Stocks wrestled in mixed trade Tuesday with the Dow leading and the Nasdaq pausing after racking up another record high on Monday. Biotechs, big banks and energy stocks were early leaders. Textron topped the S&P 500 on an analyst upgrade. Goldman Sachs boosted the Dow Jones today, with Boeing not far behind after a massive jet order from United Airlines.
XThe Dow Jones Industrial Average climbed 0.4%, attempting to snatch back some of Monday's decline. The Nasdaq Composite swung back and forth, dipping 0.1% on the stock market today. The S&P 500 slimmed its early increase to 0.1%.
Investment banks Morgan Stanley (MS) ran high on the S&P 500, after its dividend late Monday. Five of the six largest U.S. banks hoisted their dividend payouts, following strong findings in the Federal Reserve's annual stress test checkup, announced on Thursday.
Morgan Stanley jumped 2.7% in early trade after doubling its quarterly dividend, to 70 cents a share. The bank also launched a $12 billion share buyback initiative.
Oil producers grabbed six of the top 10 early gains among S&P 500 stocks, rebounding as oil prices bounced back from losses on Monday.
Also at the top of the S&P 500, aerospace/defense leader Textron (TXT) rose 3.8% as Morgan Stanley upgraded the stock to overweight with a price target at 87. The note pointed out a cyclical rebound in business jets, and Textron's market strength in electrical vertical take off and landing technologies.
Canadian Solar (CSIQ) rallied 5.3% after winning contracts for three major solar installations in Japan.
Biotechs were again in motion, with Cereval Therapeutics Holdings (CERE) rocketing 81% higher. The company announced positive phase 1 trial results from its antipsychotic treatment for schizophrenia patients. Ultragenyx Pharmaceutical (RARE) popped 4%, after Bank of America upgraded the stock to buy, with a 162 price target.
Dow Jones Today: Goldman Dividend, Boeing 737 Order
Walgreens Boots Alliance (WBA) rose 1.3%, and Nike (NKE) gained 1% to contest Goldman's lead on the Dow Jones today.
Goldman opened moved 1.2% higher after increasing its dividend 60%, to $2. That puts the stock at a 2.2% yield. The company did not announce a share buyback program. It had targeted $1.9 in buyback spending in the first quarter, but put buybacks on hold during Q2 as it explored other investments.
Goldman Sachs is the top-gaining stock on the Dow so far this year, up more than 49% at its peak in early June. Shares are pulled back and riding support at the stock's 21-day exponential moving average. An advance off that line would place the stock in a technical buy range.
Boeing halved its early gain to 0.7%, rising on news that United Airlines (UAL) had ordered 200 Boeing 737 Max aircraft, including 150 737-10s — the largest version of the jet. That puts United orders of 737 aircraft at 380, 30 of which have been delivered. United also ordered 75 airliners from Airbus (EADSY), making it the biggest single order by any carrier in at least a decade.
Boeing stock dropped 3.3% on Monday, on news that its updated 777 aircraft would be delayed due to concerns voiced by the Federal Aviation Administration. The slip left shares testing support at the stock's 50-day moving average, and not quite 8% below a handle buy point at 258.50.
Home Price Gains Accelerate
Homebuilding and home retail related stocks received a boost from data showing home price gains accelerated in April. The S&P CoreLogic Case-Shiller National Home Price Index reported a 14.6% year-over-year gain for April, vs. a 13.3% rise for March. The 20-city composite index jumped 14.9%, up from March's 13.4% advance. Economists had projected a 14.9% rise in the 20-city index.
Housing-related stocks near buy points include Lennar (LEN,) RH (RH), Home Depot (HD) and Trex (TREX). Lennar jumped 2.4%, Home Depot rallied 1.5% and Trex gained 1% early Tuesday.
IBD 50 Buy Points: Sea Ltd., NovoCure Gain
IBD 50 stocks rising near buy points Tuesday included Sea Ltd. (SE), up 0.6% after ending Monday 1% below a 285.10 buy point in a 16-week consolidation.
Drugmaker NovoCure (NVCR) rose 0.6%, working on its seventh straight weekly advance and in a buy zone above a cup-base buy point at 220.58.
10-Year Bond Yield Eases
Bond yields remain in focus this week, after a rebound of nearly 6% last week ended a five-week slide. The 10-year Treasury yield dived 3.8% on Monday to settle just below 1.48%. Yields recovered some ground on Tuesday, holding at 1.50% in early trade.
Two Top China Stocks Flashing Buy Signals
Monday's drop broadened the yield's decline in June to around 6.5% — continuing a three-month slide. The 10-year yield had hit a 13-month high above 1.76% on March 30.
Bitcoin Rebounds Above $36,000
Bitcoin recovered another 5%, to trade above $36,200, according to CoinDesk. The cryptocurrency cut below $29,000 a week ago for the first time since last year.
Bitcoin touched a record high above $64,800 on April 14. It has narrowed its loss for June to less than 2%, and has a year-to-date gain of just over 24%.
Stocks To Watch: Granite, MLM, Vulcan, Wabtec
The possibility of a federal spending agreement have placed infrastructure-related plays squarely on investors radar. Expectations appeared to improve Monday regarding the bipartisan infrastructure deal that played a key role in boosting market optimism on Friday. A carefully worded statement from President Joe Biden on Saturday appeared to ease concerns raised by comments from the President that he would veto the deal without passage of another, even-larger spending package sought by progressive Democrats. Democratic congressional leaders still plan to push through a larger spending package under a reconciliation resolution, tied procedurally to the bipartisan deal. Any sense of progress or breakdown in movement toward an agreement is likely to influence market action.
Among the stocks linked to that spending, Granite Construction (GVA), which briefly cleared a flat base buy point at 42.52 on Friday. Shares dipped on Monday.
Martin Marietta Materials (MLM) offered an early entry by breaking a short downtrend in a five-day rally last week. But shares fell back below their 50-day line on Monday.
Vulcan Materials (VMC) is still well below a proper buy point at 194.27. It could signal an early entry if it retakes its 50-day line, but retreated slightly Monday after hitting resistance at that key level on Friday.
Wabtec (WAB) is slightly below an 84.80 buy point from a double-bottom base.
Nasdaq, S&P 500, Dow Jones Today
June, and the second quarter of one of the most economically unusual years in the market's history, are wrapping up on a mixed note. The Nasdaq and S&P 500 are rallying, but not quite on equal terms. Both indexes are knocking out new highs. The Nasdaq is up 5.5% so far in June, its best month since December, and tracking toward its seventh advance in the past eight months.
The S&P 500 has advanced 2.6% this month, also its seventh gain in eight months. Year to date, the S&P 500 still has the advantage: up 14.2% vs. the Nasdaq 12.5% gain.
For more detailed analysis of the current stock market and its status, study the Big Picture.
Meanwhile, a quick look at the Dow Jones today shows the index is consolidating. Up 3% from a mid-June low, it is still more than 2% below its record high from May. The index has regained and may be finding support at its 50-day moving average. It remains down 0.7%, thus far, for the month.
Still, almost half of the Dow's 30 stocks have still outperformed the S&P 500 since the start of the year. Those include the indexes heaviest weighted stocks. Goldman Sachs is up more than 39%. JPMorgan (JPM) and Microsoft (MSFT) have advanced more than 20%. Caterpillar (CA), Cisco Systems (CSCO), Home Depot (HD) and Intel (INTC) all have better than 15% gains.
UnitedHealth Group (UNH), representing almost 8% of the Dow, has climbed 14.5%.
About a third of the Dow's stocks are in constructive base patterns. That does not include names like Caterpillar and JPMorgan, which are broken down and have work to do before offering valid buy points.
But Apple (AAPL), UnitedHealth, Visa (V) and Boeing are watchlist worthy. Apple in particular, is up more than 8% in June, ending Monday less than 2% below its 137.17 buy point. That is the Dow's second best gain for the month, behind Nike (NKE), which spiked more than 20% last week — scoring a breakout from a 25-week consolidation — following its fiscal fourth-quarter report.
ETF Breakouts: Software, Small Caps
The iShares Expanded Tech-Software Sector ETF (IGV) has scored a breakout over the past three sessions. A 1.2% jump on Monday lifted it decisively into a buy range, which extends to 409.02.
The iShares Russell 2000 ETF (IWM) has been toying with a breakout, ending Monday less than 2% below a 234.63 buy point in what IBD MarketSmith analysis plots as a 16-week flat base. The ETF is up only 2.2% so far in June, but has a year-to-date gain of 17.3%, easily outpacing the S&P 500 and the Nasdaq.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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