The S&P 500 and Dow industrials slipped into a mixed open Monday, after dual warnings from Goldman Sachs and a U.N. climate panel left global markets on edge. Tesla rallied on an analyst upgrade. BioNTech led the IBD Leaderboard list after a blowout second-quarter report. And Walmart rose in a buy range on the Dow Jones today.
The Dow industrials dropped more than 100 points at the open, down 0.3% as it backed away from Friday’s record high. The S&P 500 also retreated from new highs, down 0.2% on the stock market today. The Nasdaq Composite struggled to maintain narrow gains, with Marriott International (MAR), Micron Technology (MU) and Ross Stores (ROST) dragging at the bottom of the list.
At the top of the Nasdaq, Moderna (MRNA) and Tesla (TSLA) rallied. And NetEase (NTES) led China-based names that were rebounding, despite a sharp downward revision in China’s growth outlook from Goldman Sachs.
At the top of the S&P 500, Tyson Foods (TSN) surged 6% after reporting earnings. Other earnings-fueled moves included a 3.6% gain for Shockwave Medical (SWAV) and Scientific Games (SGMS), up 4%. On the downside, The Trade Desk (TTD) and Workhorse Group (WKHS) traded sharply lower on earnings news, and Elanco Animal Health (ELAN) took a 17% dive.
Dow Jones Today: Chevron, Walmart, Microsoft
Boeing (BA) dropped 1.3%, Chevron (CVX) slipped 1.3%, at the bottom of the Dow Jones today. Walmart (WMT) ran high on the list, up 0.3% in premarket trade. Walmart stock staged a seven-week rally through Friday, topping a 144.68 entry in a 10-week flat base. Shares remain in a buy range through 151.91.
Microsoft (MSFT) shares slipped 0.1%. Microsoft stock is extended after a June breakout, but has formed a shelf pattern with an entry at 290.25. Shelf patterns provide follow-on opportunities to add to existing positions, but are not advised for opening a new position in a stock.
IBD 50, Leaderboard: BioNTech, Freedom, Upstart
At the top of the IBD 50 list, Freedom Holding (FRHC) popped 3.9%. The Kazakhstan-based financial network has been riding support at its 21-day exponential moving average, about 7% below a 68.90 entry in a five-week flat base.
Among the other IBD 50 names in motion, Upstart Holdings (USPT) gained 4.1%. The consumer lender posted a three-week advance through Friday, lifting it back above support at its 10-week moving average.
BioNTech (BNTX) easily led the IBD Leaderboard list, scrambling more than 10% higher after reporting huge sales and earnings beats for its second quarter. BioNTech is in a profit-taking zone following a breakout in July, and is flashing signs of a climax run.
Goldman Halves China Outlook, U.N. Climate Panel Warns
A Goldman Sachs report released Sunday significantly trimmed the investment bank’s forecast for growth in China, due to rising pressure from the latest round of coronavirus infections. The forecast now calls for GDP growth of 2.3% in the third quarter, less than half of an initial projection for 5.8% growth. Full-year growth is now seen at 8.3%, down from 8.6%. Bloomberg reported that the cuts followed similar changes made by Nomura earlier in August.
In addition, a United Nations climate panel issued a warning on Monday that changes “unequivocally” caused by human-generated greenhouse gases are accelerating toward irreversible levels. The Wall Street Journal said the report highlighted “human responsibility for record heat waves, droughts, more intense storms and other extreme weather events seen around the world in recent years. It also sharpens estimates of how sensitive the climate is to rising atmospheric levels of carbon dioxide and other greenhouse gases — a key metric in forecasting the rise of global temperatures in the years ahead.”
Vital Signs: Oil, Bond Yields, Bitcoin
Crude oil prices tumbled following the Goldman release, with West Texas Intermediate futures trimmed early losses to 2.7%, recovering back above the $66 a barrel. WTI dived 7.7% last week, sending prices back to retest recent lows, below their 10-week moving average.
The 10-year bond yield traded at 1.28%, down from Friday’s settle at 1.29%. A four-day advance through Friday left yields up more than 4% for the week, snapping a string of 10 losses in 11 recent weeks.
Bitcoin moved above $45,500, to its highest levels since May. The cruptocurrency touched a high above $64,829 in mid-April.
China’s Markets Bounce, Europe Mixed
China’s markets had a good day, unfazed by the Goldman outlook revision. Hong Kong’s Hang Seng Index ended up 0.4% and the Shanghai Composite posted a 1% advance. In Japan, Tokyo’s Nikkei 225 added 0.3%.
Among China gauges in the U.S. early Friday, the iShares MSCI China ETF (MCHI) climbed 1.4%, and the Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR) climbed 1.7%. Technology tracker KraneShares CSI China Internet ETF (KWEB) rose 2.1% in early trade.
Europe’s markets were mixed near mid-session. The CAC-40 in Paris traded flat. Frankfurt’s DAX dipped 0.1%. London’s FTSE 100 fell 0.4%. The SPDR Portfolio Europe ETF (SPEU) rose 0.1% in early trade, after falling 0.6% on Friday. The ETF is up 0.9% in August, has a year-to-date gain of 14.4%, and is trading just below a 44.06 buy point in an eight-week flat base.
S&P 500, Dow Jones Today
The Dow Jones today has earned a break after notching a new record high as well as a fresh closing high on Friday. The SPDR Dow Jones Industrial Average ETF Trust (DIA) is in a buy range above a 348.75 buy point in a double-bottom base. The leveraged ProShares UltraPro Dow30 (UDOW) is nearing the top of a buy range above a double-bottom base entry at 75.52.
The Dow’s biggest gainers last week were the investment banks, rallying on rebounding bond yields. Goldman Sachs (GS) jumped 6.1%. JPMorgan (JPM) gained 3.1%. Goldman Sachs is in a buy range after breaking out past a flat-base buy point at 393.36.
Walt Disney (DIS) is the only blue chip set to report this week, with results due out late Thursday. Disney shares are attempting to fashion a floor in a three-month consolidation.
For more detailed analysis of the current stock market and its status, study the Big Picture.
The S&P 500 also posted new record and closing highs on Friday, taking a 0.9% gain for the week. The index has a 0.9% gain for the month, and is working toward a seventh-straight monthly advance.
The index’s biggest advances for the week came from Under Armour (UAA) and medical supplies vendor Invacare (IVC). Each rallied about 22% after their earnings reports, both stopping short of breakouts.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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