Stock futures shifted sharply higher Thursday, boosted by earnings reports and by a notable improvement in weekly jobless claims. Taiwan Semiconductor (TSM) and Bank of America (BAC) were early leaders on earnings news. On the Dow Jones today, UnitedHealth Group (UNH) led after reporting positive third-quarter results.
Dow Jones futures rumbled 0.9% higher, while S&P 500 futures also swung 0.9% above fair value. Nasdaq 100 futures racked up a 1.1% gain on today’s stock market, enough to push the index into positive territory for the week.
Chip equipment makers led the Nasdaq 100, boosted by strong third-quarter results from Taiwan Semiconductor. ASML Holdings (ASML) ran at the top of the list with a 3.1% gain. Applied Materials (AMAT) and KLA (KLAC) gained more than 2%, Lam Research (LRCX) gained 1.9%. The VanEck Semiconductor ETF (SMH) climbed 1.7% in premarket trade.
Taiwan Semi jumped 3.9% following its third-quarter earnings report in which it raised guidance for the current quarter. The stock is looking to snap a five-week decline.
Vaccine maker Moderna (MRNA) ran strong, up 2.2%, ahead of a vote among advisors to the Food And Drug Administration regarding approval of a third shot of the company’s Covid-19 vaccine. Moderna shares are struggling to climb off the bottom of a nine-week correction.
Also receiving an FDA boost, biotech Regeneron Pharmaceuticals (REGN) jumped 2.7%, after the agency reportedly accepted the company’s application for its monoclonal antibody treatment for non-hospitalized Covid-19 patients. Regeneron shares are testing 200-day support after a steep, four-week breakdown.
United Parcel Service (UPS) powered up 2.7%. Stifel upgraded the stock to buy, from hold, and raised its price target to 224, from 210.
Dow Jones Today: Walgreens, UnitedHealth Earnings
UnitedHealth Group and Walgreens Boots Alliance (WBA) topped the Dow Jones today, running strong on quarterly earnings news.
UnitedHealth added 2.6%, positioning the stock for a possible test of resistance at its 50-day moving average. The managed-care giant cleared analysts’ third-quarter revenue and earnings targets by narrow margins, and boosted its full-year earnings guidance in line with Wall Street expectations.
UnitedHealth stock is rebounding from a test of support at its 200-day line. It faces potential resistance at its 50-day moving average as it attempts to move up the right side of what IBD MarketSmith analysis plots as a flat base.
Walgreens rallied 2.2%, after reporting that fiscal fourth-quarter earnings and revenue cleared estimates. U.S. sales rose 6.6% to $28.8 billion. International sales soared 62%, to $5.5 billion.
Walgreens stock is locked in a six-month consolidation, trading below both its 10-week and 40-week moving averages.
IBD 50: Callon Pete, Diamondback Lead
Callon ended Wednesday down more than 7% since the start of the week, pulling back after briefly topping a 60.61 buy point. The pullback went well beyond the 8% loss limit that triggers the automatic sell rule, ejecting investors and sending a caution flag about buying while the market outlook reads “in correction.”
Diamondback has been less didactic, breaking out past a 102.63 buy point on Oct. 4. Shares are narrowly extended above the cup base entry, after finding support at its short-term 10-day moving average on Wednesday.
Econ News: Jobless Claims Fall, Oil Rises
The Labor Department reported first-time applications for unemployment assistance decreased to 293,000 in the week ended Oct. 9. That marked a 10% drop vs. the prior week, and below economist projections for 320,000 claims.
The second-straight decline in weekly applications, it was also the lowest tally since March 2020, just as the pandemic got underway.
The Energy Information Administration reports weekly natural gas inventories at 10:30 a.m. ET, and weekly oil supply estimates at 11 a.m. ET.
Oil prices swung higher, with West Texas Intermediate futures up 1.2%, trading above $81 a barrel and pushing to add an eighth week to their advance. Copper rose 1.5%, after posting a 4.6% surge on Wednesday. Bond yields were largely flat after two days of strong declines, with the 10-year Treasury yield unchanged at 1.54%.
Meanwhile, bitcoin surged nearly 5% to trade above $57,500, according to CoinDesk. The cryptocurrency moved as high as $58,518 and as low as $54,554 over the prior 24 hours.
Earnings: Bank Of America, Morgan Stanley Climb
Financials were in motion on earnings news, after a tough day of trading on Wednesday.
Bank of America popped 2.7%, trading high on the S&P 500, after reporting a better-than-expected 67% surge in earnings. Revenue also topped analyst estimates, and asset quality improvements spurred a reserve release of $1.1 billion. Bank of America stock is pulled back to test support at its 21-day exponential moving average, after rekindling a failed August breakout.
Morgan Stanley (MS) rallied 2.5% as a 28% third-quarter earnings gain swept past analyst forecasts. Revenue rose 20%, also above forecasts, as earnings received a boost from a $1.7 billion release of reserves banked against possible defaults.
A late-September spike to new highs interrupted Morgan Stanley’s basing pattern. Shares are currently consolidating below their 10-week moving average.
Nasdaq, S&P 500, Dow Jones Today
The Dow Jones today heads for the starting bell with a 1.1% loss for the week. The S&P 500 is down 0.6%. For the month, the Dow is up 1.6%. The S&P 500 has a 1.3% gain.
Meanwhile, the Nasdaq composite is down less than 0.1%. If the index holds near current levels, it would mark a second weekly close within 0.1% of the prior week. On a weekly chart, that shows as a three-weeks-tight pattern, a bullish marker usually found in stocks.
The Nasdaq and the S&P 500 both snapped three-day retreats on Wednesday. Both now have found five days of support at their short-term 10-day moving averages, but remained well below the longer-term 50-day moving averages.
The Dow remains on the fence, with a flat finish Wednesday that essentially added a fourth down day to its chart. The Dow, however, erased earlier losses. The stock market market outlook is still “in correction,” but the rally attempt, constructed upon the Oct. 4 lows for the Nasdaq and S&P 500, remains in effect.
For more detailed analysis of the current stock market and its status, study the Big Picture.
A follow-through day — a big gain by the Nasdaq or S&P 500 in rising volume — is needed to launch a new uptrend and kick the market outlook over to “confirmed uptrend.” Until that occurs, the best place for investors to be is in cash, building watchlists and waiting for the shift in market status.
Alan R. Elliott is on Twitter @IBD_Aelliott
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