Stocks opened lower Thursday, as Federal Reserve chief Jerome Powell began a second day of congressional testimony. China-based stocks traded high on the Nasdaq, with chips and biotechs weighing on early trade. On the Dow Jones today, UnitedHealth Group dived after reporting its second-quarter results.
The Nasdaq Composite dipped 0.2%, pulling back farther from Tuesday’s new high. The S&P 500 retreated from a Wednesday record, down 0.3%. The Dow dropped 0.3% into the red, as Salesforce.com (CRM) and UnitedHealth Group (UNH) dragged at the bottom of the list.
Netflix (NFLX) climbed 1.2% after signaling a move into videogame development. The company announced late Wednesday it had hired Facebook (FB) gaming executive Mike Verdu, who is also a former Electronic Arts (EA) executive. A four-day rally has Netflix stock headed for a 563.66 buy point.
Insurer American International Group (AIG) swung 2% higher, to the top of the S&P 500. The New York-based company announced the sale of a 9.9% stake in its life insurance and retirement business, for $2.2 billion, to asset manager Blackstone Group (BX). Blackstone, an IBD 50 stock, rallied 2.7%.
Delta Air Lines (DAL) jumped almost 3%, after Raymond James upgraded the stock to a strong buy.
Also on the S&P 500, Progressive (PGR) dived 5.4%, despite beating analysts’ second-quarter revenue and earnings targets. The insurers reported a steep increase in auto accident claims during the quarter.
Dow Jones Today: Honeywell, UnitedHealth
Honeywell stock jumped back above its 10-week moving average this week. It is less than 3% from a 234.12 buy point in a seven-week cup base.
Managed care provider UnitedHealth Group (UNH) ground out a 1.2% decline, after reporting an acceleration in revenue growth and a smaller-than-forecast decline in earnings for the second quarter. The stock closed Wednesday less than 3% below a 426.08 entry in a 10-week cup base.
Chips Mixed, Meme Stocks Slide
AMD rose following an upgrade to neutral, from sell, by Citi. The note raised the chip stock’s price target to 95, from 17. AMD is trading just below what IBD MarketSmith analysis charts as a 95.54 buy point in a 26-week cup-with-handle base.
Taiwan Semi dropped 2.8% after reporting mixed second-quarter results. The company said it expects automotive industry chip shortages to begin to work themselves out in the current quarter.
TSM stock is working to climb the right side of a 22-week consolidation.
India-based information technology consultant Wipro (WIT) jumped 3% after reporting first-quarter results. The stock ended Wednesday up more than 4% so far for the week. The gain placed shares back above their 50-day/10-week moving average, threatening to snap a four-week decline.
Small caps remained under pressure after a tough day on Wednesday. The Russell 2000 opened to a 0.6% loss. Meme stocks improved sharply in early trade. Carver Bancorp (CARV) spiked 17%, as it looks to stem a steep three-day sell-off. AMC Entertainment Holdings (AMC) reversed premarket losses and rose 4%. GameStop (GME) dipped 1.4%.
Econ: Jobless Claims Dip, NY Data Spikes
First-time claims for unemployment assistance dipped to 360,000 in the week ended July 10, the Labor Department reported. The number was the lowest number since March 2020, falling from 386,000 claims in the prior week, and below economists’ target of 368,000 claims.
Manufacturing activity slowed sharply in the mid-Atlantic region, while New York’s regional manufacturing action accelerated.
The index for the Philadelphia Federal Reserve’s Manufacturing Business Outlook Survey fell to 21.9 for July, down from June’s 30.7 tally. Economists had projected a reading of 28.5. New orders and shipments decreased, while prices increased and 63% of firms reported plans to increase employment in the next six months.
Meanwhile, the New York Federal Reserve’s Empire State Manufacturing Survey index surged to 43 — a record high — up from 17.4 and blowing past expectations for a readout of 18.3. The new orders and shipments indexes both posted powerful gains. Unfilled orders and delivery times increased, indicating businesses operating at capacity.
June industrial production numbers from the Federal Reserve are set for release at 9:15 a.m. ET.
Federal Reserve Chairman Jerome Powell speaks to the Senate Banking Committee just as the market opens at 9:30 a.m. ET. Questions of rate policy were largely settled before Powell’s House testimony on Wednesday. And markets will be anxious to glean any new information on Fed thinking with regard to altering its asset purchasing strategy, though Powell has made clear that the Fed will signal well in advance of any change in course.
Vital Signs: Oil Prices, Bond Yields
Oil prices continued to pull back, after a 2.8% drop on Wednesday. Reuters reported that Saudi Arabia and the United Arab Emirates had reached an agreement, potentially opening the door to an OPEC+ deal that would ease some of the current 5.8 million barrel-per-day curbs placed on Organization of Petroleum Exporting Country members and a group of partners, led by Russia.
West Texas Intermediate slipped 1.6% to trade at $72 a barrel. WTI oil futures are tracking toward a second-straight weekly decline, after a six-week advance last week lifted prices on July 6 to their highest level since October 2014.
Bond yields also eased after snapping a three-day rally on Wednesday. The 10-year bond yield hit a four-month low on July 8, then rallied to above 1.41% on Tuesday. Early Thursday, the 10-year yield pulled back to 1.33%, down from Wednesday’s settle above 1.35%.
S&P 500, Nasdaq Dow Jones Today
The S&P 500 and the Nasdaq pulled back after tapping out more new highs this week. The S&P 500 is tracking toward a fourth-straight weekly advance, up 1.8% so far in July. The Nasdaq ended Wednesday down 0.4% so far for the week, threatening to snap its three-week advance. The Nasdaq has a 1% gain since the start of July.
For more detailed analysis of the current stock market and its status, study the Big Picture.
The Dow Jones today opens less than 0.5% below its record high from May 10. The Dow gained 0.2% for the week through Wednesday, and has a 1.3% rise so far in July.
American Express (AXP) and Goldman Sachs (GS) remain the Dow’s two fastest movers for the year, up more than 42% each. American Express is extended after an April breakout and a June rebound from support.
Goldman Sachs is seated nicely at its 10-week moving average, 5% below a 393.36 buy point in a six-week flat base.
China Rallies; Europe, Japan Slump
Overseas action was mixed, with China’s markets staging a brisk rally after second-quarter GDP data met expectations. The economy expanded 7.9% during the period, putting the country on track to meet its full-year target of 6% growth Meanwhile, the Nikkei 225 in Tokyo closed down 1.15% after the U.S. dollar pulled back sharply on Wednesday.
Stocks in Europe dug deeper into losses entering afternoon trade as energy issues dragged on the market. Frankfurt’s DAX dropped 1%. The CAC-40 in Paris slipped 0.8%. London’s FTSE 100 was off 0.7%.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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