Stocks opened in the red Friday, as the Gulf and East coasts struggled with the impact of Hurricane Ida, and after a pivotal monthly payroll report sharply undercut expectations. Broadcom broke out past a buy point, boosted by a strong quarterly report. Earnings also sent Leaderboard stock DocuSign higher in its buy range. Visa lead the Dow Jones today, after reporting a jump in August payment volume.
The Dow industrials dropped 120 points at the open, down 0.3% with American Express dragging at the bottom of the index. The S&P 500 slumped 0.2%. The Nasdaq Composite wrestled with a 0.1% decline.
Earnings news sent DocuSign (DOCU) and Broadcom (AVGO) to the top of the Nasdaq 100. DocuSign, an IBD 50 and Leaderboard listing, surged 4.4%, rising in a buy range that extends through 320.42. Chip giant Broadcom rose 2.3% after easily outpacing analysts’ fiscal third-quarter forecasts. The chipmaker ended Thursday just below a 495.24 buy point in a shallow, 26-week consolidation.
Upstart Holdings (UPST) ran ahead of the IBD 50 list, up 2.3%, after already racking up a 7.5% gain for the week through Thursday. Steelmaker Cleveland Cliffs (CLF) rallied 1%, as it looks to add a third day to its rebound from its 50-day line. The stock triggered the automatic sell rule on Wednesday, by falling more than 8% below a cup-base buy point.
Dow Jones Today: Apple Leads, Visa Eyes Rebound
Apple (AAPL) firmed up its early lead, rising 0.4% on the Dow Jones today. The stock gained 3.4% through Thursday, in its strongest week since early July. Apple stock, an IBD Leaderboard listing, remains in a buy zone through 155.40.
August Payrolls Miss Target
The Labor Department reported U.S. nonfarm employers added 235,000 workers in August, while revising July’s hiring number sharply higher, to 1.05 million. The August number was the first dip in three months below 900,000 new hires, far from economist projections for 740,000 new jobs. The number signals a sharper-than-expected slowdown in labor demand, and the timing here is particularly crucial.
Analysts suspect a shortfall could be linked to impact from the rising numbers of coronavirus infections caused by the delta strain. With the economy heading into the important fall ramp-up in school, work and manufacturing activity, and toward the holiday shopping season, a potential fall-off in consumer spending and demand would force some sharp revisions in forecasts.
Private payrolls expanded by 243,000, while government-sector hiring surrendered jobs. Manufacturers added 37,000 workers and the labor force participation rate remained steady at 61.7%. Average hourly earnings increased 0.6% month-over-month and 4.3% vs. year-ago levels, above July’s wage gains.
Researcher Market releases its August composite purchasing managers index at 9:45 a.m. ET. The Institute For Supply Management delivers its August services PMI at 10 a.m.ET.
Vital Signs: Oil Prices, Bitcoin, Bond Yields
Oil futures continued higher, as most major Gulf Coast ports had reopened but with the Department of Energy reporting that more than 80% of oil production in the Gulf of Mexico remained off line following Hurricane Ida. Refiners reported restarts taking longer than expected due to flooding in the wake of the storm. Producers had completed 91% of oil production ahead of the hurricane, and stockpiles remain well above long-term averages. West Texas Intermediate rose 0.4% Friday, trading above $70 a barrel. Oil prices soared 10% last week and are up 1.8% for the week through Thursday. In early July, WTI hit $76.98, the highest level in almost seven years.
Bitcoin held steady, trading just below $50,000, according to CoinDesk. Over the past 24 hours, the cryptocurrency moved as high as $50,374, and as low as $48,356.
Gains in bond yields accelerated following the payrolls report, with the 10-year Treasury yield up to 1.33%, after settling on Thursday around 1.29%. Yields have spent the week bunched up in a knot of converged technical gauges — above the 21-day average and below the 50-day line. Friday’s early gain lifted the 10-year above its 50-day line.
China Plans A New Stock Exchange, Europe Mixed
China’s markets fell hard on Friday, snapping a five-day rally in Shanghai and ending Hong Kong’s four-day advance. President Xi Jinping announced late Thursday plans to create a new stock exchange in Beijing, but gave no timeline. The Shanghai Composite dropped 0.4%. Hong Kong’s Hang Seng shed 0.7%. That left the Shanghai benchmark up 1.8% for the week. The Hang Seng has a 1.9% gain.
Among China-based ETFs, the iShares MSCI China ETF (MCHI) dipped 0.6% in early trade Friday, after ending Thursday up 4.5% for the week. The Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR) was unchanged in premarket trade, rising 0.6% through Thursday. The KraneShares CSI China Internet ETF (KWEB) dropped 0.9% in premarket trade, and is sitting on a 9.4% gain through Thursday.
Europe’s markets remained mixed, but weaker, after the U.S. payrolls report. Frankfurt’s DAX dumped early gains and slipped into narrow losses in afternoon trade. London’s FTSE 100 pared its advance to 0.1%. The CAC-40 in Paris worsened to a 0.65% decline. The SPDR Portfolio Europe ETF (SPEU) was inactive, but up 0.9% through Thursday. The fund continues to trade a fraction below a 44.06 entry in what IBD MarketSmith analysis marks as an 11-week flat base.
Stocks To Watch: Matson, Chipotle, Celsius, Facebook
Chipotle Mexican Grill (CMG) is pulling back slightly after a powerful six-week advance. Shares closed Thursday just below a 1,912.85 buy point. The buy point is in a four-weeks-tight pattern, a more bullish variation of a three-weeks-tight setup. The buy range extends to 2,008.49.
Celsius Holding (CELH) is making a strong move this week, with a five-day advance giving the stock a 13.5% gain through Thursday. The IBD 50 stock is in a buy range above an 83.10 buy point. The buy zone tops out at 87.26.
Shipping giant Matson (MATX) recovered nicely after a brief slip early in the week. Shares gained nearly 3% Thursday in soft trade, rising further above a 79.15 entry in what IBD MarketSmith analysis charts as a 27-week cup base. The buy zone extends to 83.11.
Nasdaq, S&P 500, Dow Jones Today: A Strong Week For Growth Stocks
The Dow Jones today is nursing a fractional decline for the week through Thursday. The S&P 500 is up 0.6%. The Nasdaq Composite has a 1.3% gain. The Nasdaq and S&P 500 continue to rattle off new highs. The Dow is sitting nicely above its 21-day moving average, but still jammed up below its Aug. 16 high, ending Thursday 0.5% off that peak.
The SPDR Dow Jones Industrial Average ETF Trust (DIA) remains in a buy zone through 366.19. The leveraged ProShares UltraPro Dow30 (UDOW) is also in a buy range, through 80.83, above what MarketSmith chart analysis plots as a flat base buy point at 76.99.
Small caps entered September a little uneven, with the Russell 2000 rising 1.2% for the week through Thursday, while the S&P Smallcap 600 managed only a 0.2% advance.
Growth stocks have seized the initiative for the week. The Innovator IBD 50 ETF (FFTY) clocked a 4.2% gain for the week through Thursday. That put the fund up 22% from a late-July low, and pennies below a 28-week cup base buy point at 50.06. A strong portion of that action has come from growth stocks that were already extended.
The Innovator IBD Breakout Opportunities ETF (BOUT) posted a 1.3% gain for the week, as it continues climbing the right side of its 29-week base. The iShares Russell 1000 Growth ETF (IWF) gained 1%, and is rising in a buy range above a shelf pattern buy point through 298.75.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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