Stock launched into a broad rebound Wednesday, as stimulus talks appeared to have been revived in Washington. United led airline stocks rallying after President Trump advocated support for the industry. Alibaba and JD.com paced early gains among China stocks. FANG giant Netflix and paint maker RPM eyed possible breakouts, and Boeing easily led the Dow Jones today.
The Nasdaq sprung to an early lead, up 1.4% with Sirius XM (SIRI) and United Airlines Group (UAL) leading the Nasdaq 100. The Dow Jones Industrial Average and the S&P 500 each popped 1.2% on the stock market today. Small caps also ran near the head of the early rally, as the Russell 2000 jumped 1.3%.
A quiet day on the economic calendar could turn out to be volatile for stocks, if Tuesday’s trend of messaging on economic stimulus continues. Federal Reserve minutes from the Sept. 15-16 meeting are due out at 2 p.m. ET.
United scrambled almost 6% higher, after a late-night tweet from President Donald Trump demanded congress provide $25 billion in coronavirus stimulus support for airlines. JPMorgan also upgraded United to overweight, from neutral, with a price target at 52.
The tweet — one in a series demanding stimulus concessions from Congress — triggered a broad airline rally, with American Airlines Group (AAL), Delta Air Lines (DAL) and Alaska Air Group (ALK) among the industry stocks trading more than 3% higher. Spirit Airlines (SAVE) was a leader among Russell 2000 stocks, rising 4.1%.
Alibaba and RPM (RPM) jumped toward buy points in premarket trade. Marvell Technology (MRVL) moved higher in its buy range. Telehealth services IPO American Well (AMWL) spiked more than 11% in morning trade. The IBD Leaderboard stock is up 40% so far this week, and ended Tuesday’s session up 99% from its Sept. 17 initial offering price.
In the fast-moving solar industry, solar installer Peck (PECK) spiked 77%, Sunworks (SUNW) vaulted 54% higher, after the two companies announced new contracts. Sunworks said it signed $10 million in new contracts during its third quarter. Peck announced a $7.3 million contract to install 5.3 megawatts of solar production capacity in Rhode Island.
The Invesco Solar ETF (TAN) powerd up 3% in opening trade.
Gear up for Wednesday’s market action by reading IBD’s Investing Action Plan.
Dow Jones Today: Boeing Leads, Home Depot Eyes Buy Point
Boeing rose 2.9%, tracking the stimulus rally among airlines. The stock also received a boost from the Federal Aviation Administration, which late Tuesday released updated training guidelines for pilots of Boeing’s 737 Max aircraft.
The guidelines are reportedly one of five crucial moves necessary in the recommissioning of the planes, which were grounded in March 2019 following a series of fatal crashes.
Home Depot stock jumped 1.7%, after a modest price target hike to 300, from 295, from Morgan Stanley. Home Depot shares finished Tuesday about 6% below a 293.05 buy point in what IBD MarketSmith chart analysis pinpoints as a six-week flat base.
Analyst Actions Lift Netflix, Workday
The big tech FANG stocks moved generally higher higher, despite Tuesday’s warnings of possible antitrust action underway in Washington. Netflix (NFLX), which was not named as a target for legislators, easily outpaced the group with a 3.9% advance. A report from equity analysis firm Pivotal Research hoisted the stock’s price target to 650, from 600.
The gain sent Netflix shares closer to a 557.49 buy point in a double-bottom base. It also put shares less than 1% from an early, more agressive entry at 529.65.
Software brand Workday (WDAY) was an early leader on the IBD 50 list, rallying 5.3%. Jefferies upgraded the stock to buy, from hold, with a 260 price target. Workday’s August breakout collapsed and triggered a sell signal. But shares found support and are working on the sixth week of a possible cup base.
Status Of Stimulus Talks
Stock markets and negotiations between Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi received strong support Tuesday morning, when Fed Chairman Jerome Powell said in a National Association for Business Economics speech that more stimulus was key to boosting the U.S. economic recovery.
That boost was undercut by a series of back-and-forth messages from President Trump. He first called for negotiations to halt until after the Nov. 3 election. The move tripped up an early market advance and sent stocks into a tailspin. The president then reversed course, and tweeted that he would approve a stand-alone bill for $1,200 stimulus checks, to be sent immediately.
Morgan Stanley’s top equity strategist Mike Wilson told Business Insider that there was no economic imperative to complete a stimulus agreement before the election.
“I don’t think we need stimulus in the next 30 days for the economy to stay afloat. There is no risk of a double-dip recession in the next 30 days if we don’t get the stimulus done,” Wilson said. He added, “we still think stimulus is coming. It is now just a timing question — before or after the election.”
In the meantime, Wilson projected a worst-case scenario for the stock market would be a pullback to 3,100 for the S&P 500. That is about 8% below where the index ended on Wednesday.
Update: White House, Trump Coronavirus
Trump continued convalescing at the White House after his discharge from Walter Reed Medical Center in Bethesda, Md., late Monday. Reports said Trump remained in the residence and was not working in the West Wing portion of the building.
Senior Policy Advisor Stephen Miller and two other White House staffers tested positive for coronavirus on Tuesday. That brings the past week’s total of persons testing positive in Trump’s inner circle to more than a dozen, including former White House counselor Kellyanne Conway and press secretary Kayleigh McEnany.
At the Pentagon, Chairman of the Joint Chiefs of Staff General Mark Milley is also under quarantine, along with a number of other top Pentagon officials. All were exposed to Adm. Charles Ray, the vice commandant of the Coast Guard, who tested positive for the virus on Tuesday.
Breakout Stocks To Watch: Alibaba, RPM, Marvell
Alibaba Group Holdings (BABA) jumped 1.7% early Wednesday in the wake of Tuesday’s price-target hike to 350 from 325 by Goldman Sachs. The China-based e-commerce giant ended Tuesday 2% below a 299.10 buy point in a six-week flat base.
Paint producer RPM clocked a 3.5% gain after reporting above-forecast earnings and revenue growth in its fiscal first quarter. Shares ended Tuesday 4% below a 84.90 buy point in a flat base.
Chip developer Marvell Technology gained in its buy range above a 41.44 buy point. The buy range runs to 43.51.
Dow Jones Today: Uptrend Holds
The Dow Jones today is set to rebound from another test of support. Yesterday’s snap-back session stopped neatly at the index’s 50-day moving average, avoiding a move below the low of its Sept. 24 follow-through day. Technically, the current confirmed uptrend remains intact as long as the Dow Jones holds above that low.
A quick status scan of Dow Jones stocks shows Apple trading tight and sticking close to its 50-day line. Nike (NKE), for now, is the Dow’s rock star. It is up 22% from an August breakout, has advanced in eight of the past nine weeks and jabbed to a new high Tuesday before pulling back to a fractional decline. But now the stock is extended with no buy points in sight.
Salesforce.com (CRM) is in the sixth week of what could mature into a cup base at the end of this week. Microsoft is basing, but struggling against resistance at its 50-day line. The stock has slipped in four of five recent weeks, and its relative strength line is trending lower.
Five Dow Bases, Two Outliers
Two outliers to watch are Goldman Sachs (GS) and Caterpillar (CAT). Caterpillar is in a buy range over a 150.65 buy point. It had pulled back to 5% below that entry, then rebounded sharply off support at its 50-day/10-week line. Its RS line is trending higher.
Goldman Sachs has formed a double-bottom base with a buy point at 215.33. The chart is messy, and much of the base formed below 10-week support, which is a notable caution sign. But Goldman’s earnings spiked 52% in the second quarter. That was the first earnings gain in seven quarters, and analysts are calling for an earnings jump of more than 50% next year. UBS upgraded the stock to a buy rating and a 245 price target on Sept. 23, so it may be worth tucking into a watchlist.
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