Stocks climed up from a mixed open Wednesday, stirred slightly by earnings as markets awaited an afternoon policy announcement from the Federal Reserve, as well as any morsel of news regarding U.S.-China trade negotiations. Boeing (BA) and Home Depot stock fell hard on the Dow Jones today. Tesla (TSLA) and China's NetEase (NTES) traded near the top of the Nasdaq.
XThe Nasdaq swung 0.4% higher. The S&P 500 climbed 0.3%, while the Dow Jones industrial average shook off early losses and edged into fractional gains.
Retail stocks were active early in the stock market today, as Home Depot (HD) skidded 1.9% after trimming its 2020 revenue guidance to below analyst views. Boeing (BA) fell to the bottom of the Dow Jones Industrial Average, off 2.2%. Federal Aviation Administration Administrator Stephen Dickson confirmed the 737 Max airliners would remain grounded through the end of 2019. Dickson was scheduled to testify before the House transportation committee at 10 a.m. ET.
Ollie's Bargain Outlet (OLLI) soared 15% in opening trade, while Gamestop (GME) crumbled 16% — both delivered earnings reports late Tuesday. A Wednesday morning earnings report sent Children's Place (PLCE) into an 18% dive. Vera Bradley (VRA) also reported early Wednesday, scuttling its opening gain and dropping 5%.
Gear up for Wednesday's market action, including earnings after the close from Lululemon Athletica (LULU), by reading IBD's Investing Action Plan.
Tech Stocks: Tesla Rises, Photronics Breaks Out
Chip stocks performed well in early action, with Western Digital (WDC), Micron Techn0logy (MU). Skyworks Solutions (SWKS) running at the top the Nasdaq 100.
Also high on the Nasdaq, Tesla (TSLA) jumped 1.7% after a German newspaper reported the company aimed to produce 500,000 electric vehicles a year at its plant in Brandenburg, Germany. Tesla shares are technically in a buy range, above a cup-with-handle buy point at 340.94. The base is mroe than 50% deep, a factor that adds risk to the breakout.
Chip manufacturing tool maker Photronics (PLAB) bolted 18% higher at the open. Company earnings slipped in line with estimates, but revenue growth jumped after three quarters of relatively flat growth. Photronics stock was 1% below a flat base buy point late Tuesday. Wednesday's open produced a breakway gap buying opportunity, with the buy range beginning at the stock's 13.80 opening price.
Fed Rate Policy, Consumer Prices, Oil
The Federal Reserve's Federal Open Market Committee wraps up its meeting today with a policy announcement at 2 p.m. ET, followed by a press conference with Fed Chairman Jerome Powell. Markets broadly expect no significant change to policy or interest rate targets, although minutes from the Fed's October meeting showed concerns of continued risks to the economy.
The Labor Department reported consumer price growth eased in November, lifting the Consumer Price Index 0.3% for the month. That was down from October's 0.4% gain, but above forecasts for a downtick to 0.2%.
Core prices, minus food and energy, edged up 0.2%. That was equal to October's growth and in line with economist projections.
Oil prices traded slightly lower early Wednesday, ahead of weekly oil inventory data, set for release from the Energy Information Administration at 10:30 a.m. ET. Oil markets showed no real reaction to the highly anticipated launch of Saudi Aramco as a publicly traded stock on Saudi Arabia's Tadawul exchange. The IPO clocked in with a value of $1.88 trillion, topping Apple's $1.19 trillion market cap and well above the $292 billion market cap for Exxon Mobil (XOM), now the No. 2 public oil giant.
China Trade: Shanghai's Tight Optimism
Some news reports Tuesday said negotiators were working toward a phase one deal and/or a possible delay of the new round of tariffs due to go into effect Dec. 15. Larry Kudlow, a key economic adviser to Trump, then played down any possible delay.
Bloomberg on Wednesday quoted White House adviser Peter Navarro saying there had been no indication that Trump would do "anything other than have a great deal or put the tariffs on."
China's markets traded higher, at least partly on the news of a possible tariff delay. Hong Kong's Hang Seng Index jumped 0.8%. The Shanghai Composite rose 0.2%. That was enough to boost the Hong Kong index onto positive ground for the week. For the Shanghai benchmark, it was its fifth straight, tight advance.
In Japan, Tokyo's Nikkei 225 slipped a fraction on Wednesday. Similar to the Dow Jones industrials, the index is in its fourth week of tight trade, holding just below a record high chalked up on Nov. 26.
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Dow Jones Today: The Intel, Caterpillar Indicators
The Dow Jones today points toward its third weekly slip in the past four weeks. All the dips have been mild, less than 0.5%. That has closed the distance between the Dow and its 50-day moving average, leaving the benchmark about 2% above that line of support at the end of the day Tuesday.
At the same time, the Dow Jones industrials are less than 0.5% below the 28,000 level, and just 1% below their record high set on Nov. 27. The Nasdaq and S&P 500 are snug up against short-term support at their 10-day lines. The Nasdaq is 1% below its record, the S&P 500 is less than 1% from its peak. Both record highs were also set on Nov. 27.
Among some of the most China-trade sensitive Dow Jones stocks, Apple (AAPL) has held its ground, wedged tightly below the record high set on Friday and its five-day moving average. The IBD Leaderboard pick is in a profit-taking zone, more than 20% above its most recent buy point.
While the Dow Jones Industrial Average has held steady over the past four weeks, Intel (INTC) and Caterpillar (CAT) — other stocks that are sensitive to China trade news — have pulled back to test support. Caterpillar has eased 4% lower since setting its high on Nov. 7. Intel hit its high on Nov. 26, then pulled back more than 4%.
That leaves Caterpillar poised for a rebound from support, within a buy range above a 140.72 buy point in a double-bottom base, according to IBD MarketSmith chart analysis. CAT stock rose 1% early Wednesday. Intel briefly topped a 58.90 buy point with the push to its Nov. 26 high. It is testing support about 4% below that buy point, and the buy point and breakout are still in play. Shares edged up 0.2% Wednesday morning.
For more detailed analysis of the current stock market and its status, study the Big Picture.
European Markets Mixed Ahead Of UK Election
Europe's stock markets were mixed, with London's FTSE 100 down a fraction, while the CAC-40 in Paris edged slightly higher and Frankfurt's DAX jumped 0.5%. Markets are watching today's U.S. rate policy announcement from the Fed, ahead of Thursday's European Central Bank meeting, and the critical U.K. general elections meant to determine the fate of Britain's Brexit effort.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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