Stocks downshifted at the starting bell Monday, as markets reacted to mixed comments made Sunday by Fed chief Jerome Powell. Still, IBD Leaderboard stocks Floor & Decor and Ingersoll Rand both gained in early trade. Tesla rose after an analyst upgrade. And Boeing dragged on the Dow Jones today, after workers in Washington approved a strike.
The Dow Jones Industrial Average knocked off a quick 80 points, a 0.2% slip. The S&P 500 shed 0.1%. The Nasdaq Composite carved a 0.5% loss on the stock market today, as China-based Trip.com (TCOM) and JD.com (JD) led the early declines.
Federal Reserve Chairman Jerome Powell said in a CBS “60 Minutes” interview airing Sunday that vaccinations and federal stimulus had substantially brightened the economic outlook. He added the economy was at an “inflection point” and “about to start growing much more quickly.” He also noted that, in the stock market, “some asset prices are overvalued.”
Canaccord upgraded Tesla stock to buy, from hold, with a price target at 1,071. The report said Tesla was creating an “Apple-esque ecosystem” within the $1 trillion energy generation and storage market, and that its generation and storage business could generate $8 billion in revenue by 2025.
Stocks sensitive to pandemic recovery concerns traded at the bottom of the S&P 500. United Airlines (UAL) and Norwegian Cruise Lines (NCLH) were at the bottom of the list. United dropped 1.5% after updating first-quarter revenue guidance to $3.2 billion, which would be a 66% decline, and just below the $3.3 billion projection from analysts polled by FactSet.
Dow Jones Today: Boeing Strike, Microsoft Purchase
Boeing (BA) dropped 2.5% in early trade, after 200 workers in Washington state approved a strike action after contract negotiations stalled. Microsoft (MSFT) also lost ground, down 0.3%, confirming it would pay $19.7 billion to acquire artificial intelligence leader Nuance Communication (NUAN).
Nuance shares spiked 16.8% in early trade.
Leaderboard: Floor & Decor, Ingersoll Rand Rally
IBD Leaderboard stocks Floor & Decor (FND) and Ingersoll Rand (IR) rallied nearly 6% in early trade. The stock closed Friday in a buy range that runs to 113.55, after a powerful breakout from a cup base on Friday.
Ingersoll, a Leaderboard watchlist stock, trimmed its early surge to 2.4%, gaining after announcing a deal to sell its golf cart-production unit for $1.68 billion to private investor Platinum Equity. The move lifted shares toward a 51.71 buy point in a four-weeks-tight pattern.
Trex, Alibaba Group Climb
On the Russell 2000, Trex (TREX) whittled its early advance to 0.7% following an upgrade to buy, from hold, by Truist. The maker of synthetic decking products carries a 90 Composite Rating from IBD, and is climbing the right side of an 8-week cup with a buy point at 107.74.
An early 8% surge by China’s e-commerce giant Alibaba Group Holding (BABA) failed to rally other China-based stocks. Alibaba soared after as a record-setting $2.5 billion anti-competition fine levied by Chinese regulators was less than many had anticipated. Alibaba shares remain deep in a six-month consolidation.
China-based electric auto maker Xpeng (XPEV) jumped 3.8%, after announcing it would introduce a LIDAR-quipped P5 smart sedan on Wednesday. LIDAR — light detection and ranging — uses pulsed laser signals to detect objects.
Dow Jones Industrials, S&P 500 Extended
The S&P 500 and the Dow Jones today start the week further than usual above their 50-day moving averages. For the time being, this is a moderate technical caution flag hanging over the market. Both indexes have easily outstripped the Nasdaq since the beginning of the year, with the Dow up 10.4% through Friday and the S&P 500 climbing 9.9%, vs. a 7.1% gain for the Nasdaq.
For more detailed analysis of the current stock market and its status, study the Big Picture.
The Nasdaq is accustomed to being the pacesetter for the market. A pause or pullback in the Dow and S&P 500 could allow the tech-heavy Nasdaq to reassert its leadership role.
Friday’s stock market wrap video — available at the top of this article — noted that the market’s current confirmed uptrend is rewarding cautious optimism and balanced portfolios. Investors should be taking advantage of this market rally, adding to exposure in recent weeks while avoiding being overweight in any one particular stock or sector.
Stocks To Watch
Shares of 10x Genomics (TXG) slipped 1..3% Monday. Shares are below a 201.80 buy point in a cup base, but could form a handle. Square (SQ) flashed buy signals last week after clearing a short-term high of 252.60 and is rising toward a buy point of 283.29. Etsy (ETSY) also retook its 50-day line, below a potential early entry of 231.44, as well as an official buy point of 251.96. Pinterest (PINS) is nearing a 90 buy point.
Steelmakers Nucor (NUE) and Steel Dynamics (STLD) are both below buy points in three-weeks-tight patterns. Nucor’s buy point is at 82.86. Steel Dynamics is at 52.69. The steel industry, fueled by recovery optimism and speculation on the success of the White House’s infrastructure plan, has been one of the fastest rising industries in 2021.
Nasdaq ETFs Approach Buy Points
Last week’s strong move by the Nasdaq showed a change in complexion of the market’s uptrend, with tech leaders and growth stocks stepping more confidently back onto the stage. A 3.1% gain for the week left the Nasdaq Composite 2% below its record high, notched on Feb. 16.
It also left Nasdaq tracking ETF Invesco QQQ Trust (QQQ) less than 1% below a cup-based buy point at 338.29. The more aggressive, leveraged Nasdaq tracker ProShares UltraPro QQQ (TQQQ) finished the week 4% below a 111.96 cup-base entry.
Dow Jones Q1: JPMorgan, Goldman, UnitedHealth
Dow Jones stocks JPMorgan (JPM) and Goldman Sachs (GS) kick off the first-quarter reporting season early Wednesday, along with Wells Fargo (WFC), Infosys (INFY) and Lovesac Co. (LOVE). Dow Jones peer UnitedHealth Group (UNH) reports on Thursday. Now is the perfect time for investors to brush up on their earnings season options-buying strategy, in order to limit risk when buying stocks of companies reporting earnings.
Goldman Sachs is in a buy range on a rebound from its 10-week moving average.
JPMorgan is below a 162.79 buy point in a four-weeks tight pattern. Wells Fargo is also in a four-weeks-tight pattern, with a buy point at 41.64.
Infosys is in a buy range that runs through 20.13, after clearing a 19.17 buy point in a cup base.
Find Alan R. Elliott on Twitter @IBD_Aelliott
YOU MAY ALSO LIKE: