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Stock Market Bounces Back From Friday's Rout; FANG Stocks Revive Despite China Woes

The stock market bounced back from its epic Friday meltdown, as U.S. investors largely shrugged off a deep plunge in Chinese financial markets and the potential economic impacts of the worsening coronavirus epidemic. Even FANG stocks with their heavy Chinese exposure moved up, as Alphabet (GOOGL), parent of Google, awaited earnings after the close.

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The Dow Jones Industrial Average clawed back 144 points, or 0.5%, partly recovering Friday's 600-point rout. The Nasdaq gained 1.3%, as a wide swath of growth stocks made gains. The S&P 500 index added 0.7%. The small-cap Russell 2000 index posted a solid 1.1% rise.

Volume was modestly lower, with turnover on both NYSE and Nasdaq off about 9% from the same time Friday.

The official estimate for the total number of Wuhan coronavirus cases passed 17,000 on Monday, with 362 deaths. That death toll now exceeds the total 349 from the 2003 SARS coronavirus outbreak, CNN reports.

The U.S. has an estimated 11 cases. Major Chinese stock exchanges, which had been closed since Jan. 24 in celebration of China's Lunar New Year, were hammered. China's bellwether Shanghai Composite index plunged 7.7%.

Despite China's steep market decline, Chinese stocks on U.S. exchanges rose strongly along with other shares.

Chinese retailing giant and IBD 50 stock Alibaba (BABA) jumped 2.8%. The stock remains extended above a lengthy cup-with-handle base with a 195.82 buy point. In recent trading days, the stock fell below its 50-day moving average, but pushed above it on Monday, a bullish sign.

Meanwhile, private education and test prep company New Oriental Education (EDU) jumped 5.1%. New Oriental stock is extended 10% above a cup base that set up last summer. But a recent three-weeks-tight formation has created an alternate 128.90 entry for the stock.

Stock Market: FANG Stocks Rebound

The FANG stocks, with their strong ties to China's troubled economy, all rose in Monday's midafternoon trading.

Alphabet's Google rose 3.5%. Wall Street sees Google earnings per share of $12.76, basically even with last year's $12.77, according to Zacks Investment Research. Revenue is expected to grow 21%.

Google, on IBD's Big Cap 20 list, has a 99 Composite Rating and is ranked first in its industry group. It's extended from a cup-with-handle base above a 1,268.49 buy point.

Facebook (FB) gained 1.1%. It had been extended in recent weeks' trading, but fell back last week into a 5% buy zone just above a cup with handle and 198.19 buy point. Facebook gave up a 13% gain from the entry, however, which triggered a sell signal.

Online retailer and streaming stock Amazon (AMZN) eased 0.2%, after being up most of the trading session following Friday's breakaway gap-up in price. Amazon jumped 7.4% in Friday's difficult trading session, clearing a 1,917.92 buy point over a saucer base after easily beating Wall Street's Q4 EPS forecasts.

Streaming service Netflix (NFLX) jumped 3.7%, pushing the stock out of the buy zone that lies above a cup with handle and a 338.10 buy point. Netflix was one of the biggest gainers Monday in the IBD 50. The Innovator IBD 50 ETF (FFTY) advanced 1.5%.

Apple TV: 'Surprisingly Low' Demand

Meanwhile, cellphone maker, music provider and streaming service Apple (AAPL) dropped 0.3%, following reports of a "surprisingly low" take rate for its AppleTV+ service free trials. Apple stock has shed 20 points, or about 6%, since hitting an intraday high of 327.85 last Wednesday. But the 98 Composite Rating stock remains well above its 50-day moving average and is about 40% extended after a long run-up.

Electric car and battery maker Tesla (TSLA) gapped up and surged 19.9% in price after Argus Research raised its Tesla price target from 556 to 808. Tesla has soared in recent weeks as a number of analysts have revised up their price and EPS estimates for Tesla stock, which remains extremely extended from a 2019 base.

Among Dow stocks, Nike (NKE), up 3.1%, and Microsoft (MSFT) up 2.4%, led the way. Nike stock rose after JPMorgan put it on its focus list and called its current level a "multiyear buying opportunity."

Meanwhile, the Innovator IBD 50 ETF (FFTY), the bellwether exchange traded fund for the IBD 50, added 1.4% as many of the list's growth stocks posted solid gains.

Please follow Jones on Twitter at @IBD_TJones for more on growth stocks, financial markets and the economy.

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