Stocks staged an uneven open Thursday, fighting to resist sliding oil prices and heavy selling begun in China in response to tremors in the U.S.-China trade standoff.
XIntel (INTC) quickly pared losses, recovering after chairman and chief executive Brian Krzanich was forced to resign following an investigation into a relationship with a company employee. Darden Restaurants (DRI) and grocery chain Kroger (KR) spiked on quarterly results. Bellwether chipmaker Micron Technology (MU) also jumped on earnings news, triggering an early rally among chip-gear makers including Applied Materials (AMAT) and Lam Research (LRCX).
The Dow Jones industrial average dropped 0.3% at the open. Verizon (VZ) posted the Dow's strongest early move. Intel, Boeing (BA) and Caterpillar (CAT) slumped to the bottom of the list.
The S&P 500 wrestled against narrow losses. Darden, Kroger and Micron topped the index.
At the same time, the Nasdaq Composite added 0.2%, stubbornly driving to another new high. Chip and memory names led by Micron and Western Digital (WDC) held the index's top four positions.
The Dow on Wednesday added a seventh decline to its longest pullback since March 2017, drilling further below the 25,000 level, while still narrowly holding support at its 50-day moving average. Meanwhile, the Nasdaq continues to work on a fifth-straight weekly advance, its best string of gains since November. The S&P 500 heads into Thursday's session down 0.4% for the week, but still comfortably above 50-day support.
Meanwhile, the small cap gauges continue to be the standouts. The Russell 2000 and S&P Small Cap 600 are banging out new highs as they each work on an eighth straight up week — their longest rallies in nearly five years. The contrast with the Dow suggests institutional investors are rotating out of blue chips and into small caps.
Global Markets: China, Europe Tumble; Japan Mixed
Stocks in China sold off hard on continued trade fears, as a commerce ministry spokesman said China was "fully prepared" to retaliate for any new sanctions imposed by the U.S. India followed the lead of China and the European Union, hoisting tariffs in response to trade barriers raised by the U.S.
Investors reacted by sending the Shanghai Composite and Hong Kong's Hang Seng index each to losses of 1.4%. Japan diluted the sell-off, with Tokyo's Nikkei 225 gaining 0.6% and the broader Topix Index dipping 0.1%.
In Europe, markets veered lower in afternoon trade. London's FTSE 100 skidded 0.5% lower. Frankfurt's DAX tumbled 0.8%, The CAC-40 in Paris fell 0.4%.
On The Dow: Verizon Upgraded; Nike Downgrade; Intel Recovers
Verizon led the Dow, jumping 1.5% after Goldman Sachs upgraded the stock to buy, from neutral. The note said telecom shares had been hurt by "M&A uncertainty and rising interest rates," among other factors. Goldman also upgraded Charter Communications (CHTR), and said both were "positioned as long-term leaders in broadband and 5G."
Goldman raised Verizon's price target to 56, from 51. It lifted Charter's price target to 361, from 315. Verizon's stock is trading below long-term support in a four-month correction. Charter shares rose 2.1% in premarket trade.
Intel dived 2% at the open, but quickly trimmed losses to less than 1%. The company said chief financial officer Robert Swan would take over CEO duties on an interim basis, effective immediately. In addition, the company increased ts second quarter sales and earnings guidance. Earnings are now guided to 99 cents per shares, with revenue targeted at $16.9 billion. Intel shares have been struggling since Monday to regain support at their 50-day moving average.
Nike pared its early 1% loss to a fraction, after UBS downgraded the stock to neutral, from buy. However, the report also notched up Nike's price target to 78, from 76. The note base the downgrade on valuation, saying that Nike held the "number one mindshare" with global consumers, and that it was getting U.S. promotions and inventories under control. Nike shares were trading just off their June 15 high on Wednesday, extended above a 70.45 buy point in a flat base.
Micron, Darden, Kroger Spike On Earnings
Micron Technology sparked 1.6% higher after narrowly clearing fiscal third-quarter analyst targets. But Micron's healthy outlook on pricing and above-forecast fourth-quarter earnings guidance cheered chip-sector investors. Micron shares ended Wednesday not quite 10% below a 64.76 buy point in a cup-with-handle base.
Darden Restaurants, owner of the Olive Garden and Longhorn Steakhouse chains, served up a 10% gain. The company's fiscal fourth-quarter earnings topped views, and revenue growth was in line with expectations. Management boosted the quarterly dividend by 19%, and added $500 million to its stock repurchase program. Shares are building the right side of a six-month base pattern.
Kroger launched 12% higher just after earnings and revenue growth easily cleared forecasts in its first-quarter report. The stock ended Wednesday up 15% from a March low, attempting to climb the right side of a possible base pattern.
Oil Prices, Philly Fed Index Dive; Jobless Claims Steady
Oil prices slumped ahead of Friday's meeting of the Organization of Petroleum Exporting Countries and other partners, including Russia. Europe's Brent crude dived almost 2%. U.S. benchmark West Texas Intermediate crude dropped 1%, holding near the $65 per barrel level ahead of the OPEC meeting. Saudi Arabia and Russia are expected to lobby for an easing of the production caps that have helped support oil prices for nearly two years.
First-time unemployment claims were flat at 218,000 in the week ended June 16, the Labor Department said. That was below economist forecasts for an uptick to 220,000 claims. The four-week moving average eased to 221,000, from 225,000.
Mid-Atlantic region manufacturing slowed sharply in June, trimming the Philadelphia Federal Reserve's Manufacturing Business Outlook Survey to 19.9, vs. a 34.4 reading for May. Consensus views expected a mild pullback, to 28. The new orders index fell 23 points and backlogs diminished, the report said. Six-month outlooks among executives "continued to moderate, but remained positive overall."
The Federal Housing Finance Agency's April Housing Price Index edged up 0.1%, stopping well short of expectations for a 0.5% gain.
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