Stock futures drilled into early losses Monday, as the market prepared for the final week of a volatile but so-far successful February. Bitcoin briefly notched a new high above $58,000. Ore miners were once again rising as the copper price rally continued. Tesla sagged lower after a weak reliability review of its vehicles. Meanwhile, Boeing dragged on the Dow Jones today, after a close call over Denver on Saturday.
Dow Jones futures trimmed early losses to 0.4%. S&P 500 futures lagged 0.6% below fair value, as generic drug maker Viatris (VTRS) and Tesla (TSLA) dropped to the bottom of the index. Nasdaq 100 futures shifted 1.1% lower, with Baidu (BIDU), NetEase (NTES) and JD.com (JD) squarely at the bottom of the list, down more than 3% apiece. Baidu reported fourth-quarter earnings Sunday night. NetEase reports on Thursday.
People’s United Financial (PBCT) vaulted more than 10%, to the top of the S&P 500, after M&T Bank (MTB) agreed to acquire the Bridgeport, Conn.-based operation in a deal valued at $7.6 billion. Freeport McMoRan (FCX) tacked on another 2% gain ahead of the open, after spiking 20% last week, as copper prices extended their recent rally. IBD 50 stock Southern Copper (SCCO) jumped 1.4%.
Pandemic recovery plays topped the Nasdaq, with United Airlines (UAL) and Marriott International (MAR) leading the list. China-based Trip.com (TCOM) also ran high on the Nasdaq 100, up 1.3% and rising in a buy range above 37.55 buy point.
Another China stock, streaming audio service Lizi (LIZI) bolted 23% higher, after announcing its interactive audio platform had been launched in Mercedes Benz S-Class vehicles.
Shares of GasLog (GLOG) jetted more than 17% higher, after the liquefied natural gas carrier fleet operator sealed a deal to be taken private by the Global Energy & Power Infrastructure at BlackRock (BLK) at $5.80 a share.
In earnings news, Silver Spring, Md.-based Discovery (DISCK) rallied almost 7% after reporting a solid fourth-quarter performance. Discovery shares are up 63% since the start of the year. Palo Alto Networks (PANW), Occidental Petroleum (OXY) and Trex (TREX) are among the companies due to report after Monday’s close.
Gear up for the week’s market action by reading IBD’s Investing Action Plan.
Dow Jones Today: Engine Failure Grounds Boeing
Boeing (BA) was getting beat up, down more about 4% on the Dow Jones today, after a United Airlines pilot guided a flight safely back to Denver airport following an apparent catastrophic engine failure shortly after takeoff. The aircraft was a Boeing 777-200 powered by Series 4000 engines made by Raytheon Technologies’ (RTX) Pratt & Whitney division. Boeing recommended the grounding of 69 similarly powered 777s currently in service. The Federal Aviation Administration reportedly plans immediate inspections of those jets.
Boeing shares have, since early December, been shaping their most concise base in a year. The stock remains down 33% from where it ended 2019. Raytheon shares were down 2.8% in premarket trades.
Tesla Set To Break Below Support
Tesla stock dropped 2.9% after the annual J.D.Power U.S. Vehicle Dependability Study to include Teslas placed the vehicles low on the reliability scale. Tesla also stopped accepting orders for its Model Y Standard Range Plus models, pulling the line from tis website on Sunday.
Tesla also reduced prices on the Long Range versions of its Model 3 and Y on Sunday. Tesla stock ended Friday in a test of support at its 50-day moving average. Monday’s early action pointed to a possible early break below that technical support level. Tesla has not traded below that line since mid-November.
A Big Month For Growth Stocks, With Some Caution Signs
The Nasdaq Composite heads into the week with a 6.2% gain so far for the month. The S&P 500 is up 5.2% and the Dow industrials have a 5% gain, as those two indexes rebound from their dips in January.
Small caps have so far outperformed by a wide margin, with the Russell 2000 up 9.3% from the start of February and working on its 10th advance in the past 11 months. Meanwhile, growth stocks saw accelerating gains, as the Innovators IBD 50 ETF (FFTY) rocketed 13.4% higher since Feb. 1. That puts the Innovator fund on track toward the best month in the fund’s history.
For more detailed analysis of the current stock market and its status, study the Big Picture.
As a result of February’s gains, the Nasdaq is moderately extended while gauges such as the Russell 2000 are trading at record heights above key levels of support. Market conditions remain comfortably in “confirmed uptrend” status. But action is also sending a clear message the market is due for some price consolidation, which means a pullback to narrow the distances to gauges such as the 50-day and 200-day moving averages.
The Nasdaq ended Friday 5% above its 50-day line, and almost 22% past the 200-day level. Investors should be fully prepared for a pullback of at least 5%, and have contingency plans in place in the event that the Nasdaq breaks below its 50-day line and heads for a test of support at the 200-day level.
Bitcoin Strikes New High Above $58,000
Bitcoin backed off sharply Monday, sinking below $54,000, after climbing to above $58,000 on Sunday, according to CoinDesk. The cryptocurrency has gained more than 85% since the start of the year, following an increase of nearly 300% in 2020.
Among Bitcoin-related stocks, Marathon Patent Group (MARA) fell 9.4% in premarket trade, while MicroStrategy (MSTR) traded down less than 5%. The Amplify Transformational Data Sharing ETF (BLOK) slumped 6.2%.
IBD Leaderboard stock PayPal Holdings (PYPL) slipped 2.3%. PayPal stock has felt some influence from Bitcoin price swings since October, when the company launched a cryptocurrency trading service that deals in Bitcoin. PayPal stock is extended, following a November breakout and a January rebound from 10-week support.
Coronavirus Update: 41 Days Of Decline
New Covid-19 cases reported daily in the U.S. and worldwide have, on average, now declined for 41 straight days. Worldwide, the average number of new cases reported daily hit a high of 745,985 on Jan. 11. By Sunday, that number dropped to 360,270, a decrease of nearly 50%.
In the U.S., the seven-day average for new reported cases fell on Sunday to 69,002, the lowest level since Oct. 24. The seven-day average reached a peak of 255,258 on Jan. 11, according to Worldometer.
Deaths in the U.S. began trending lower much later than the drop in new cases. The seven-day average for deaths reported daily hit a high of 3,447 on Jan. 26. Deaths fell to 1,965 on Saturday, then edged slightly higher on Sunday, ending a 25-day decline.
The Centers for Disease Control and Prevention reports that 75.2 million doses of vaccine have so far been distributed in the U.S. Some 63.09 million doses have been administered. At Dec. 30, fewer than 11.5 million doses had been distributed, with about 2.1 million shots administered.
Dow Jones Today: Home Depot, Salesforce Earnings
Home Depot stock has crafted a handle on a seven-month consolidation, putting its best valid current buy point at 285.87. Shares closed on Friday a bit more than 2% below that entry.
Salesforce stock is climbing the right side of a cup base that formed after a failed November breakout from a double-bottom base. MarketSmith puts the buy point at 271.02, and Salesforce shares were about 10% below that mark at the end of trade on Friday.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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