Dow Jones futures rose slightly late Tuesday, along with S&P 500 futures and Nasdaq futures, after the stock market rally closed Tuesday with tiny gains.
Didi Global (DIDI), the world’s largest ride-hailing operator, priced its IPO at the high end of its narrow range late Tuesday, with former rival Uber Technologies (UBER) owning a big stake.
Apple stock has had a sluggish 2021, but is closing in on a buy point. Meanwhile, Apple (AAPL) iPhone chipmakers Qorvo (QRVO), Skyworks Solutions (SWKS) and Broadcom (AVGO) are nearing breakouts as well. SWKS stock and especially QRVO stock surged up the right side of bases Tuesday, helped by analyst price target hikes. They were Tuesday’s two best S&P 500 performers.
The moves by iPhone chipmakers comes as the chip sector has been strengthening once again.
Before Wednesday’s open, Schnitzer Steel (SCHN) and Bed Bath & Beyond (BBBY) report earnings.
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The Didi IPO sold 288 million American depositary shares at $14 a share, at the high end of the $13-$14 range. The IPO raised just over $4 billion, giving the Chinese ride-hailing giant a market valuation of about $67 billion.
Didi is profitable, with revenue doubling in the first quarter, helped by easy comparisons to China’s Q1 2020 pandemic quarter. It has 493 million users, operating in 16 countries.
The Didi IPO will begin trading on the NYSE on Wednesday under the DIDI ticker.
Uber sold its Uber China business to Didi back in 2016, taking a big stake in return. Uber stock dipped 0.7% to 50.76 on Tuesday, just above its 50-day and 200-day lines in the lower half of a consolidation.
Dow Jones Futures Today
Dow Jones futures advanced 0.1% vs. fair value. S&P 500 futures climbed 0.1%. Nasdaq 100 futures rose 0.1%.
A China manufacturing index came in at 50.9 for June vs. 51 in May. Analysts expected 50.8. The services gauge slipped 1.7 points to 53.5 vs. views for 52.7. Readings over 50 signal growth.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
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Coronavirus cases worldwide reached 182.58 million. Covid-19 deaths topped 3.95 million.
Coronavirus cases in the U.S. have hit 34.52 million, with deaths above 619,000.
New U.S. cases may be just starting to tilt higher from relatively low cases, as the Delta variant spreads in areas with low vaccination rates. Covid cases are picking up worldwide, with the U.K. seeing a big jump from early May.
The Delta variant is more infectious than many others. More vaccinated people are getting the Delta variant, though usually mild cases.
Stock Market Rally Tuesday
The stock market rally had a muted session, with the major indexes edging higher.
The Dow Jones Industrial Average closed fractionally higher in Tuesday’s stock market trading. The S&P 500 index also tilted higher. The Nasdaq composite rose 0.2%.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) climbed 0.6%, while the Innovator IBD Breakout Opportunities ETF (BOUT) closed just below break-even. The iShares Expanded Tech-Software Sector ETF (IGV) increased 0.5%.
The VanEck Vectors Semiconductor ETF (SMH) gained 0.9%. AVGO stock is a big SMH component, with QRVO and SWKS also in the chip ETF.
SPDR S&P Metals & Mining ETF (XME) edged up 0.1% and Global X U.S. Infrastructure Development ETF (PAVE) dipped 0.6%. U.S. Global Jets ETF (JETS) retreated 1% as Covid fears continue to weigh on travel stocks. SPDR S&P Homebuilders ETF (XHB) climbed 0.7%. The Energy Select SPDR ETF (XLE) dipped 0.5% and the Financial Select SPDR ETF (XLF) edged down 0.35%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) rose 0.5% and ARK Genomics ETF (ARKG) 0.1%.
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Apple stock rose 1.15% to 136.33, just below a 137.17 buy point from a cup base within a larger consolidation, according to MarketSmith analysis. The left side of the cup base represents a failed breakout from a cup-with-handle pattern in late April.
Apple stock has back-to-back gains of just over 1%, but volume has been well below average, which is not a great sign.
The relative strength line for Apple stock has improved in June, but is still below consolidation highs, let alone its January peak or August 2020 all-time high.
Potential buyers have to consider whether or not Apple stock will be a true leader. Even among megacap techs, the iPhone maker has been laggard.
Still, while AAPL stock has been sluggish in recent months, Apple earnings have not. The tech titan’s EPS surged 119% in the latest quarter on 54% sales growth.
Qorvo stock jumped 4.45% to 195.66 in heavy volume. QRVO stock is just below a 201.78 cup-base buy point. It reclaimed its 50-day line last week. Qorvo earnings growth has accelerated for three straight quarters.
Skyworks stock popped 4.5% to 190.95 in its third straight gain in above-average trade. SWKS stock has a 204.10 buy point in a consolidation next to another consolidation.
Broadcom stock edged up 0.9% to 477.12. The chip-and-software giant is less exposed to Apple than Qorvo and especially Skyworks. But it’s just below a 478.50 handle buy point in a four-month consolidation. Broadcom boasts four quarter of accelerating earnings growth and five quarters of faster sales gains.
On Tuesday, Barclays raised its QRVO stock price target to 220 from 210 and its SWKS stock PT to 200 from 185. It kept a 525 price target on AVGO stock. Barclays is overweight Qorvo and Broadcom, with Skyworks at equal weight.
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Market Rally Analysis
The stock market rally had a relatively quiet session, but the Nasdaq and S&P 500 hit fresh highs while the Dow Jones held above its 50-day line.
A quiet day is especially healthy for the Nasdaq, which is 5% above its 50-day line. The Nasdaq 100, including Apple and other big-cap members, is 5.6% above its 50-day line. When the Nasdaq gets 6% or more extended from its 50-day line, it’s getting a bit extended. That raises the risk of a pullback, along with the odds that any such pullback will be larger. Of course, as the Nasdaq showed in August 2020 and earlier this year, the tech-heavy index can get a lot more extended, for a lengthy time, before retreating considerably.
Only a few new buying opportunities appeared Tuesday, but there have been dozens of breakouts, early buy signals and aggressive entries over the last several days and weeks. A number of stocks, including Apple, moved closer to buy points. The broader market’s flat finish meant that Tuesday’s winners got an extra RS line boost.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
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