Stocks rolled into a mixed start Friday, as the market struggled to halt its losses for the week. A Thursday night U.S. presidential debate was generally considered constructive. Boston Beer, Mattel and coronavirus stock Gilead Sciences were big early movers. Banks were in motion, and Flagstar Bancorp jumped to lead the IBD 50 list. UnitedHealth climbed in a buy range on the Dow Jones today.
The Nasdaq weakened to a 0.4% decline on the stock market today, as heavy losses by Intel and Versign (VRSN) dragged on the Nasdaq 100. The S&P 500 's 0.2% advance narrowed to less than 0.1%. The Dow Jones Industrial Average struggled to defend narrow gains.
Trading overseas was brisk, with markets in Hong Kong and Tokyo closing higher, and European benchmarks trading more than 1% higher in afternoon action. Oil prices held steady, with West Texas Intermediate bobbing to near $41 a barrel, effectively flat vs. a week ago. Gold hovered around $1,910 an ounce, also flat on the week. Bonds, one of the week's big movers, traded flat on Friday, with the 10-year yield up at 0.86% — 11 points above week-ago levels.
Gilead Sciences (GILD) jumped 3.3%, leading the Nasdaq 100, after the FDA granted full approval for its antiviral remdesivir as a coronavirus treatment. The FDA gave the drug emergency use approval on May 1. Gilead stock is down 29% from a March high.
Bank stocks were in motion on earnings. SVB Financial (SIVB) rocketed almost 8% higher, taking a new high as analysts hoisted porice targets after the bank reported third-quarter results late Thursday. Capital One Financial (COF) muscled up 4.2%, to the top of the S&P 500, after reporting late Thursday. KeyCorp (KEY) and Wells Fargo (WFC) also moved higher.
Gear up for Friday's market action by reading IBD's Investing Action Plan.
Bloomberg reported rising resistance among GOP senators to a coronavirus stimulus deal as talks between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin dragged on. Early Thursday, Pelosi had reported some progress on spending for virus testing, tracing and vaccination strategy. But matters of state and local aid remain key sticking points just days before the election.
Earnings News: Mattel, Boston Beer Soar
Early Friday earnings sent U.K.-based bank Barclays (BCS) up more than 5%. Meanwhile, Sweden-based auto airbag maker Autoliv (ALV) added 1.5%. Bank and auto stocks were driving the rally among European markets on Friday.
Mattel jumped 10% after reporting a 265% surge in earnings and a 10% revenue gain, its first such increases in three quarters. Mattel stock jetted 8% higher early Friday as D.A. Davidson upgraded the stock to buy, from neutral and gave it an 18 price target. Shares ended Thursday up almost 17% from a mid-September breakout.
Sam Adams brewer Boston Beer received two target hikes, to 996 from Deutsche Bank and 1,150 from Citi — despite revenue that just missed the analyst target. Still, per-share earnings rose 70% and revenue surged 30%. The stock jumped 13% early Friday, and has a year-to-date gain of nearly 175%.
Dow Jones Today: Intel Dives, United Health In Buy Zone
Intel's third-quarter revenue and earnings fell less than expected. But sales of data center chips disappointed investors, sending shares lower. Intel's pain lately has meant gains for fabless rival Advanced Micro Devices (AMD). AMD stock perked up 1.4% early Friday, leading the IBD 50 list.
American Express reported a mixed quarter, with earnings down hard as consumers reigned in travel and entertainment spending — the bulk of the credit lender's revenue.
Goldman Sachs (GS) traded up 0.5%. The bank on Thursday agreed to pay nearly $3 billion in penalties to four countries, admitting that its Malaysian subsidiary had conspired to violate U.S. corruption laws in the scandal surrounding Malaysian investment fund 1MDB.
UnitedHealth Group (UNH) jumped 2.6% after financial pundit Jime Cramer declared healthcare stocks winners on the heels of Thursday night's presidential debate. UnitedHealth is in a buy range, above a 324.67 buy point in a seven week cup base.
Coronavirus Update: India's Deaths, New Cases Decline
Over the past week, the U.S. has seen its total number of cases rise by 442,634, a 15.7% increase. Deaths rose 2.5% as another 5,627 persons died. India and the U.S. have been locked in a grisly competition, with India's new cases up 13.8% in the past week while 5,122 Indians died, a 4.4% increase in the country's death count.
India has seen its number of new cases and deaths decline since mid-September. It looked for a while as though India would catch and pass the U.S. as the country with the highest number of total cases and deaths from the coronavirus. But daily new cases in the country, measured on a seven-day average, peaked at 93,275 on Sept. 16.
India's new cases since have declined steadily, with the seven-day average on Thursday at 54,482 — down nearly 42% from its mid-September peak and at its lowest level since early August. Daily deaths in India, also gauged on a seven-day average, peaked at 1,166 on Sept. 19. The seven-day average on Thursday was 781, down 33% from Sept. 19.
Meanwhile, the seven-day average for new cases in the U.S. ramped from 35,728 in mid-September to 62,933 on Thursday, for a 76% increase. Daily deaths hit an interim peak of 1,178 in early August. After hitting a low of 711 on Oct. 15 deaths have trended higher, rising to 808 on Thursday. That is 33% below the August high.
As a result, the U.S. reported 15.7% of the world's total new cases and 14.1% of the deaths occurring in the seven days to early Friday. Both new cases and deaths were trending higher. India reported 13.8% of the week's new cases and 12.8% of the deaths, with both numbers trending lower.
Europe's Second Wave
European countries showed the highest rates of increase in new cases for the week. Italy reported 84,124 new cases, a 22% increase. Some 189,359 new cases in France drove its total case count up 23.4%. New cases in the U.K. rose 20%. Spain and Germany saw increases of 14.9%. and 15.6%, respectively.
Daily death counts in Europe are also up sharply, although at lower levels than in the U.S. and India. The seven-day average for deaths in France increased 118% since Sept. 30, rising to 155 per day on Thursday. In Italy, daily deaths had slumped to a low of 19 on Sept 30, and since have rebounded to 136. The daily death toll in Spain has risen 30% over the same period, with the seven-day average at 138 on Thursday.
Dow Jones Today: Sell Rules, Chapter & Verse
With seven trading sessions to go before election day, the market is maintaining its watchful pre-election holding pattern. A mild late-day rally on Thursday defended the Nasdaq's margin above its 50-day moving average. Both the Dow and the S&P 500 have touched down in so-far successful tests of support.
The Dow Jones today gets started with a 0.9% dip for the week, leaning toward a break of its three-week advance. After rising as much as 4.2% for the month on Oct. 12, the index is now ahead 2.1% since Sept. 30. That is still a smashing performance vs. past pre-presidential election Octobers. The Dow has averaged a 1.5% decline in those months since 1988.
For more detailed analysis of the current stock market and its status, study the Big Picture.
The Nasdaq is down 1.4% for the week, and up 3% for the month. The S&P 500 is down 0.9% for the week, with a 2.7% advance so far in October. The S&P 500 has, on average, slipped 1.8% during its pre-election Octobers since 1988. The Nasdaq has averaged a 3.2% decline.
The volatile, headline-driven stock market remains in its confirmed uptrend status. A stimulus or vaccine announcement could possibly be imminent. Earnings season is in full swing. So is the coronavirus pandemic. Buy leading stocks passing buy points, but keep up a strong defense. Knowing your earnings season options trading strategy is one good way to do that. So are knowing your sell rules, chapter and verse, and keeping your stop limits ratcheted up tight.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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