Dow Jones Today, Futures Gain Strength As Goldman Sachs Scraps Analysts' Q3 Earnings Views – Investor's Business Daily

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Stock futures rose from early losses into narrow gains Wednesday, with small caps rallying to an early lead. Biotechs were in motion, with Covid-19 vaccine maker BioNTech poised for a strong bounce. Banks continued to report as the third-quarter earnings season gathered momentum, and Goldman Sachs ran up a strong lead on the Dow Jones today.

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Nasdaq futures climbed 0.4% above fair value. Dow Jones futures gained strength, moving up 0.3% on the stock market today. Meanwhile, S&P 500 futures shed their early losses and muscled up 0.2%. Small caps came to life, with Russell 2000 futures rallying ahead of premarket action with a 0.7% gain.

In the U.S., oil industry consolidation chatter sent Concho Resources (CXO) up 9%, to the top of the S&P 500. Bloomberg reported late Tuesday that ConocoPhillips (COP) was negotiating a potential takeover.

Big banks were mixed as the third-quarter reporting season continued to get underway. S&P 500 stocks PNC Financial (PNC) and US Bancorp (USB) traded up 2% and 1.5%, respectively, on earnings news.  Bank Of America (BAC) dropped 1.7% after a mixed report. Goldman Sachs jumped to the top of the Dow after releasing its third-quarter report.

Chip equipment leader ASML Holding (ASML) pulled back slightly after reporting above-forecast third-quarter revenue and earnings. Management affirmed its fourth-quarter guidance, but pointed to low double-digit growth in 2021. The IBD 50 stock ended Tuesday in a buy range above what to IBD MarketSmith chart analysis plotted as a 401.25 buy point in a double-bottom base.

Specialty chemicals maker Albermarle (ALB) dropped 3.3% to the bottom of the S&P 500 following an analyst downgrade.

Leading stocks in or near buy zones in the stock market rally are Amazon.com (AMZN), Lam Research (LRCX) and Netflix (NFLX).

Netflix (NFLX) rose more than 2%, boosted by a price target hike from Goldman Sachs. Goldman lifted the stock’s price target to 670, from 600, ahead of the company’s third-quarter report, due on Tuesday. The note projected a six million subscriber increase for the quarter, and earnings well above analyst expectations. Netflix stock was less than 1% below a 557.49 buy point at the end of trade on Tuesday.

Gear up for Wednesday’s market action by reading IBD’s Investing Action Plan.

Biotechs: BioNTech Bounce Continues

Germany-based biotech BioNTech (BNTX) popped more than 3% in early trade. Partnered with Pfizer (PFE) in developing a coronavirus vaccine, BioNTech shares received a boost Tuesday after both Eli Lilly (LLY) and Johnson & Johnson (JNJ) announced a delay in their vaccine trials. BioNTech shares are in a deep 13-week cup, ending Tuesday session 13% below a 105.09 buy point.

J&J stock gained 0.3% on the Dow Jones today, after Tuesday’s news sent shares down 2.2%. Eli Lilly was down 0.4%, tacking toward a third consecutive decline. Emergent BioSolutions (EBS) moved up 1.8%, rebounding after its 13.6% tumble on Tuesday.

Dow Jones Today: Goldman, UnitedHealth Report

Goldman Sachs (GS) rallied more than 2% after scoring a huge third-quarter earnings beat. The investment bank’s earnings came in a $9.68 per share for the quarter, more than double its year-ago take and 75% above the analyst target. Third-quarter revenue jumped 29%, also beating views.

Goldman shares are technically set to crack a buy point in a double-bottom base. But the stock carries a weak Composite Rating of 56 from IBD. And its relative strength line has trended sharply lower since mid-June.

UnitedHealth Group (UNH) advanced 0.7% after easily topping analyst earnings and revenue expectations for the third quarter. Earnings came in 10% below year-earlier levels, though almost 18% better than analyst projections. Revenue rose 8%, to more than $65.1 billion.

UnitedHealth shares are technically in a buy zone above a double-bottom base buy point at 323.92. The stock carries an 85 Composite Rating from IBD.

Microsoft (MSFT) added 0.6% in early action, leaving to extend its run up to a sixth day. Microsoft stock ended Tuesday less than 5% from a 232.96 buy point in a six-week cup base.

Coronavirus Update: Upper Mid/Northwest States

Across the U.S., numbers of new coronavirus cases have tracked higher since mid-September, along with a corresponding increase in testing. The seven-day average for the number of new cases in the U.S. reached 51,676 on Tuesday — its highest level since Aug. 16, according to data collected by Worldometer. The 10-day average for daily tests administered, calculated from COVID Tracking Project data, hit a record above 993,000 on Sunday.

Some notable authorities are sounding alarm bells over case increases in state like Wisconsin, Montana and North Dakota.

Wisconsin has seen the seven-day average for its number of daily new cases rise from around 730 at the start of September to 2,728 on Tuesday. Daily deaths in the state have spiked higher this month, hitting a record of 34 on Tuesday.

Daily new cases in Montana have ramped steadily higher. The seven-day average was at 126 on Sept. 1, and at 609 on Tuesday. The state recorded its highest single-day death count on Sept. 19, when 10 persons died. The seven-day average for daily deaths reported was three, equal to where it was in early August.

North Dakota’s daily new cases have ramped higher since mid-June. The state’s seven-day average for daily new cases was 124 on Aug. 1, rising to 555 on Tuesday. Deaths in the state, measured on a seven-day average, remained below two per day through mid-August. The seven-day average rose to three deaths on Sept. 16 and has kept climbing, reaching an average of nine deaths per day on Sunday.

Nationwide, the number of deaths continues to trend gradually lower. The daily number of deaths reported in the U.S. peaked on April 21 at 2,748. The daily death toll decreased over the next two and a half months, then rose to a lower peak of 1,851 on July 30. Numbers have gradually trended lower. The seven-day average for daily deaths on Tuesday was 717.

IBD 50 Watchlist: AMD, Nvidia Near Buy Points

More than 20% of stocks in the current IBD 50 list have are now below buy points in valid bases. Kirkland Lake Gold‘s (KL) base is a little messy, with an 11-week pattern that could be either a double bottom or a cup. As a cup base, its buy point would be at 57.70. As a double-bottom, the entry would be 55.39. The stock was just over 7% from the lower of those two early Wednesday.

Two others, semiconductor leaders Advanced Micro Devices (AMD) and Nvidia (NVDA), also moved higher early Wednesday.

AMD traded up 0.3%, looking for its third straight gain as it bounces off support at its 50-day line. Shares ended Tuesday about 11% below a 94.38 buy point.

Nvidia gained 0.3% in Wednesday’s premarket trade. Nvidia stock has climbed in 11 of 13 recent sessions. It was within 4% of a 589.17 buy point at Tuesday’s closing bell.

Dow Jones Today: A Strong October

JPMorgan (JPM) and Johnson & Johnson got the third-quarter reporting season rolling for Dow Jones stocks on Tuesday. On the Dow Jones today, Goldman Sachs and UnitedHealth Group report, followed on Thursday by Walgreens Boots Alliance (WBA) and new Dow member Honeywell (HON).

Overall, the Dow severed a four-day advance with its moderate loss on Tuesday. It is maintaining a healthy 3% margin above its 50-day moving average, and trading less than 2% from its Sept. 3 high. Maybe more surprising, the Dow Jones Industrial Average is so far up 3.2% for October.

Since 1988, the Dow’s strongest October ahead of a presidential election occurred in 2000, when it ended October with a 3% gain. In an unusual year, the Dow is so far running ahead of that pace.

The stock market remains in a confirmed uptrend status, following its recovery from a brief correction ended Sept. 30. That means leading stocks breaking out past valid buy points are on the buy menu. But a topsy-turvy year, with 20 days to go before a presidential election, makes protecting capital a paramount concern — so trade defensively. Earnings season is a good time to study up on options trading strategies, a good way to buy into promising breakouts while limiting risk.

Find Alan R. Elliott on Twitter @IBD_Aelliott

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