Stock futures ramped higher Tuesday as global markets traded on pins and needles ahead of the U.S. stimulus deal deadline. Stimulus-sensitive stocks Zoom Video and Alpha Pro Tech jumped. Earnings news powered early gains from Logitech and Crown Holdings, and sent Travelers to the head of the Dow Jones today.
Dow Jones futures halved their early gains to 0.4%, S&P 500 futures also pared back to a 0.4% gain. Nasdaq 100 futures traded well off early highs, 0.5% above fair value on the stock market today. Small caps maintained their lead above the overall market, with Russell 2000 futures moving defending a 0.9% gain.
Collaboration software leader Workday (WDAY) jetted ahead 2.8%, leading the Nasdaq 100, after an upgrade to overweight from Piper Sandler. The note lifted the stock’s price target to 275, from 248. The IBD 50 stock is shaping a possible handle on an eight-week cup base.
Gear up for Tuesday’s market action by reading IBD’s Investing Action Plan.
DOJ To File Google Antitrust Suit
The Fang stock tech leaders edged generally higher, except for Alphabet (GOOGL). Google-owner Alphabet dropped 0.3% after the Wall Street Journal reported the U.S. Justice Department planned to file a lawsuit Tuesday alleging anticompetitive conduct against the company. Alphabet shares are sttempting to hold 50-day support, trying to climb the right side of an eight-week consolidation.
Chipmaker Intel (INTC) was also in motion on company news, rising 0.3% after agreeing to sell its NAND memory unit to South Korea’s SK Hynix in a deal valued at $9 billion. Intel shares have been working to regain technical support since a steep sell off in July.
Earnings News: Logitech, Crown, Iqvia
Switzerland-based Logitech (LOGI) rocketed more than 18% higher, after a beat and raise quarterly report, as well as an upgrade to overweight from JPMorgan.
Container and packaging leader Crown Holdings (CCK) rallied almost 7%. The Yardley, Pa., company easily cleared analysts’ Q3 and full-year targets, and announced it would implement a dividend of at least 20 cents per share in the first quarter of 2021.
Clinical trial manager Iqvia Holdings (IQV) leapt 3.6%, nearing a 170.61 buy point in what IBD MarketSmith chart analysis plots as a six-week flat base. Iqvia beat Q3 analyst targets, but Q4 EPS guidance was a little low. Management also announced it would restart its idled share repurchase program.
Financial names were mixed. Swiss bank UBS Group (UBS) spiked 7% after effectively doubling its profit during the quarter. Synchrony Financial (SYF) dropped 2.7%, after both sales and earnings missed expectations.
Dow Jones Today: Travelers, P&G Earnings Beats
Diversified insurer Travelers (TRV) led the Dow Jones today, surging 2.8% as earnings increased 118% on a 3% rise in revenue during the third quarter. Both numbers comfortably topped analysts’ forecasts. Travelers has been slogging through a messy consolidation since June.
Procter & Gamble (PG) jumped 1.2%, aiming to revive its early October breakout. The Cincinnati-based personal care giant reported a 19% rise in earnings and a 9% revenue gain, clearing analyst projections by wide margins. The company increased its stock buyback program to as much as $9 billion, and projected $8 billion ion dividend payouts during 2021.
P&G stock cleared a flat base buy point at 141.80 in quiet volume on Oct. 8.
Stimulus Deadline Approaches
Negotiations were set to continue Tuesday between lawmakers working to craft a fresh round of coronavirus stimulus, ahead of the Nov. 3 election. House Speaker Nancy Pelosi on Sunday set a Tuesday deadline for an agreement. If the deadline passes, the Speaker says, a deal will be delayed until after the election.
Democrats back a $2.2 trillion relief plan. Senate Republicans have drawn a line at $1.8 trillion. President Donald Trump has said he is willing to go beyond the Senate GOP plan.
Coronavirus Update: Europe’s Second Wave
As Europe wrestles with a second wave of infections, numbers provided by the European Centre for Disease Prevention and Control, which is essentially Europe’s CDC, provide a closer look.
The ECDC shows that, since the end of August, the total number of coronavirus cases reported since the onset of the breakout have more than doubled in the U.K., Spain and Italy. The total case count has soared 254% in France, 235% in Netherlands, 168% in Belgium.
Meanwhile, in Germany, total cases have increased 54%. Sweden held its case growth to 18.5%.
Looking at 14-day averages, the number of deaths in Spain rose to 3.6 per 100,000 persons as of Monday, vs. 0.8 deaths per 100,000 at the end of August. Deaths in the U.K. were up to 1.9, from 0.2. Deaths in France also rose to 1.9 per 100,000, up from 0.3 in late August. Belgium’s deaths rose to 2.9, up from 0.8.
Overall, the 30 countries of the European Economic Area, which have a population about 40% larger than the U.S., have seen a 131.6% increase in total cases over the past two months, and an 11.1% increase in deaths.
Total cases in the U.S. during the same period increased 23.7%, while U.S. deaths rose 21.9%. Total cases worldwide rose 65%, with a 34.5% rise in deaths.
The Dow Jones Today: Index ETF Bases
The focal point on the Dow Jones today are the handles being formed on the bases of blue chip leaders such as Apple (AAPL), Microsoft (MSFT) and Salesforce.com (CRM). But the market’s pause-within-a-pause also means the Dow itself is basing. So are the Nasdaq and the S&P 500.
The Dow’s cup-with-handle base is actionable via ETFs, such as SPDR Dow Jones Industrial Average ETF Trust (DIA). Leveraged funds, such as ProShares UltraPro Dow30 (UDOW) and ProShares Ultra Dow30 (DDM) also reflect the base and the support at the 50-day line.
For more detailed analysis of the current stock market and its status, study the Big Picture.
The same is true for the Nasdaq tracker Invesco QQQ Trust (QQQ) and the SPDR S&P 500 ETF Trust (SPY). CAN SLIM chart reading methodology generally applies to ETF charts. Investors should approach leveraged ETFs with caution, because losses can mount quickly.
The market’s recent pause has done little to narrow the year-to-date gap between growth stocks and blue chips. The Nasdaq had turned positive for the year in May. The S&P 500 began moving into positive territory in June. At the end of August, the Nasdaq had a year-to-date gain of 31.2%. The S&P 500 was up 8.4%. The Dow hung 0.4% below its closing level from Dec. 31.
As of Monday’s close, the Dow was down 1.2% year-to-date. The Nasdaq had eased to a 27.9% gain. The S&P 500 had advanced 6%.
Small caps have been the exception, narrowing their 2020 loses significantly during October. The Russell 2000 was down 6.4% at the end of August, and had narrowed that loss to 3.3% by Monday’s close. The index is so far up 7% in October, vs. a 2.8% gain for the Nasdaq and a 1.5% advance for the Dow.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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