Stock futures rattled off early gains on Monday, as global markets moved sharply higher and the coronavirus stock market rally aimed to extend its gains from Friday. Facebook, Emergent Biosolutions and LabCorp were early leaders. JPMorgan (JPM) headed up the Dow Jones today. Caterpillar (CAT) fell on a downgrade.
XDow futures scrambled 0.9% higher ahead of an important week for the market, with Apple and Microsoft set to lead earnings reports due from a half-dozen Dow names. S&P 500 futures also rose 0.9% above fair value. Nasdaq 100 futures jumped 1.1% on the stock market today.
At the head of the S&P 500, Laboratory Corp. Of America (LH) jumped more than 5%. Citi upgraded the stock to buy, from neutral. Quest Diagnostics (DGX) also got an upgrade, rising 1.8%. Both companies are deeply involved in building out testing infrastructure in the fight against the coronavirus pandemic.
Emergent Biosolutions (EBS) rallied more than 7% to lead the IBD 50 list in premarket trade. Emergent agreed last week to partner with Johnson & Johnson (JNJ) on a Covid-19 vaccine manufacturing effort. Emergent stock ended Friday in a buy range above a 71.29 buy point.
Other stocks in buy ranges or below buy points heading into the week include Domino's Pizza (DPZ), Akamai Technologies (AKAM) and Centene (CNC).
Cognex (CGNX), K12 Inc. (LRN), Alexandria RE Equities (ARE) and Universal Health Services (UHS) are among the names scheduled to report after today's close.
Gear up for a big week's market action by reading IBD's Investing Action Plan.
Nasdaq 100: Facebook, Amazon Up Ahead Of Earnings
American Airlines (AAL), Expedia (EXPE) and Facebook (FB) ran at the top of the Nasdaq 100. Facebook climbed 2.2% after Stifel raised the stock's price target to 230, from 200, ahead of the company's Wednesday afternoon earnings report. Facebook shares are looking to retake their 40-week moving average, within a 13-week cup base.
Amazon.com (AMZN) rose 1.4%, Google-parent Alphabet (GOOGL) notched a 1.5% gain ahead of their earnings reports later this week. Amazon stock is extended above a 2,185.99 buy point in cup base. Alphabet is fighting to regain support at its 40-week line within a 10-week cup.
In earnings news, Checkpoint Software Technologies (CHKP) jetted more than 2% higher after reporting a strong revenue beat in first quarter. The Israel-based stock ended Friday less than 4% below a 108.50 entry in a cup-with-handle base.
Dow Jones Today: Apple, Microsoft Buy Points
Boeing's (BA) first-quarter report comes out early Wednesday, Microsoft (MSFT) reports late Wednesday, Apple (AAPL) delivers results after Thursday's close. Exxon Mobil (XOM) and Chevron (CVX) both report on Friday.
Apple stock and Microsoft stock are both poised in bases, near buy points, ahead of their earnings reports. AAPL stock has a 288.35 buy point, according to MarketSmith analysis. The relative strength line for Apple stock is near highs. The RS line, the blue line in the charts provided, reflects a stock's performance vs. the S&P 500 index.
MSFT stock is a little more complicated. Shares last week slipped back below a 175.10 double-bottom buy point cleared on April 16. Microsoft stock remained in a buy range above an early entry at 170.10. Last week's action also left MSFT stock with a handle on its double-bottom base. That provided a new, a 180.10 entry.
That is a lot of buy points. But the important entries this week are at 175.10 and 180.10. Investors may want to study up on IBD's earnings options strategy, as a means to buy a possible breakout, but minimize risk. Microsoft is an IBD Leaderboard listing.
Global Markets: Japan Leads Rally
Global markets rode broad gains Monday, partly on Friday's turnabout performance in the U.S. and as Japan led markets higher in Asia. Japan's central bank boosted its stimulus measures and said it would buy unlimited bonds in order to support the economy through the coronavirus pandemic — an important cue ahead of the Fed's rate policy announcement on Wednesday. Tokyo's Nikkei 225 launched 2.7% higher.
Stocks in China staged an uneven rally. Hong Kong's Hang Seng Index swept 1.9% higher. The Shanghai Composite finished Monday ahead 0.3%.
In Europe, markets charged firmly into afternoon trade. Frankfurt's DAX punched up 2.6%. The CAC-40 in Paris saided ahead 1.9% and London's FTSE 100 showed a 1.6% gain.
Fed Meeting, Oil Prices
The Federal Reserve's two-day meeting will demand attention, even in a blitzkrieg week of big tech earnings reports. The Fed meets Tuesday and Wednesday, with a rate policy decision due Wednesday afternoon. Investors expectations are currently 100% that the Fed will hold its target interest rate unchanged, according to the CME Fedwatch Tool. But updates on bond buying strategies and others stimulus efforts could move markets.
Investors should keep radars tuned to oil prices, which played a large role in the market's volatile performance last week. West Texas Intermediate swooned 16% early Monday, sending the June futures contract back to near $14 a barrel. Europe's Brent crude contract shed 3.5% to $20.70.
Coronavirus Update
Georgia, Alaska and Oklahoma have begun a gradual process of reopening their economies. New York Governor Andrew Cuomo said coronavirus-related hospitalizations have fallen for 14 days and that virus deaths in New York were near a one-month low — moving NY closer to its Covid-19 exit strategy. The state plans to reopen its economy in stages, beginning with the construction and manufacturing sectors.
Worldwide, the 27,950 new cases of coronavirus reported in the 24 hours to Monday morning raised the cumulative global number of cases to 3.004 million, according to Worldometer data. The U.S. share of that total edged up to 32.8%. The share represented by countries of the European Economic Area decreased, as of Sunday, to 35.9%.
Russia has become one of the hot spots for new infections, reporting more than 6,000 new cases on Monday. That raised the country's cumulative total to 87,147 – up almost 27% since Friday.
The majority of cases have been identified in Moscow, but Covid-19 patients are now reported in all of Russia's 85 regions, "and the spread is accelerating outside the capital," according to The Moscow Times. Tight lockdown rules initiated in Moscow on March 30 are expected to extend until at least May 1.
Significant Gains In U.S. Testing
The U.S. added another 11,146 confirmed new cases from Sunday to early Monday, lifting the cumulative number for persons infected by the virus to 987,322. The rate of new infections increased in New York, ramping from the 2% seen early last week to 3.6% on Thursday and rising to 5.1% by Sunday. Cases in Georgia and New Jersey rose by more than 6%, while Missouri, Delaware and North Dakota reported cases increases by more than 10%.
The number of active cases in the U.S., – the number of patients who have tested positive and are currently being treated or quarantined for the virus – on Sunday rose by more than 50,000, to 812,966. That was a 3.3% increase, down from daily increases of around 7% in early April. This helps gauge the still-rising pressure on hospitals and medical personnel.
The average number of new tests performed daily picked up significantly heading into the weekend, according to data from the Covid Tracking Project. Increases of 105% on Wednesday and 35% on Saturday helped boost the 10-day average for new tests administered to more than 200,000 – up from an average of 150,000 seven days earlier. More tests are a key factor enabling states to move toward reopening their economies.
Dow Jones Today, Bullish Nasdaq Signals
Heading into the final week of April, the Dow Jones today has an 8.5% gain for the month. That puts the index on track for its first monthly gain since December. The Dow is down 19.6% from its February peak, holding only narrowly above the bear market threshold.
The Dow has, since April 17, been caught between its 21-day and 50-day moving averages. A move above the 50-day line would be a bullish sign for the overall market. Another pullback from that resistance could hint at further sideways trade.
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Right now, the Dow is about tied with its gain from October 2015. Unusually powerful months often do occur during bear markets — and the Dow has spent most of the month in bear territory. But don't ignore the big gain. And keep an even closer eye on the Nasdaq, which made use of last week's turbulent market action to notch a handful of bullish new signals. IBD's Weekly Stock Market Update noted the Nasdaq, during the past week, formed a handle on a V-shaped cup base.
Friday marked the index's 13th day above its 21-day moving average. The 21-day average, in turn, appears set to climb above the Nasdaq's 50-day moving average. The sets up a possible stock market Power Trend. "With this week's pause, the coronavirus bull market remains even stronger than it was last week," the update noted.
The earnings, guidance and share price action of top stocks will be a key driver for the coronavirus stock market rally. Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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