Stocks jumped in opening trade Friday, despite heavy losses from Facebook (FB) fell in early trade, and as Amazon.com and Broadcom zeroed in on possible buy points.
Earnings reports sent Broadcom (AVGO) higher and stirred fellow chip stocks STMicroelectronics (STM) and ASML Holdings (ASML) to a mild rally. Ulta Beauty (ULTA) was poised to take a new high after its fourth-quarter results.
Amazon.com (AMZN) gained on an analyst upgrade. Facebook swung lower lower, hurt by the sudden loss of two key executives. Tesla (TSLA) fell as investors reacted to Thursday night’s introduction of Tesla’s new Model Y.
Arista Networks (ANET) will be a stock to watch Friday, as it fights to gain ground after clearing a buy point on Wednesday.
The Nasdaq Composite led, up 0.3%, while the Dow Jones Industrial Average trailed with a 0.1% gain. The S&P 500 added 0.2%, ahead of a session in which options expirations are likely to drive heavy trading volumes. Ulta Beauty and Broadcom held the top gains among Nasdaq 100 and S&P 500 stocks just before the open.
S&P 500: The Fight For 2,800
The S&P 500 remains a focal point for the market as it battles to hold the slippery 2,800 level. The index heads into Friday’s session up 2.4% for the week and just below Wednesday’s high. It has taken five prior runs at the 2,800 mark since October. The Nasdaq has a 3% gain for the week and the Dow Jones Industrial Average is ahead 1%.
For in-depth analysis of the current stock market and its confirmed uptrend, study the Big Picture.
Empire State Index, Manufacturing Data Disappoint
The New York Federal Reserve Bank’s Empire State Manufacturing Survey showed an abrupt slowdown in business activity in March. The index dropped to a reading of 3.7 for the month, down from 8.8 in February. That disappointed consensus forecasts for a ramp up to a reading of 10. New orders, delivery times and inventories effectively flat-lined for the month, the report said. Shipment grew only modestly. Prices paid rose for the first time in four months, suggesting an uptick in raw material prices. Prices received moved lower.
On a national level, Federal Reserve numbers showed U.S. manufacturing down for a second straight month in February. Manufacturing decreased 0.4%, not as steeply as January’s 0.9% decrease, but the reverse of consensus projections for a 0.4% gain. Production eked up 0.1%, a turnaround from a 0.6% slip in January, but well short of the 0.4% consensus target. Capacity utilization held steady, at 78.2%.
Facebook Hit By Executive Exodus
News late Thursday that Facebook was losing Chief Product Officer Chris Cox and Chris Daniels, vice president of the Facebook messaging app WhatsApp, sent shares 1.5% lower in premarket trade. Facebook fell 1.85% in regular trade Thursday on a New York Times report that the social media giant is under criminal investigation over data deals with electronics makers.
Facebook shares finished Thursday up 0.3% so far for the week, and working on a third straight week of incremental advances. The stock is 38% off a late December low, climbing the right side of a possible eight-month base.
Earnings News: Oracle, Adobe, Broadcom
Earnings reports late Thursday sent Adobe to an early 3% loss and Oracle also down 3%.
Chipmaker Broadcom jetted more than 5% higher, as sharply slower earnings growth nevertheless topped the consensus target, while revenue came up just short of analysts’ views. Management gave an optimistic outlook, and gave a positive progress report on the integration of Broadcom’s massive $18.9 billion acquisition of CA Technologies in November.
Broadcom shares ended Thursday about 7% below a buy point of 286.73 in a 15-month saucer-with-handle base.
Amazon Approaches Possible Buy Point
Amazon.com gained 0.9% in early action, leading its FANG stock tech peers. KeyBanc Capital upgraded the stock to overweight — its first upgrade of the stock since April 2017 — with a price target set at 2100. The note based the change on improved profitability in Amazon’s core retail business, which could drive mid-term earnings above consensus expectations.
Amazon shares ended Thursday less than 3% below a potential 1736.10 buy point in a six-week flat base. There are a number of technical factors weighing against a possible breakout: the stock’s Relative Strength Rating is particularly weak, and the base formed within a larger consolidation and entirely below its 40-week moving average. The pattern did have the required 30% increase before it began to form.
Gold, Silver Rise; Oil Prices Dip
Commodities moved up, with silver and platinum jumping more than 1% and gold up 0.5% to above $1,300. West Texas Intermediate oil prices dropped 0.8%, holding above $58 a barrel. WTI oil prices are sitting atop a four-day rally that lifted prices back above $58 for the first time since November. WTI is now up 38% from a late December low, boosted by tightening U.S. supplies, trimmed production levels in Saudi Arabia and Russia, and U.S. sanctions against Venezuela.
Europe’s Markets Trade Higher On Brexit Vote
In the UK and Europe markets rallied in afternoon trade, after Britain’s Parliament voted late Thursday to seek an extension to the country’s planned March 29 exit from the European Union. Approval of the extension is not certain, requiring approval from all 27 EU member states.
Prime Minister Theresa May said that if lawmakers support her Brexit proposal in a vote scheduled for next week, Britain would seek an extension to June 30 to work out the details. If May loses the vote, Britain will seek a longer, and still undetermined period to its extension.
An extension is better than a Brexit with no trade plan in place. But it leaves markets, as well as the economies of Britain and the EU, in a purgatory, with government and company capital spending and development plans effectively frozen until the trade bloc determines a new set of protocols.
A Big Week For Markets In China, India
Markets across Asia snapped higher Friday. In China, the Shanghai Composite jumped 1% to end the week up 1.8%, its first weekly close above 3,000 since June. Hong Kong’s Hang Seng Index gained 0.6% Friday, taking a 2.8% gain and ending above 29,000 for the first time in nine months. In Japan, Tokyo’s Nikkei 225 closed 0.8% higher for a 2% advance on the week. The Sensex Index on India’s Bombay Stock Exchange climbed 0.7%, locking in a 3.7% gain for the week — its best week since November.
Among international ETFs, the Direxion Daily CSI 300 China A Share Bull 2X (CHAU) jumped 3.2%, the Direxion Daily FTSE China Bull 3X Shares (YINN) climbed 2.7%, and the Direxion Daily MSCI India Bull 3x Shares (INDL) added 1.9%. For the week, the three funds gained 7.8%, 10.9% and 11.2%, respectively.
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