Stocks divided into mixed trade Tuesday morning, as the Dow and S&P 500 laid low ahead of Senate testimony from the Fed's Jerome Powell and Treasury Secretary Steven Mnuchin, while the Nasdaq set its sights on a fourth straight advance. China-based Baidu swept to the head of the Nasdaq 100, while an early breakout from Silicon Motion topped the IBD 50 list. Walmart jumped to the head of the Dow Jones today, after coronavirus lockdown sales boosted its Q1 results.
XThe Dow Jones Industrial Average pared its early loss to 0.5%, with Home Depot among the laggards following its first-quarter report. The S&P 500 slipped 0.2%, while the Nasdaq fought to a 0.3% gain on the stock market today.
Advanced Auto Parts (AAP) jumped 6%, Take Two Interactive (TTWO) popped 3.3% to lead the S&P 500. Airlines were mixed after reporting April operational results. United Airlines Holdings (UAL) shed an early gain and traded flat. Southwest Airlines (LUV) rallied 1.4%.
On the Nasdaq, China-based search engine Baidu (BIDU) grabbed an easy lead, soaring 9% on first-quarter results. Zoom Video Communications (ZM) swept 3.6% higher, as it struggled to reverse Monday's 5.8% decline.
On the IBD 50 list, data storage leader Silicon Motion Technology (SIMO) rumbled 4.5% higher in huge trade, snapping it into a buy range above a cup-with-handle buy point at 47.45. Chip designer Nvidia (NVDA) scrambled ahead 2.5%, aiming to book a fifth-straight gain ahead of its first-quarter report on Thursday, after Susquehanna raised the stock's price target to 410, from 355. Nvidia is also an IBD Leaderboard stock.
Gear up for Tuesday's market action by reading IBD's Investing Action Plan.
Earnings News: Eagle Materials, Baidu, Sina Rally
Advanced Auto Parts and Dycom (DY) were among the names sweeping higher on earnings early Tuesday. Wallboard manufacturer Eagle Materials (EXP) surged 6.3% after reporting a third-straight quarter of accelerating earnings.
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China-based search giant Baidu rocketed more than 8% higher as a late-Monday report showed first-quarter earnings accelerated to a 205% gain, even as revenue declined.
Dow Jones Today: Walmart, Home Depot Earnings
Walmart (WMT) bounced 1.3% higher, while Home Depot (HD) shed more than 2%, after announcing their first-quarter results.
Walmart's earnings and revenue blew past analyst targets, boosted by coronavirus lockdown shopping trends. Management withdrew its guidance for the year, but reported a 10% increase in same stores sales, while e-commerce sales soared 74%.
Walmart ended Monday technically in a buy range above a 125.48 buy point in an 18-week base. The base was messy, the attempted breakout messier, with Walmart stock pulling back more than 8% and triggering the automatic sell rule following a brief March 18 breakout.
But while the coronavirus pandemic drove the overall stock market into its bear-market dive, Walmart has traded within a relatively tight range, and done a good job of holding key levels of support. Whether or not the prior buy point remains valid, the stock would be buyable as a rebound from its 50-day moving average, and is also shaping a possible base with a potential buy point at 133.48.
Home Depot's first-quarter results were mixed, with earnings hurt by coronavirus-related expenses. The stock ended Monday more than 9% above a 224.32 buy point in a cup-with-handle base.
Powell, Mnuchin Testimony; Housing Starts Tumble
Investors will have a careful eye on Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin as they go before the Senate Banking Committee Tuesday morning, to provide a first look at how $2.2 trillion in CARES Act stimulus funding has so far been put to use.
Prepared testimony from Mnuchin claims that 4.2 million in small business loans totaling more than $530 billion have so far been distributed. A Congressional Oversight Commission report released Monday found the Treasury Department had so far doled out little of the $500 billion Congress specifically appropriated for lending to businesses and state and local governments.
New housing starts fell 30% in April, to an annualized rate of 891,000, according to the Commerce Department. That was well below the 968,000 pace projected by economists, and the slowest rate since early 2015. Building permits slowed almost 25%, to a rate of 1.074 million, down from 1.353 million in March. Economists had projected a deeper slowdown, to 1.033 million starts.
Coronavirus Update: Active Cases Top 1.1 Million
The cumulative total of worldwide cases rose by more than 89,000 in the 24 hours to Tuesday morning, a 1.8% increase, to more than 4.9 million. The share of the cumulative total among European Economic Area countries held steady at just above 27% on Monday, down from more than 44% at the start of April. The U.S. case count represented 31.5% of the total.
Deaths worldwide increased by 3,471, a 1.1% rise. EEA countries represented 40.4% of that total as of Monday. The U.S. reported another 1,005 deaths, a 1.1% increase that brought its total to 91,985 – 28.8% of the losses worldwide.
The accumulated case count in the U.S. on Tuesday topped 1.55 million. Growth in active cases — persons who have tested positive and are either under hospital care or home quarantine — held to 1.1%, rising above 1.1 million for the first time. The number of new tests administered slowed to 346,094. But that was enough to lift the 10-day average for tests conducted to 345,952, up from around 226,000 at the end of April.
The rise in death rates in New York, New Jersey and California slowed to less than 1% during the 24-hour period. In new infections, Minnesota and Kansas continued to see increases of more than 4%. Iowa, Pennsylvania and Kentucky saw deaths continue to rise at more than 3%.
Covid-19: States Push To Reopen Ahead Of Memorial Day
At least 34 states are phasing into statewide reopenings, though at least some are leaving the ultimate decision-making to city and county regulators. Ten states, including Washington, California, Oregon and Pennsylvania, are testing the water with regional reopenings. Stay-at-home orders remain in place in Michigan, Illinois, New Jersey and Delaware. Connecticut's stay-home rule expires on Wednesday, and all states plan to move into some form of staged reopening ahead of the Memorial Day weekend.
Dow Jones Today: Big Caps & Small Caps
A healthy jump on Monday kicked the Dow Jones back above its 21-day moving average, as the Dow attempts to build some level of support into its rebound from coronavirus crash lows. The Dow Jones today will show whether it can hold that 24,000 level. The index has closed above the 24,000 line in seven of the past 16 sessions. It ended Monday just a short throw from its April 29 high, up more than 35% from its March 23 low and only slightly more than 20% below the record it notched on Feb 12.
Small caps sparked to life on Monday, sending the Russell 2000 up 6.1% and S&P Smallcap 600 to a 7.2% gain. After two weeks of testing, the Russell has now established clear support at its 50-day moving average. The question is whether it can move past its April 29 high — a 3% stretch from where the index closed Monday — and continue its recovery. The index ended Monday 38% above its March 18 low, but still 29% below its Jan. 17 peak.
ETFs tracking the indexes include the iShares Russell 2000 ETF (IWM) and the SPDR Portfolio S&P 600 Small Cap ETF (SPSM). The Direxion Daily Small Cap Bull 3X Shares (TNA) and ProShares Ultra SmallCap600 (SAA) provide leveraged approaches to the indexes.
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