 10-week moving average. The stock is arguably in the 10th week of a flat base, formed within a larger consolidation. Shares are trading a bit more than 1% below a 144.68 buy point, but Walmart’s relative strength rating is a barrel bottom-scraping 36.
Econ Data: Jobless Claims, Job Cuts
The roll up to Friday’s July payrolls report from the Labor Department continues, with weekly unemployment data due out at 8:30 a.m.ET.
The monthly job cuts report from consultant Challenger, Gray & Christmas showed layoffs by U.S. employers in July falling to 18,942. That was the lowest number since June 2000. Andrew Challenger, senior vice president of Challenger, Gray & Christmas, noted in the report that healthy job markets typically include a robust level of layoff and turnover activity.
“Right now, things appear to be stalling,” he said. “There are over 9.2 million job openings and 9.5 million unemployed. The positions and workers are not connecting,” he added.
Oil prices and bond yields were relatively steady ahead of the weekly jobless data. West Texas Intermediate futures edged higher, holding above $68 a barrel after sliding 3.4% on Wednesday. A three-day drop put WTI prices down 7.8% for the week, on track for the worst week since April 2020.
The 10-year yield eased a single basis point to 1.17%, after settling just above 1.18% on Wednesday. June trade deficit data from the Commerce Department is also due for release at 8:30 a.m. ET.
China Volatility Continues
U.S.-traded China stocks were taking hard early hits Thursday, as China’s markets continued to saw back and forth. The Shanghai Composite dropped 0.3%, and Hong Kong’s Hang Seng index slumped 0.8%. Both indexes remained on positive ground after the Shanghai benchmark fell 4.3% and the Hang Seng dived 5% last week.
China’s markets began selling off aggressively on July 23, as authorities rolled out a series of reforms that reframed regulations for education companies, food delivery operations and companies listing on exchanges outside of China. Tech and internet stocks fell hard Tuesday, on fears that online gaming would be the next sector on which the government would focus its broadening crackdown.
China’s markets rebounded Wednesday, even as the country imposed “massive travel restrictions,” with a large number of airports and rail travel canceled, according to state-run media agency Xinhua. The fast-moving coronavirus Delta variant has now posited China its greatest challenge since the Wuhan peak last year, according to the Associated Press. China’s strategy of isolating cities and individuals during last year’s outbreak was widely considered successful, but wreaked havoc on the county’s economy.
Tracking Global Stock Markets
Among China gauges in the U.S. early Wednesday, the iShares MSCI China ETF (MCHI) dropped 1.5%, and the Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR) faded 0.3%. Technology tracker KraneShares CSI China Internet ETF (KWEB) slumped 1.9% in early trade.
In Europe on Thursday, stocks were mixed around midday. The CAC-40 in Paris showed a 0.35% advance. Frankfurt’s DAX hovered at its breakeven point. London’s FTSE 100 dipped 0.2% after the Bank of England left its rate and stimulus strategies unchanged. The SPDR Portfolio Europe ETF (SPEU) was inactive, after posting a 0.1% decline Wednesday. The ETF is 2% below a 44.06 entry in an eight-week flat base.
IBD 50 Earnings: Roku, HubSpot, Innovative
At least a dozen IBD 50-listed companies have reported or will report earnings this week. Cloudflare (NET) is due to wrap up the IBD 50 list’s earnings for the week, reporting after today’s closing bell. Of the companies reporting this week, Roku, HubSpot and Innovative Industrial Properties were near to buy points.
Roku tumbled 8.8% in premarket trade, positioning the stock for a break below its 50-day moving average. Shares had already undercut their 21-day exponential moving average, finishing Wednesday about 9% below a 463.09 buy point in a cup-with-handle base.
HubSpot rallied 2.8%, as Mizhuo, Citi and Piper Sandler raised price targets after the company reported a solid second-quarter earnings and revenue beat late Wednesday. Citi aimed highest, setting its price target at 750, 27% above where shares finished on Wednesday.
Thursday’s early gain positioned HubSpot for a nice rebound after a test of support at its 21-day exponential moving average. The stock ended Wednesday in a buy range above a cup-base buy point at 574.93. The buy zone extends to 603.68.
Marijuana stock landlord Innovative Industrial Properties gained 1% in premarket action. A six-week advance has placed the stock less than 4% below a 222.18 entry in a 24-week cup base. The first-stage base is bullish, forming largely above support at the stock’s 10-week moving average.
Dow Jones Today: Blue Chip Breakout Watchlist
Several blue chip leaders are worth minding on the Dow Jones today. Microsoft (MSFT) is extended from a late-June breakout. But seasoned chart readers are watching a tiny shelf pattern that offers an interim entry at 299.09. Microsoft stock inched up 0.1% early Thursday.
Home Depot (HD) — a stock that has benefited during periods of tighter Covid restrictions — gained 0.3% early Thursday. Home Depot stock is trading less than 1% below a 333.55 entry, also in a 12-week cup with handle.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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