Stocks Climb; Chip Stocks Lead, Dow Jones Lags - Investor's Business Daily

Stocks grabbed strong early gains Wednesday, with chip stocks leading, as hints of more U.S.-China trade talk progress boosted global optimism.

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The Nasdaq jumped out to an early lead, up 0.5%. The S&P 500 followed with a 0.3% advance. The Dow Jones Industrials slipped into tight losses, as heavyweights Caterpillar (CAT) and Boeing (BA) fell to the bottom of the index. (For updates on this story and other market coverage, visit the Stock Market Today page.)

Chip stocks shifted firmly higher, with STMicroelectronics (STM) scoring a gap-up open, and Advanced Micro Devices (AMD) and Intel (INTC) rallying on analyst actions.

Amazon.com (AMZN) and Intel were both rising within buy ranges. Micron Technology (MU) rose 5% to lead the Nasdaq 100. AMD topped the S&P 500. Dave & Buster's Entertainment (PLAY) soared after reporting fourth-quarter results late Tuesday.

Caterpillar dropped 0.8% on a downgrade and a price target cut from Deutsche Bank. Boeing slid 1.6% as details from the Egypt Air crash investigation leaked out in news reports.

Dow Jones, S&P 500 Near Fresh Highs

The Dow Jones Industrial Average traded 2.9% below its October high early Wednesday, holding firmly above the 26,000 level. The S&P 500 was 2.3% below its peak from September, maintaining support above the 2,800 mark. The Nasdaq moved to within 3% of its August high. All of the index's 2018 peaks occurred in concert with tariff- or sanction-related policy announcements.

For more detailed analysis of the current stock market and its confirmed uptrend, study the Big Picture.

Chip Stocks: Intel, Advanced Micro Get Buy Ratings

Chip stock Intel jumped 1.8% at the open, after Nomura initiated coverage on the stock with a buy rating. The note placed a price target for the stock at 65, almost 20% above Tuesday's closing price.

Intel remains in a buy range, after topping a 54.20 buy point in a cup-with-handle base in mid-March. Shares remain in buy range through 56.91.

Advanced Micro Devices sparked almost 8% higher, scoring an early breakout. Nomura also initiated coverage on the stock with a buy rating and a 33 price target. AMD's move hoisted it past a buy point at 28.21, in a possible six-month cup-with-handle base. The base is 53% deep, which adds some risk to any potential breakout.

FANGs: Amazon, Netflix Advance

Amazon.com and Netflix paced the FANG stock tech leaders in early action, each with a 0.5% gains. IBD Leaderboard stock Amazon ended Tuesday at the very top of a buy range above a 1,736.51 buy point. The buy range runs through 1823.33.

Netflix possibly received a boost from Tuesday's news that the Justice Department had warned the Academy of Motion Picture Arts and Sciences that barring content from streaming services such as Netflix could violate antitrust laws.

Netflix, an IBD Leaderboard watch list stock, ended Tuesday 1% below a 371.59 buy point in a cup-with-handle base.

Hiring, Service Sector Slow; Mortgage Action Surges

U.S. non-farm private sector employers added 129,000 workers in March, according to ADP's National Employment Report. That was down from 183,000 new hires in February, and well below forecasts for a decrease to 165,000 new jobs. Service sector employers added 135,000 new workers, while employment among goods producers decreased by 6,000. Education and health posted the largest increase: 56,000 new jobs.

Mortgage application activity spiked for a second straight week as mortgage rates posted their biggest one-week drop in a decade, according to the Mortgage Bankers Association. Mortgage application volume swelled 18.6% vs. the prior week and was up 28% over year-ago levels. Refinance applications soared 39% week-over-week, and 58% above year-ago activity.

Researcher Markit reported U.S. service sector activity slowed less than expected in March. Markit's services purchasing managers index settled to 55.3 for the month. Economists had projectged a downshift to 54.8, from February's 56 reading.

The Institute for Supply Management's non-manufacturing index is due out at 10 a.m. ET.

U.S.-China Trade War Final Push?

Chinese Vice Premier Liu He meets with Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer in Washington, D.C., today, as negotiations push to close what appear to be last-mile gaps in a restructured U.S.-China trade relationship.

Trade optimism sent China's markets higher, with both the Shanghai Composite and Hong Kong's Hang Seng Index taking better-than 1% gains. Japan followed suit, with Tokyo's Nikkei 225 jumping 1%.

China-facing ETFs traded generally higher on U.S. markets. The Direxion Daily CSI 300 China A Share Bull 2X (CHAU) rose 3.3%, the Direxion Daily FTSE China Bull 3X (YINN)  swept 4% higher in opening trade. The iShares MSCI China (MCHI) climbed 1.1%.

Prime Minister Shakes Up Brexit Talks

Prime Minister Theresa May abandoned her effort to muster support for her existing Brexit proposal, offering to compromise with opposition Labour leaders and to implement any deal that was agreed to by a majority of lawmakers. The shift in stance points to a much "softer" Brexit plan than had been favored by May's Conservative party, and points to a less severe change than many Brexiteers had hoped for in the U.K.'s relationship to the European Union.

May plans to request a short delay to the U.K.'s already extended deadline for exit from the trade bloc, currently set for April 12. Europe's markets were mixed on May's strategy, with London's FTSE 100 trading a fraction in the red near midday. Frankfurt's DAX sprung 1% higher and the CAC-40 in Paris gained 0.6%.

Oil Prices Inch Up Ahead Of Data

Oil prices chalked up narrow gains ahead of Energy Information Administration weekly supplies data due out at 10:30 a.m. ET. West Texas Intermediate crept 0.2% higher to $62.72 a barrel. Brent crude gained 0.4% to $69.64. WTI is at its highest level since the first week of November.

Oil-focused ETFs Citigroup Global Markets VelocityShares 3x Long (UWT) slipped 0.4%, the United States Oil Fund (USO) dipped 0.1%, in early trade.

Follow Alan R. Elliott on Twitter @IBD_Aelliott

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2019-04-03 14:15:00Z
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