Stocks climbed into Monday’s open, boosted by positive international trade and a possible stimulus plan at the White House. Electric vehicle makers rallied on strong January deliveries and after an analyst doubled Tesla’s price target. China-based stocks climbed on central bank support in China. GameStop’s retail investor/short seller skirmish broadened to include silver. And Apple climbed towards a buy point on the Dow Jones today.
The Dow industrials hammered out a 235-point gain at the open, up 0.8% as the market looked to claw back a share of Friday’s steep losses. The S&P 500 rallied 1.1%. The Nasdaq Composite swung 1.4% higher on the stock market today as Tesla (TSLA) and Skyworks Solutions (SWKS) ran atop the index, up about 3% apiece.
Early action could reflect some market optimism toward sparks of bipartisanship flickering in Washington. President Biden plans to discuss possible coronavirus stimulus measures with a group of 10 Republican senators at the White House Monday afternoon. The Senate group had proposed on Sunday a $600 billion package, vs. Biden’s $1.9 trillion relief plan.
On the S&P 500, International Fragrance (IFF) led, up more than 8% as the company completed its merger into DuPont‘s (DD) Nutrition & Biosciences unit. DuPont shares tumbled more than 4% to the bottom of the S&P 500.
Earnings news started the week slowly. Chipmaker ON Semiconductor (ON) gained 3.4% after results cleared analyst expectations. Akoustis Technologies (AKTS) rallied 7.4% following its fiscal second-quarter report.
Gear up for the week’s market action by reading IBD’s Investing Action Plan.
Dow Jones Today: Apple Buy Point; Chevron/Exxon Talks
Apple (AAPL) rallied 1.4%, wrestling with Visa (V) and Chevron (CVX) for the early lead on the Dow Jones today. Apple stock, an IBD Leaderboard listing, is angling to retake a 138.89 buy point after a three-day pullback that broke support at its 21-day exponential moving average.
Chevron climbed 1.5%, possibly lifted by reports that the company had engaged in merger discussions with Exxon-Mobil (XOM) early in 2020. Discussions between the company’s two CEOs were described as preliminary and not ongoing, “but could come back in the future,” according to the Wall Street Journal. The merger would mark one of the largest deals in U.S. corporate history, and would mark a significant change of course for the U.S. energy trades.
Global Markets Rally, China Stocks Rise
Markets staged strong sessions across Asia, including a 2.2% advance by Hong Kong’s Hang Seng Index, after China’s central bank injected $15 billion into financial markets. India’s BSE 30 staged a 5% rally, as that nation’s government announced a broad-based economic stimulus initiative. In Europe, markets maintained a brisk rally, with benchmarks in London, Paris and Frankfurt all showing gains well above 1% entering afternoon trade.
China stocks trading in the U.S. showed early signs of strength, with Alibaba Group Holdings (BABA), Baidu (BIDU) and JD.com (JD) all up nearly 2%. Futu Holdings (FUTU) spiked 9%. ReneSola (SOL) climbed 5%. On the IBD Leaderboard roster, Pinduoduo (PDD) grabbed a 3.5% premarket gain.
Pinduoduo has been struggling to breakout past a 187.80 buy point in a bullish ascending base.
China-based IBD 50 stock 360 Digitech (QFIN) was poised to retake a buy point, trading 5.6% higher. The online consumer finance platform ended Friday 4% below what IBD MarketSmith analysis charts as a 18.16 buy point in a 27-week cup base.
EV Makers: Tesla Stock’s Price Target Doubled
Electric vehicle makers generally gained ground as January sales numbers rolled in. IBD Leaderboard stock Tesla rose 3%, as Piper Sandler more than doubled its price target on the stock to 1,200, from 515. The note projected the company would deliver 894,000 vehicles in 2021, rising to more than nine million units by 2030. The premarket move was enough to boost shares back above the stock’s 21-day exponential moving average, if it holds through the open.
Among other EV makers, China Xpeng (XPEV) vaulted 5.6% higher. Nio (NIO) rallied 3.7%. Li Auto (LI) gained 2.1%. Xpeng reported early Monday its January deliveries increased 470% vs. year-ago levels, to 6.015 vehicles. Nio delivered 7,225 vehicles in January, up 353% year-over-year.
R/WallStreetBets: GameStop, AMC, Gatos Silver
The battle between Reddit-based r/WallStreetBets traders and institutional short sellers appeared set to continue on Monday. GameStop (GME) shares traded up 5.4%, at 342.40 — up 1,8oo% vs. their Dec. 1 price. GameStop then reversed to a 4.4% loss.
Silver had become a focus of the r/WallStreetBets crew, which shares trade information and discusses specific stock targets using Reddit. The group grew from around 1 million participants at the beginning of January to more than 7.6 million participants early Monday.
In Shanghai, Reuters reported that individual investors in China had also picked up on the r/WallStreetBets signals, piling into silver investments and helping to drive silver prices higher.
U.S. futures showed silver up more than 10% early Monday. The iShares Silver Trust ETF (SLV) gained 11.8% in early trade. Silver miner Gatos Silver (GATO) traded more than 79% higher, after ending Friday up almost 89% from its October initial offering price.
Other possible targets of the group included Montreal-based Alithya Group (ALYA), which spiked 90% in opening trade, but still traded below 5. Austin, Texas-based Phunware (PHUN) bolted 36% higher. Blank check outfit Tuscan Holdings (THCB) rocketed 40.6% higher.
Coronavirus: Cases Down, Vaccine Up
The average number of new cases of coronavirus reported daily have been declining from a peak of 254,862 reached on Jan. 11. The seven-day average for daily new cases on Sunday fell to 150,903 – down almost 41% to the lowest level since Nov. 14, after 20 straight days of declines. Deaths reported continue to be up-and-down, with the average hovering near the high of 3,439 marked on Jan. 26.
The Centers for Disease Control and Prevention reports that 49.933 million doses of vaccine have so far been distributed in the U.S. Some 31.12 million doses, 62.3% of those distributed, have been administered. At Dec. 30, fewer than 11.5 million doses have been distributed, with about 2.1 million shots administered, an 18.2% application rate.
Dow Jones Today: Preparing For Merck, Amgen Earnings
No earnings reports are scheduled for stocks on the Dow Jones today, after last week’s earnings rush that left more than two thirds of the Dow’s December quarter reports accounted for. Biotech giant Amgen (AMGN) reports after Tuesday’s close. Drugmaker Merck (MRK) reports Thursday morning.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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