Stocks faded into early losses Monday, as reports of trade pessimism in China dragged on the market. Chipmakers came under pressure, China names made some early gains. UnitedHealth Group (UNH) soared to the top of the Dow Jones today.
XThe Nasdaq dived 0.3%, the S&P 500 opened to a 0.2% loss on the stock market today. The Dow Jones industrials wrestled with a marginal decline.
UnitedHealth propped the Dow, up 2.7% after a price-target hike from SunTrust. UnitedHealth peer Centene (CNC) gained 4%, also on a SunTrust target hike.
Boeing (BA) traded up 0.6% on the Dow, after Turkish airline SunExpress exercised an option for 10 new 737 Max jetliners, valued at $1.2 billion. Boeing stock is approaching a buy point.
Caterpillar (CAT) and Johnson & Johnson (JNJ) were among the handful of Dow Jones stocks trading down more than 1%.
Coty (COTY) popped to the top of the S&P 500, up more than 4%. The cosmetics leader agreed to buy 51% of Kylie Jenner's beauty products company for $600 million.
China-based stocks were flashing some mild strength after strong trading on Monday in Hong Kong and Shanghai. Tencent Holding (TCEHY) jumped 2.7%. Streaming content platform Iqiyi (IQ) grabbed a 1.3% gain. JD.com (JD) popped 0.6% higher.
Chipmakers came under pressure, as Cree (CREE) dropped 3% and the VanEck Vectors Semiconductor ETF SMH dropped 0.4%. IBD Leaderboard stock Advanced Micro Devices (AMD) ran against that grain, up 1.2% after RBC Capital raised its price target on the stock to 50, from 44.
Growth stocks flexed some early muscle, as InMode (INMD) surged more than 3% to lead the IBD 50 list. The Israel-based maker of radio-frequency-based surgical devices soared more than 22% last week, ending Friday's session 253% above its August IPO price.
Gear up for the week's market action by reading IBD's Investing Action Plan.
Chinese Officials Set To Wait
Reports of progress in weekend trade negotiations gave way Modnay to reports from CNBC that the mood in China had turned doubtful. China officials were reportedly troubled by comments from President Donald Trump regarding potential tariffs. The Chinese are carefully watching U.S. impeachment proceedings and election developments. "Officials are wondering if it is more rational to wait things out," according to CNBC.
The market is now less than a month from the Dec. 15 deadline for President Donald Trump's pledged ramp-up in China tariffs. A new round of 15% tariffs on China made imports valued at $156 billion is still technically set to go into effect if some sort of bargain is not struck by Dec. 15. This round would affect cell phones, toys, apparel and other consumer goods that have so far been spared the trade war price increases.
A waiver on chip companies supplying Chinese telecom giant Huawei is set to expire Monday. But the Trump Administration is widely expected to grant a two-week extension to suppliers led by Intel (INTC), Qualcomm (QCOM), Broadcom (AVGO) and Xilinx (XLNX).
Disney, Boeing Stock Near Buy Points
Boeing swung higher early Monday, looking as though it might not take a break after last week's powerful 5.9% advance. The Dubai Air Show launched on Sunday, though first-day deal making was reported as disappointing. Boeing booked an order on Sunday for two 787-9 Dreamliners to Biman Bangladesh Airlines. It announced the SunExpress order for 10 737 Max jetliners on Monday.
Boeing stock, hit hard by the global grounding of its flagship 737 Max jetliner fleet in March, has managed a 16% gain for the year through Friday. It is still trading almost 17% below its March high. Within that consolidation, the stock has formed a cup base with a 391.10 buy point. Shares are less than 5% below that buy point.
Walt Disney (DIS) stock will also be on watch this week, after settling to a 4.9% gain last week, on the heels of the launch of its Disney+ streaming entertainment service. Disney stock briefly cleared a 147.25 buy point on Wednesday and Thursday, before easing back below that entry on Friday. Shares rose 0.8% early Monday.
Dow Jones Today: A New Gear
The premarket session for Dow Jones today suggested a positive start, after the index ran higher in nine of 11 sessions to close at a fresh new high on Friday. Friday's gain snapped the 28,000 barrier. It also showed the Dow had found a new gear — one able to carry it decisively beyond the January 2018 high which marked the start of the U.S. China trade war, and which acted as a cap on the market's progress for 22 months.
The Dow ended Friday 5.2% above that high. A bit more than halfway through November, the Dow Jones industrials are now up 3.5% for the month. That puts the index within striking distance of its five-year November average gain of 8.3%.
The Nasdaq has a 3% gain so far in November. The S&P 500 has climbed 2.7%.
The stock market is in a confirmed uptrend, although still subject to China trade news and with sector rotation continuing to muddy the waters. Department stores scored the largest gain among industries over the past week. The Roku (ROKU)-driven Leisure-Movies group was next in line.
Automakers outran all industries over the past eight weeks, with Tesla (TSLA) scoring a breakout and Toyota (TM) poised to take new high ground for the first time since 2015.
China, Japan Jump; Europe Slumps
Markets across Asia moved higher Monday, buoyed by comments from China's Commerce Ministry that U.S. and China negotiators held "constructive discussions" on Saturday.
Hong Kong's Hang Seng Index led with a 1.4% rally, rebounding after a 4.8% drop last week as the city grapples with increasingly violent exchanges between police and pro-democracy protesters. The Shanghai Composite jumped 0.6%. In Japan, Tokyo's Nikkei 225 added 0.5%.
Europe's markets lost ground in afternoon trade, with London's FTSE 100 reversing early gains to a fractional decline. Frankfurt's DAX tumbled 0.7%, while the CAC-40 in Paris fell 0.6%.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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