Stock futures trimmed gains after some weak housing data Tuesday, but remained ready to rebound from a soft day of trade on Monday. Earnings news drove active premarket trading, as NetEase topped the China-based names dominating the Nasdaq, while Home Depot and Walmart headed the Dow Jones today. Miners Freeport-McMoRan and Southern Copper rallied as copper prices edged toward new highs.
Dow Jones futures and S&P 500 futures each pared gains to a fraction above fair value. Nasdaq 100 futures defended their 0.5% advance on the stock market today. Walmart (WMT) and Home Depot (HD) led both the Dow industrials and the S&P 500 in early trade. Home Depot pared gains following weak housing starts data for April. Big box peer Target (TGT) caught a little of that updraft, rising 1.7%.
At the top of the Nasdaq, Baidu (BIDU) rallied 3.5%, and NetEase (NTES) added 4%, after reporting quarterly results. NetEase stock was positioned for a possible rebound from its 10-week moving average. JD.com (JD) gained 2.2%, after confirming on Monday a $3.4 billion target for the planned spin-off of its logistics unit on the Hong Kong stock market.
Bitcoin Veers Lower On Musk Tweet
Bitcoin struggled to hold just below $45,000, after a couple of quick dips below $43,000 early Tuesday, according to CoinDesk. The cryptocurrency downshifted Monday after a Sunday tweet from Tesla Chief Executive Elon Musk implied that Tesla might have sold or will sell its remaining Bitcoin. He tweeted early Monday that Tesla has not sold additional Bitcoin holdings so far.
Bitcoin had run up to a new high above $64,800 on April 14. Bitcoin is down more than 22% so far in May, but remains up about 55% since Dec. 31, after starting the year just above $29,000.
Dow Jones Today: Walmart, Home Depot
Early earnings reports from Walmart and Home Depot fueled the Dow Jones today. Home Depot rallied 2%, Walmart scrambled more than 3% higher in premarket trade.
Home Depot reported both earnings (up 86%) and revenue (up 23%) far above analyst projections in its first-quarter results. Same store sales vaulted 31% higher. Home Depot stock was poised for a possible rebound from support at its 10-week moving average. Shares were also less than 3% below a 328.18 buy point in a three-weeks-tight formation.
Wall Street expected Walmart to earn $1.21 per share, up 3%, as revenue slips 3% to $131.31 billion. Actual results were a 43% jump in earnings to $1.69 per share. Revenue slipped 2% to $132.16 billion. Walmart stock has been struggling to regain support at its 200-day moving average, after a quick dip to test support at its 50-day line.
April Housing Starts, Permits Slow
Homebuilders and building supply stocks trimmed early gains slightly after the Commerce Department reported housing starts slowed to an annualized rate of 1.569 million in April. That was down from March’s pace of 1.739 million starts, and below expectations for a slowdown to 1.705 million new projects.
Building permits, which flag upcoming activity, slowed to a rate of 1.76 million starts, down from 1.766 million in March, disappointing forecasts for an uptick to 1.78 million.
D.R. Horton (DHI) rose 0.6%, IBD 50 stock Builders FirstSource (BLDR) gained 0.4%. Both are poised either for rebounds from 10-week support, or to potentially break support. Home Depot trimmed its early gain slightly on the Dow Jones today.
Vital Signs: Oil, Copper, Bond Yields
West Texas Intermediate oil prices rose 0.6% to trade near $67 a barrel — moving above recent highs to its best level since striking a 33-month high at $67.98 on March 8. WTI is up almost 38% so far this year.
Copper added 0.8% to above $4.74, approaching last week’s record peak above $4.78 per pound. Copper broke past its previous record high, set in February 2011, on May 5.
The 10-year Treasury yield reversed early gains and dipped to 1.63%, vs. the CBOE settle of 1.64% on Monday. April inflation data tripped a surge in the 10-year to above 1.69% last Wednesday. Yields had skirted pre-pandemic levels late in March, climbing to almost 1.76%, the highest level since January 2020.
Miners, Steelmakers Jump
Mining stocks were once again in motion Tuesday, as copper prices neared new record highs. An election surprise in Chile on Saturday resulted in a marked shift to the left as the country rewrites its constitution, a move that leaves uncertain the regulatory environment for miners and foreign investment. In addition, labor negotiations failed on Friday at the Chilean operations of BHP Group (BHP), making a strike at the company’s two copper mines there more likely.
IBD 50: Iqvia, Southern Copper
Two stocks to watch on the IBD list today are Iqvia Holdings (IQV) and Southern Copper.
Clinical research lab Iquivia is holding steady just below a 237.57 buy point in a three-weeks-tight pattern. Shares are up almost 20% from a breakout in April.
Southern Copper is rising toward a new handle entry at 80.55 in an 11-week cup base. The base is a third-stage pattern, which suggests a higher risk of a failed breakout. In addition, he market’s “uptrend under pressure” status means all stock buys and breakouts carry an added element of risk for the time being.
Nasdaq Vs. Dow Jones Today
The Nasdaq Composite faded Monday, backing away from a test of resistance at the underside of its 50-day/10-week moving average. That 50-day level is now acting as an additional layer of resistance, about 3% below the 14,000 level, the mark which has capped the Nasdaq’s progress since February.
The S&P 500 and the Dow Jones today look good, pausing after a two-day bounce off their 50-day lines. Small caps are themselves divided, with the S&P Smallcap 600 holding above its 50-day line for a second day, while the Russell 2000 remains hung up below that line.
For more detailed analysis of the current stock market and its status, study the Big Picture.
Distribution days on the Nasdaq have eased to four, a positive. But the S&P 500 still holds seven distribution days (one is set to expire on Wednesday), and the market status remains “uptrend under pressure.”
Monday’s Big Picture suggested the best strategy now for growth stock investors “is to avoid what’s not working (large-cap technology stocks) and go with what’s working (energy, financials, materials). Keep positions small to start. The market will tell you pretty quickly if your timing was right. Add to winning positions and cut your laggards loose.”
Find Alan R. Elliott on Twitter @IBD_Aelliott
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