Stocks climbed sharply higher at Wednesday's open, as ballots continued to be counted in a cliff-hanger presidential election. Big tech, managed care and coronavirus-sensitive plays rallied hard, boosted a broad portion of the market. Chips rallied as Advanced Micro Devices surged on an analyst upgrade. UnitedHealth spiked to the top of the Dow Jones today, while Caterpillar sold off agressively.
XThe Nasdaq swept 2.9% higher at the starting bell, as Idexx Labs (IDXX) and collaboration software leader Workday (WDAY) topped the Nasdaq 100. The S&P 500 punched up 1.5%. The Dow Jones Industrial Average held to a 0.7% advance, as Caterpillar (CAT) and JPMorgan (JPM) Swooned to the bottom fo the index.
Healthcare providers soared, with Cigna (CI) up 14% and Anthem (ANTM) trading 10% higher at the top of the S&P 500. A Biden presidency is generally seen as a positive for healthcare providers. Another Trump term would signal continued deterioration of the Affordable Care Act.
Chips rallied behind AMD, which vaulted 4.3% to lead the Nasdaq and the S&P 500. Goldman Sachs upgraded the stock to conviction buy, from neutral. The note placed the stock's target price at 96, about 25% above Tuesday closing price. AMD stock is technically in a double-bottom base, with a buy point at 88.82. Chip sector stocks marched higher, with the VanEck Vectors Semiconductor ETF (SMH) up 2.2% in early action.
The FANG stock tech leaders rallied hard as election results suggested that Republicans could retain control of the Senate, easing big tech antitrust concerns. Alphabet (GOOGL) and Amazon.com (AMZN) climbed more than 4%. Facebook (FB) vaulted 6.2%. Netflix (NFLX) powered up 2.8% as it attempts to retake support at its 10-week line.
Gear up for Wednesday's market action by reading IBD's Investing Action Plan.
Election Count: Senate Tightens, White House Up For Grabs
The world's attention remained focused on U.S. election results that will decide control of the Senate and the White House, as well as the balance of power in the House of Representatives.
Early Wednesday, former Vice President Joe Biden held a narrow lead over President Donald Trump in electoral college votes in states where a majority of the votes had been tallied. In the remaining states, which included key battlegrounds of Pennsylvania and Michigan, Trump thus far held a lead with the potential to push him past the 270 electoral college votes needed to deliver a second term.
Counting continued, however. At 9:15 a.m. ET, estimates said Pennsylvania had reported around 75% and Michigan about 90% of the states' ballots had been tallied.
Bonds, Gold, Bitcoin, Oil React
Markets across Asia closed sharply mixed. Tokyo's Nikkei 225 showed the most strength, scaling up 1.7% — boosted by the U.S. dollar rising sharply against the yen. Stocks in Europe steepened their early gains in afternoon trade, with the FTSE 100 in London up 1.3%, Paris' CAC-40 climbing 1.5% and Frankfurt's DAX showing a 1.2% advance.
Bonds soared in early U.S. action, sending the 10-year-yield to 0.78%, down 12 basis points in the worst drop since March. But safe haven action was mixed. Gold futures pared early losses to a fraction, steadying at around $1,908 an ounce.
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Bitcoin rose 1.4%, to $13,879, moving back toward Saturday's peak of $13,891 and still up 91% since Dec. 31.
Oil prices were in a rally mode, with West Texas Intermediate popping 2.3% in early action and approaching $39 a barrel. The gain put oil up nearly 8% for the week, as prices worked to stem a two-month decline.
Dow Jones Today: UnitedHealth Seizes Lead
Managed care provider UnitedHealth jetted nearly 8% higher, elbowing aside Apple and Microsoft at the head of the Dow Jones today.
UnitedHealth powered up 7.7% as investors responded to election results. The move positioned shares to retake a buy point at 324.67, as UnitedHealth stock recovers from a failed breakout in October.
Apple and Microsoft were also early leaders, each rallying more than 3%. Apple stock had run up 72% from a May breakout to a September peak. A three-week slide then sent shares into a consolidation. Apple since has fought to take and hold support at its 10-week moving average. Tuesday's 1.5% jump showed shares finding some support at their 100-day line, and well above the low of the current consolidation, established on Sept. 21.
Microsoft is poised in what IBD MarketSmith chart analysis plots as a 10-week base with a 232.96 buy point. Shares are up about 18% from a breakout in April.
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Coronavirus Stocks: Zoom Video, Teledoc, Regeneron Jump
Coronavirus-sensitive stocks were in rally mode. Zoom Video Communications pumped up a 3.6% advance. The stock is looking to reverse a five-session slide, and in position to rebound from a test of support at its 10-week moving average.
Covid-19 beneficiary stock Teledoc (TDOC) climbed 2.9% in premarket action. Shares are trading low in a 28-week base pattern.
Among coronavirus-involved drugmakers, Regeneron Pharmaceuticals (REGN) rallied 2.8%, tacking toward a third-straight advance. Vertex Pharmaceuticals (VRTX) posted a 1.6% gain.
IBD Stocks: Adobe, Synposis, Digital Turbine Jump
On the IBD 50 list, Digital Turbine (APPS) led with a 5.5% gain. A two-day advance left shares up 19.6% for the week at Tuesday's closing bell. Shares are recovering from a steep two-week selloff that cut below the stock's 10-week moving average.
IBD 50 software leaders Adobe (ADBE) and ServiceNow (NOW) each rallied 4.5%. Among IBD 50 stocks near buy points, Synopsis (SNPS) and Cadence Systems (CDNS) were each up more than 3%, and poised to retake buy points.
October Hiring Halves September's Pace
The Federal Reserve's Federal Open Market Committee launches its two-day meeting this morning, with a policy announcement scheduled for Thursday afternoon.
The ADP National Employment Report showed private U.S. employers added 365,000 workers in October. The number was down sharply from the 753,000 new hires recorded in September, and well below economist expectations for 600,000 hirings. Service sector employers accounted for more than 95% of the hiring. Manufacturers were less than 2%.
Dow Jones Today: Post-Election Novembers
Two days of strong market gains make it difficult not to push cash back into the market. Premarket action on the Nasdaq is signaling yet another rally. And early action suggested at least a positive open for the Dow Jones today.
Fortune favors the bold. But the market status changed to "in correction" on Friday. Jumping into the current market bounce could grab some early gains. But it also makes that capital more vulnerable to market volatility than moves made after the market posts a follow-through day.
For more detailed analysis of the current stock market and its status, study the Big Picture.
For the time being, the most constructive thing to do is to build watchlists. The idea is to have a solid stable of top stocks and ETFs, set up near buy points, when the market finds its footing and signals a new confirmed uptrend.
Investors who do make moves during the correction may want to take small-bite profits where feasible and cut losses short. History shows Novembers following presidential elections are unpredictable. In election years since 1988, the Nasdaq has posted average November declines of 1.6%. The Dow has averaged a 1% gain in its post-election Novembers, while the S&P 500's track record shows fractional gains for the month.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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Tech, Health Care Stocks Fuel Rally; Biden Vs. Trump Down To The Wire - Investor's Business Daily
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