Dow Jones Today, Futures Bounce As IBM, HCA Health Rally On Earnings; Netflix, Chipotle Report After Close

Stock futures jumped into an early rebound amid mixed global action Tuesday as earnings news fueled early strength. HCA Health and Moderna rallied. Netflix, Intuitive Surgical and Chipotle Mexican Grill are all near buy points ahead of earnings reports due after the close. IBM climbed to the head of the Dow Jones today on a Q2 earnings beat.


Dow Jones futures and S&P 500 gained 0.7%. Nasdaq 100 futures climbed 0.5% above fair value. Small caps ran slightly ahead of the overall action, with Russell 2000 futures up 0.9%.

IBD 50 stock Moderna (MRNA) topped the Nasdaq, as it prepares for its entry to the S&P 500 Index at the start of trade on Wednesday. Moderna bolted 9.5% higher Monday, lifting its advance for July to more than 33%.

Hospital operator HCA Health (HCA) scrambled more than 7% higher, leading the S&P 500, after reporting a bis second-quarter earnings win. HCA stock ended Monday low in a buy range above a flat-base buy point at 217.46.

Drug distributor Cardinal Health (CAH) narrowed a 5% gain to around 3%. The Wall Street Journal reported that a $1 billion settlement was likely in a New York state case regarding the drug industry’s role in the opioid epidemic. A larger $26 billion settlement is expected sometime this week. Amerisource Bergen (ABC) and McKesson (MCK) also rose around 3%.

Can maker Crown Holdings (CCK) rallied almost 4% after reporting a strong earnings beat, and below-forecast revenue growth late Monday. Swiss bank UBS (UBS) climbed 3.5% after a strong Q2 report.

Dow Jones Today: IBM, Visa, Microsoft

Shares of IBM (IBM) climbed 3.8%, staking an easy early lead on the Dow Jones today. The Armonk, N.Y. company late Monday reported second-quarter earnings and revenue comfortably above analysts targets, in the company’s best quarter in more than three years.

The company’s cloud computing business expanded 13% during the quarter, to $7 billion. The company is in the process of spinning off its $19 billion managed infrastructure business.

Visa (V) and Microsoft (MSFT) showed early strength Tuesday, up about 0.6% apiece. Visa has fallen back into buy range above a 237.60 buy point. The buy range extends to 249.48.

Microsoft is extended after clearing a cup base in June. The sock is tacking toward its first weekly decline in nine weeks, and eyeing a possible test of support at its 50-day/10-week moving average. Microsoft is an IBD Leaderboard listing.

Earnings: Intuitive Surgical, Chipotle, Netflix Stock

Netflix (NFLX) is the headline earnings report after the close, along with Intuitive Surgical (ISRG), United Airlines (UAL) and Chipotle Mexican Grill (CMG).

Netflix current chart pattern is a second-stage double bottom base with a 563.66 buy point. Shares ended a little less than 6% below that entry on Monday. Netflix stock was down 0.9% in premarket trade on Tuesday.

Intuitive Surgical is pulled back ahead of its report, in a test of support at its 10-week moving average. A rebound off that line would create a buy opportunity. The five-day pullback has also placed shares back in the upper end of a buy range above a 5% buy zone following a late-June breakout.

Chipotle Mexican Grill is also testing support ahead of earnings, but at its 21-day exponential moving average. The stock is also back below a 1,579.62 buy point in what IBD MarketSmith analysis charts as an 11-week cup base.

Delta Virus, Global Markets

The Delta strain of the coronavirus continued to tear through unvaccinated portions of populations, reversing what had been a steady decrease in hospitalizations and triggering lockdowns to varying degrees in cities, states and countries around the world. Vaccinations helped to blunt the impact of the infections, but the average number of new cases in the U.S. has nevertheless doubled over the past two weeks.

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Markets in Hong Kong and Tokyo took another leg down Tuesday, with Hong Kong’s Hang Seng Index down 0.8% and Tokyo’s Nikkei 225 taking a 1% loss. Stocks in Europe were attempting an uneven bounce. At midday, Frankfurt DAX traded flat, while the CAC-40 in Paris rose 0.4% and London’s FTSE 100 climbed 0.3%.

Vital Signs: Bond Yields, Oil Prices, Bitcoin

Bonds edged up, yields continued lower after a dive to five-month lows on Monday. The 10-year yield backed off to 1.17% early Tuesday, down from a settle at 1.18% on Monday. Yields have declined in eight of the past nine weeks, and on Monday stabbed support at their 200-day moving average. The last time the 10-year yield broke below the 200-day support line was in December 2018. That began a nine-month slide that ended just ahead of the Covid-19 pandemic.

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Oil prices took a modest bounce early Tuesday, after diving 7.5% — the worst single-day drop since September. Prices began to slide after the Organization of Petroleum Exporting Countries and partners led by Russia, typically called OPEC+, agreed Sunday to a strategy to return production to pre-pandemic by 2022.

West Texas Intermediate bounced 0.4% Tuesday to just below $67 a barrel. Oil prices are now tracking toward a third-straight decline, on the heels of a six-week rally. Prices on July 6 reached $76.98, their highest level since October 2014.

Bitcoin broke back down below $30,000 on Monday, trading down more than 5% to below $29,7000 early Tuesday.  The cryptocurrency had traded above $36,000 in late June, and touched a record high near $65,000 in April.

Stocks To Watch: Sea Limited, Tesla

On the IBD 50 list, Sea Limited (SE) gained 0.8% early Tuesday. The Singapore-based internet platform on Monday reversed to a 2% gain after dropping to test its 50-day moving average.  Shares ended flat with their 21-day moving average, and less than 2% below a 278.10 buy point.

IBD Leaderboard stock Tesla (TSLA) gained 0.9% early Tuesday. The stock had climbed up from early lows Monday to end the session with a 0.3% gain. That snapped a four-day retreat, and left the stock tangled up in its converged 21-day, 50-ay and 200-day moving averages.  Tesla shares are down 8.4% year to date, and 28% below their January high.

Nasdaq, S&P 500, Dow Jones Today

A tough day on the market Monday followed Friday’s shift in market status to “uptrend under pressure.”

The S&P 500 is testing support at its 50-day moving average. The Nasdaq dropped below its 21-day line, but held comfortably above the 50-day level. The Dows Jones Industrial Average broke below support at its 50-day average, similar to its breakdown in mid-June.

Early action showed the Dow Jones today and other benchmarks moving higher early.

For more detailed analysis of the current stock market and its status, study the Big Picture.

Small caps will remain a point of interest, after a five-day tumble leaving the Russell 2000 facing a test of support at its 200-day line. The index entered interim correction status on Monday by dipping briefly more than 10% below its June 9 high. The index has not touched its 200-day line since a brief test of support in September.

Stock Market Today: Watchlists

Deteriorating market action, including the change of market status on Friday, cautions investors to be on the defensive. Protecting capital — locking in even small gains and limiting exposure — becomes a key priority. In general, it is a time for building watchlists, in order to prepare for an upshift in market strength.

For more detailed analysis of the current stock market and its status, study the Big Picture.

With earnings season gathering momentum, investors may be tempted to grab leading stocks poised to pass buy points on earnings news. Those who do should be cautious. Pyramid into positions, and  study up on their earnings season options strategy, in order to limit risk.

Find Alan R. Elliott on Twitter @IBD_Aelliott


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