Stock futures slipped back into mixed, flattish trade Tuesday, after May retail sales numbers came in weaker than expected. IBD 50 stocks Freedom Holding and Cleveland Cliffs hammered out nice early gains. Some miners were under pressure as copper prices tanked. Chevron paced the Dow Jones today, as oil prices drove energy stocks to the head of premarket action.
Dow Jones futures and S&P 500 futures defended fractional gains, as the Federal Open Market Committee prepared to swing into its two-day meeting this morning. Nasdaq 100 futures slipped into the red on the stock market today. China’s Trip.com (TCOM) topped the index, up 0.6%. Fastenal (FAST) traded at the bottom of the list, down 3.7% after an analyst downgrade.
Healthcare REIT Welltower (WELL) perked up 1.3%, enough to lead the S&P 500 after Raymond James upgraded the stock to strong buy, with a 92 price target. Wolfe Research initiated coverage at outperform with a 94 target. Welltower shares ended Monday near the top of a buy range above a flat-base buy point at 77.64.
Devon Energy (DVN) led the early gains among gas and oil stocks, which held seven of the top 10 largest gains among S&P 500 issues.
Steelmaker Cleveland Cliffs (CLF) jetted 2.2% higher after raising its second-quarter earnings guidance. The stock is extended after an April breakout, and a June rebound from 10-week support.
Small caps ran slightly warmer than the overall market, with Russell 2000 futures up 0.2%. Among the Russell 2000 stocks, Spirit Airlines (SAVE) rallied 2.9% after reporting positive second-quarter load data and operating expenses late Monday. Citi upgraded the stock to buy, and set its price target at 42.
Database and software heavyweight Oracle (ORCL) reports its fiscal fourth-quarter earnings after the closing bell. Shares dipped 0.3% in early action.
Dow Jones Today: Boeing/Airbus Subsidy Talks
Although significantly beaten down from its 2019 highs, Boeing stock has rebounded briskly since November. The stock has formed a solid cup-with-handle base pattern, with the handle sitting nicely on support at the stock’s 50-day moving average.
May Retail Sales Slip, Producer Prices Jump
Retail sales slipped 1.3% in May, the Commerce Department reported, down from a 0.9% rise in April. Economists had projected a 0.5% dip. Minus vehicles and gas sales declined 0.8%, vs. April’s 0.1% increase and compared with views for a 0.2% gain.
Prices paid to producers increased 0.8% month-over-month in May, Labor Department data showed, and were up 6.6% over year-ago levels. That was an acceleration from April’s 0.6%/6.2% gain. Projections had called for a monthly gain of 0.5% and a year-over-year rise of 6.5%.
The New York Federal Reserve’s Empire State Manufacturing Survey dropped to 17.4 for June, down sharply from May’s 24.3 reading, and well below expectations for a downtick to 22.5. New orders, shipments and employment levels all made slight gains, the report said, but “delivery times lengthened at a record-setting pace, and inventories edged lower.”
At 9:15 a.m. ET, the Federal Reserve releases industrial production numbers. At 10 a.m. ET, the National Association of Home Builders puts out its confidence index
Bitcoin, Oil Rise; Yields Steady; Copper Dives
Bitcoin gained 2%, trading above $40,300, according to CoinDesk. In oil prices, West Texas Intermediate crude gained more than 1%, trading just below $62 a barrel. The 10-year yield held steady above 1.50%, after a nice rebound on Monday.
Some mining stocks came under early pressure as copper prices dived as concerns rose over potential market intervention by China’s government to limit copper’s recent price gains. Copper price futures plummeted 4% to $4.34 a pound early Tuesday, erasing gains since April.
Stocks To Watch: Adobe Breakout/Earnings
IBD Leaderboard stock Adobe (ADBE) broke out past 525.54 buy point on Thursday. Shares climbed out of that buy range Monday, but remained in a buy range above an alternate buy point of 536.98 in a 41-week consolidation period.
The digital media and marketing software vendor reports fiscal second-quarter results late Thursday. Analysts expect the San Jose, Calif.-based company to earn $2.81 a share, up 15%, on sales of $3.73 billion, up 19%. In March, Adobe (ADBE) raised full-year guidance after first-quarter earnings topped views, and analysts expect another hike.
IBD 50 list: Freedom Holding’s Breakout
IBD 50 stock Freedom Holding (FRHC) rallied 4.6% before the open. The Kazakhstan-based provider of brokerage services to clients in Central Asia, Europe and the U.S. ended Monday in a buy range, above a double-bottom base buy point at 58.20. The buy zone extends to 61.11.
Dow Jones Today: A June Conversion?
At the end of trade Monday, the Nasdaq had a year-to-date gain of 9.3%. The S&P 500 had a 13.3% gain. The Dow Jones today opens with a 12.4% gain since Dec. 31.
But although the S&P 500 and Dow had easily outpaced the Nasdaq so far this year, as IBD’s Big Picture on Monday pointed out, circumstances may be beginning to change.
The S&P 500 is sitting on a three-week advance, and up 1.2% since the start of June. The Dow has slipped in three of five recent weeks, and has slipped 0.4% so far in June.
For more detailed analysis of the current stock market and its status, study the Big Picture.
Meanwhile, the Nasdaq Composite has logged a brisk four-week rally, rising 9% from a mid-May low and climbing 3.1% so far in June.
Year-to date, the top performing industries are retail consumer electronics, up 180.1%; U.S. oil & gas explorers, 102.3% higher; and department stores, which gained 89.2%. The worst performers have been solar stocks, down 20%; telecom services, off 12.7%; and medical services, dropping 9.6%.
Over the past four weeks, however, solar stocks have posted the largest gain among the 197 industry groups tracked by IBD: up 19.6%. Computer database stocks are next in line with a 19% advance. Medical software and fabless chipmakers are also among the top advancers since the Nasdaq started its rebound.
Industry Gain Distortions
There have been some distortions within those gains. Meme stock traders have pressured some specific stocks, which have influenced some industry group performances. The breakdown of White House/GOP infrastructure talks tripped a sharp fall off in many heavy construction, equipment and mining names. A change in news tone regarding those negotiations could quickly alter market circumstances.
The same is true of a shift in strategy at the Federal Reserve, a question likely to be answered at least in the short term on Wednesday afternoon.
All of these factors are superimposed over the market’s complex backdrop of supply chains and market demand working to recover from the past year’s pandemic gut punch. That makes this market much more difficult to read than usual, and it underscores the importance of minding the market’s current direction — the all important ‘M’ in the CAN SLIM trading stratagem.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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