Stock futures sloped higher on Wednesday amid weak global trade as positive eurozone manufacturing data and news from the US chip sector helped bolster pre-market action. . Intel led the Dow Jones today, sending most chip stocks up considerably, in a $ 20 billion manufacturing initiative. Meanwhile, investors will be keeping an eye out for Washington this morning, where Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell face the Senate Banking Committee this morning in a second day of testimony before Congress. .
Dow Jones futures held up 0.4% as 29 out of 30 Dow components traded flat higher in early stocks. S&P 500 futures also traded 0.4% above fair value. Nasdaq 100 futures were up 0.7% on the stock market today.
The chipmakers were in the mood, like Intel (INTC) led a wide-ranging rally. Applied Materials (AMAT), Lam research (LRCX) and KLA (KLAC) led the S&P 500, up about 4% each. ASML Holding (ASML) topped the Nasdaq 100 and IBD 50 charts with a gain of 5.2%. The VanEck vectors Semiconductor (SMH) ETF added 1.5%, the iShares PHLX Semiconductor (SOXX) ETF was up 2.6%.
Small-cap companies were on the verge of rebounding as well, with Russell 2000 futures up 1.3%. Winnebago (WGO) jumped 3.8% after reporting a large profit and revenue increase in the fiscal second quarter, and saw “strong retail momentum” heading into the RV shopping season.
Biotechnology Dynavax Technologies (DVAX) increased 1.7%, after launching clinical trials of a Covid-19 vaccine developed jointly with Clover Biopharmaceuticals of China. The initial move put Dynavax shares just below a buy point of 11.79 on a seven-week cup basis.
IBD Classification List Adobe (ADBE) gained 1% after reporting strong fiscal performance in the first quarter on Tuesday night. JPMorgan raised the share price target to 595 from 585 and maintained its overweight rating. Adobe Stock is struggling to regain support at its 50-day and 200-day convergent moving averages as it tries to model the correct side of a six-month consolidation.
Yellen / Powell Day 2; Durable goods, March PMI
Treasury Secretary Yellen and Fed Chief Powell face questions from the Senate Banking Committee this morning, after a similar session before the House Financial Services Committee on Tuesday. The two most powerful financial voices in the country agreed Tuesday that while market valuations were high in many cases, they did not point to a sudden spike in inflation. In addition, they both said the economy remains on track for a strong recovery, but restoring full employment will take time and monetary support.
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Durable goods order data from the Commerce Department was well below expectations, falling 1.1% in February, below January’s 3.5% increase and disappointing forecasts of a 0.8 increase. %. Minus transportation, orders fell 0.9%, versus projections for a 0.6% increase. Basic capital goods orders (non-defense orders, excluding aircraft) fell 0.8%, undermining the views for a 0.5% gain.
Researcher Markit releases his preliminary reading of the March Composite Purchasing Managers Index on the US economy at 9:45 am ET.
Intel Today Leads Dow Jones in Foundry Momentum
Chipmaker giant Intel rebounded from Tuesday’s sharp pullback, rising 3.6% to lead the Dow Jones in early action today. Chief Executive Officer Pat Gelsinger announced that the company would spend, to begin with, $ 20 billion to build two manufacturing plants in Arizona, creating a chip foundry operation to go head-to-head with chip manufacturing leaders. Taiwan Semiconductor (TSM) and Samsung Electronics.
TSMC shares fell 1.9% in pre-market trading. Taiwan Semi is a classification stock of IBD.
Intel shares have been swinging above and below a buy point of 63.64 on what IBD MarketSmith’s analysis charts as a handle cup base for seven weeks. The shares closed Tuesday less than 3% below that buy point.
After a two-month decline, the seven-day average for new Covid-19 cases reported daily in the US leveled off and then started to rise in recent days, according to Worldometer. The current plateau bottomed out at just over 55,000 new cases per day, well above the low of around 36,000 new cases during the previous valley, which occurred in September.
New cases reported worldwide have increased since mid-February. New reported cases, averaged over the previous seven days, rose to 500,524 on Tuesday. That was up from 361,619 on February 19 and below the peak of 745,985 new cases recorded on January 11.
Deaths continued to be lower in the US, with the seven-day average falling below 1,000, to 975, on Tuesday, the lowest level since Nov.5. Deaths in the US peaked at 3,470 on January 26. Worldwide, the seven-day average for deaths increased on March 13, following a six-week decline. Reported deaths rose to 8,932 on Tuesday, down from a high of 14,462 on January 26.
The Centers for Disease Control and Prevention report that the count of vaccine doses distributed so far increased Tuesday to 164.3 million. 128.21 million doses have been administered, leaving 13.7% of the total population fully vaccinated.
Bitcoin, oil prices, bond yields
Asian stock markets fell sharply on Wednesday, and European stocks came under mixed pressure in afternoon trading, despite the reversal of Germany’s plans for a Covid-19 lockdown over the week-long holiday. Santa, as well as data showing a healthy rebound in euro zone manufacturing activity during March.
Cryptocurrency stocks surged as Bitcoin rallied to close to $ 57,000, after falling below $ 54,000 on Tuesday, according to CoinDesk. The cryptocurrency rose to a record $ 61,556 on March 13.
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Oil prices rebounded, helped by a cargo ship on land that blocked the mouth of Egypt’s busy Suez Canal, effectively pinching the world’s oil supply. West Texas Intermediate was up 2.7% to more than $ 59 a barrel. WTI fell 3.8% on Tuesday, leaving it well below its March 8 high near $ 68, and undermining support at its 50-day line for the first time since early November.
Bonds were effectively flat, with the 10-year Treasury yield climbing 1 basis point to 1.63%. Yields had seen a rapid rise from record lows during the pandemic of around 0.50% in August. They approached pre-pandemic levels late last week, rising above 1.75%, the highest level since January 2020. Yields had started in 2020 at around 1.8%, which was less than 2 , 7% from the previous year.
Dow Jones Today flexes muscles, small cap flash warning
Today’s Dow Jones continues to show some strength as it continues to hover well above its 21-day exponential moving average. Meanwhile, the S&P 500 successfully holds support while testing its 21-day line. The Nasdaq is now facing clear resistance at its 50-day line, and furthermore, it fell back below its 21-day support levels on Tuesday. The next critical technical score is Friday’s low, around 13,039. A cutout of that marker leaves the door open for a deeper throwback.
For a more detailed analysis of the current stock market and its status, study the big picture.
Small caps also showed a worrying sign on Tuesday, as the Russell 2000 fell sharply below its 50-day moving average. The index had previously undermined the line earlier in the month. But the move was intraday, with the index closing the session above support again, and then rebounding sharply the next day. Yesterday, the Russell 2000 closed at the bottom of the trading range for the session, more than 1% below its 50-day line.
Russell 2000 futures were outperforming Wednesday’s pre-trade action by a wide margin, but GamestopThe 14% drop after (GME) gains raised a yellow flag as it faded to the bottom of the index.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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