Stock futures weakened Thursday, as investors awaited a heavy dose of early economic news. Oil prices and bond yields were little changed after surges on Wednesday. China-based stocks remained under pressure as market slides in Shanghai and Hong Kong continued. Cisco Systems ran out front on the Dow Jones today, after upgrading its revenue outlook.
Nasdaq 100 futures faded 0.3% as China-based stocks, along with Tesla (TSLA) and ASML Holding (ASML), weighed at the bottom of the index. S&P 500 futures were down 0.2% and Dow Jones futures traded 0.1% below fair value on the stock market today, following the S&P 500’s bullish rebound from support on Wednesday.
Great Western Bank (GWB) punched 10% higher to lead the S&P 500. Billings, MT.-based First Interstate BancSystem (FIBK) agreed to acquire the Sioux Falls, S.D. outfit in a $2 billion stock deal. First Interstate shares were flat.
Car rental leader Avis Budget (CAR) jumped 2%, on the heels of an upgrade from Bank Of America.
Doximity (DOCS) led the IBD 50 list, rising 1% as it looks to take back a piece of Wednesday’s 7% slide. In IPO action, cybersecurity play IronNet (IRNT) spiked 51% in premarket action, as the stock trends high on WallStreetBets Reddit thread. Blank check new issue TMC Metals (TMD) rocketed 48% higher.
A heavy slug of early data rolls out at 8:30 a.m. ET, with the Philly Fed Survey, and August retail sales data from the Commerce department due out alongside the Labor Department’s weekly unemployment claims report.
Dow Jones Today: Cisco Revises Guidance
Cisco Systems (CSCO) rallied to the head of the Dow Jones today, up 1.5% in premarket trade. The company, at an investors’ day event on Wednesday, projected annual revenue growth of 5% to 7% over the next four years, up from a five-year average gain of 1%. to Credit Suisse upgraded the stock to outperform, from neutral, hoisting the stock’s price target to 74, from 56.
Cisco Systems stock has made little progress since a breakout in July, ending Wednesday up less than 4% from the 55.45 buy point.
Vital Signs: Oil, Bond Yields, Bitcoin
Oil prices paused, after West Texas Intermediate futures surged more than 3% Wednesday to $72.61 a barrel — the highest settle since July. The gain left WTI up 4.2% so far this week, and up almost 17% from a late-August low.
The Energy Information Administration on Wednesday reported a heavy drawdown in stored supplies of crude oil and fuel. And the Bureau of Safety and Environmental Enforcement reported that 30% of oil and natural production remained shut in two weeks after Hurricane Ida. OPEC on Monday cranked its oil demand forecast for next year higher by 900,000 barrels a day, putting its 2022 estimate now at 4.2 million barrels per day above 2021 levels.
The circumstances, Chevron CEO Mike Wirth told Bloomberg on Wednesday, pointed to energy prices remaining high for some time. “There are things that are interfering with market signals right now that we haven’t seen before. Eventually things work out, but eventually can be a long time,” Wirth said.
The 10-year Treasury yield eked higher after some volatile trade over the prior two days. The yield gained 1 basis points to 1.31% early Thursday, following a 2.1% rebound on Wednesday. It traded as low as 1.12% in August, and hit a high for the year above 1.76% on May 30.
Bitcoin continued its gradual rebound, moving up almost 2%, to trade above $48,000, according to CoinDesk. It moved as high as $48,485 and as low as $47,115 over the past 24 hours. The cryptocurrency touched a high above $63,500 on April 13.
China Slides; Europe Rallies
Markets in China continued to take a pounding on Thursday. Trade was suspended in debt issues of a leading Chinese property development firm, stirring concerns of overall weakness in the real estate sector. Casino and gaming stocks continued to sell off, as regulators in Macau announced plans to tighten oversight and restrictions on gambling operations. Top gaming stocks stripped off $18.4 billion in combined market value on China’s markets on Wednesday, according to Bloomberg.
Official data released in China Wednesday showed retail sales rose 2.5% in August, far below expectations for a 7% increase. Industrial production and construction investment also missed targets for the month in what analysts generally read as the impact of the country’s battle to subdue the spreading delta wave of the coronavirus.
Hong Kong’s Hang Seng Index tumbled 1.5%, leaving the index down 5.7% since Monday. The Shanghai Composite fell 1.3%, and has now dropped 2.5% since hitting its highest levels since August 2015 on Friday and Monday. In Japan, Tokyo’s Nikkei 225 shed 0.6%, after touching a new record high on Tuesday.
Among China-based ETFs, the iShares MSCI China ETF (MCHI) and the Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR) were unchanged in premarket trade. The KraneShares CSI China Internet ETF (KWEB) dropped 1.5%.
Europe’s markets were rallying near midday, as energy issues accelerated early gains among travel and leisure stocks. Frankfurt’s DAX and London’s FTSE 100 each sprung up 0.5%. Meanwhile, the CAC-40 in Paris swung 1.1% higher%. The SPDR Portfolio Europe ETF (SPEU) was inactive.
Stocks To Watch: Crocs, Deckers, Mercado Libre, HubSpot
Deckers Outdoor (DECK), the parent of Uggs and Teva, bounced 4.9% this week through Wednesday. It is trading just below a 444.58 buy point in a six-week flat base. Deckers was Monday’s IBD 50 Stock To Watch. It joined IBD’s Leaderboard list on Tuesday, as it passed an early aggressive entry at 433.
Argentina-based Mercado Libre (MELI) remains settled atop its 21-day moving average, not quite 3% below an 1,899.43 entry in a 31-week cup-with-handle base. The IBD Leaderboard stock briefly topped that entry at the start of September.
HubSpot (HUBS) has dipped back below a three-weeks-tight entry at 679.29. Shares are trading just even with their 21-day exponential moving average. The cloud-based marketing software developer has climbed more than 16% from a June breakout. Its relative strength line is just off record highs.
Footwear maker Crocs (CROX) ended Tuesday up 6.6% for the week. It is extended beyond a buy range after rebounding from support at its 10-week moving average. The stock surged nearly 15% Tuesday, after the company announced an accelerated share buyback program and guided sales expectations to above $5 billion by 2026.
Nasdaq, S&P 500, Dow Jones Today
Wednesday’s rally, built upon a wobbly start, sent the Nasdaq and S&P 500 back above their short-term 21-day moving averages. For the S&P 500, the move marked a clear rebound from support at the index’s 50-day moving average — its eighth touchback since the start of the year. IF the Nasdaq can hold support at its 21-day line, that would send an additional bullish signal.
Growth stocks also showed strength. The iShares Russell 1000 Growth ETFIWF regaining its 21-day line, while the Innovator IBD 50 ETF (FFTY) rallied 1.5% to end flat at its short-term 10-day moving average.
For more detailed analysis of the current stock market and its status, study the Big Picture.
The status is less clear for the Dow Jones today. It has undercut its August lows and is scrawling back and forth below its 50-day moving average. Within the index, Apple has dropped 3.9% over the past five sessions. Johnson & Johnson (JNJ) and Merck (MRK) are close behind. Salesforce.com (CRM) is down 2.5%.
Meanwhile, Intel (INTC) has led the industrials, up 2.9% as it attempts to haul itself up off the floor in a five-month consolidation. Leaderboard stock Microsoft has gained more than 3% over the past three sessions, rebounding from its 21-day line and heading for a buy point at 305.94.
The S&P’s rebound is a positive. But the market, while remaining in a confirmed uptrend, had been sending signals for investors to lean toward a defensive stance. Investors playing defense may have pushed some chips back into the market amid Wednesday action, into energy in particular. But heeding the signals to remain cautious and defensive is not a bad idea until the market affirms that Wednesday’s show of support.
Please follow Alan R. Elliott on Twitter @IBD_Aelliott
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