Stock futures settled into modest gains Wednesday, despite another unexpected jump in inflation data, as investors awaited congressional testimony from Fed chief Jerome Powell. Skyworks and Roku rose near buy points. Some optimistic production news boosted Apple to the top the Nasdaq 100 and the Dow Jones today.
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Nasdaq 100 futures paced the early gains, climbing 0.7% after backing away from yet another new high on Tuesday. S&P 500 futures strengthened to a 0.3% advance, while Dow Jones futures notched a 0.2% gain. Small caps also leaned higher, with Russell 2000 futures trading 0.4% above fair value.
Momentum picked up in the second-quarter earnings season. Bank of America (BAC) and Blackrock (BLK) moved lower after their reports. Wells Fargo (WFC) aded 0.2%, Citigroup (C) jumped 1.8%. Delta Airlines (DAL) rose 0.9% after its report, as the stock looks to stem a four-week slide. American Airlines (AAL) also rallied, up 3.2% in early trade.
Apple’s news helped boost chip supplier Skyworks Solutions (SWKS), which jumped 2.3% in early action. The stock ended Tuesday 2% below a 193.74 buy point in an 11-week cup-with-handle base. Skyworks moved in April to decrease its dependence on Apple, agreeing to pay $2.75 billion for Silicon Labs (SLAB) automotive chips unit.
Jabil (JBL), which makes the cases for iPhones and other Apple products, climbed 1.2% Wednesday morning. Jabil shares have been feeling their way along a rising 50-day moving average, and are in the fifth week of a shallow consolidation.
High-end fitness maker Peloton (PTON) dropped 2.5%, suggesting a drop back below its 200-day moving average. Wedbush downgraded the stock to neutral, from outperform.
Perrigo (PRGO) rallied more than 4% to the top of the S&P 500. The company completed the sale of its generic drug business to Altaris Capital Partners for $1.55 billion. The sale shifts Perrigo from being a generic drug maker to a provider of self-care products and over-the-counter health and wellness solutions.
Also on the S&P 500, Newell Brands (NWL) climbed 2.1% after an upgrade to strong buy from Raymond James.
Apple Leads Nasdaq 100, Dow Jones Today
Apple (AAPL) climbed 1.9%, after Bloomberg reported the company was preparing its supply chain for 90 million iPhone units this year. The company has targeted 75 million units in recent years, and the larger number suggests expectations for additional demand following the pandemic.
Apple stock is narrowly extended, ending Tuesday 6% past a 137.17 entry in a flat base. The Dow Jones stock pushed past its prior record high on Friday, and is angling toward its seventh straight weekly advance.
Econ: Producer Prices Accelerate
Prices received by producers accelerated in June, with the Producer Price Index up 1% month-over-month. Economists had projected a 0.6% gain, down slightly from May’s 0.8% increase.
On a year-over-year basis, prices soared 7.3%, setting a new record for the largest increase in the gauge’s history. May had also set a record with a 6.6% rise. Consensus views project a 6.8% surge for June.
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The Fed’s Powell begins two days of congressional testimony today, going before the House Financial Services Committee at 12 p.m. ET.
Small Caps: Compass Surges On Lithium Find
Road salt supplier Compass Minerals (CMP) bolted 19% higher in premarket trade, leading the Russell 2000. The Overland Park, Kan.-based company announced late Tuesday it had identified a potential source of 2.4 million metric tons lithium carbonate equivalent at its solar evaporation site in Ogden, Utah. The company is assessing development options. The stock is attempting to build a floor in a two-month, 20% deep consolidation.
Vital Signs: Oil Prices, Bond Yields
Oil prices flattened early Wednesday, after rising in three of four recent sessions. West Texas Intermediate slipped a fraction to trade just above $75 a barrel. WTI oil futures ended Tuesday up 0.9% since Friday, after snapping a six-week advance last week.
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Interest rates will remain in investors’ radars, as Powell speaks and following a three-day rally. The 10-year bond yield rebounded from Thursday’s four-month low, settling Tuesday above 1.41% and up nearly 5% for the week. Early Wednesday, the 10-year yield pulled back sharply, to 1.37%.
Leaderboard: Roku, ASML Holding Rising
IBD Leaderboard stock ASML Holdings (ASML) added 2.2% in early trade. An eight-month advance has left shares with a year-to-date gain of 45%. The stock is rebounding from 10-week support, but Leaderboard is treating it as extended, after multiple rebounds.
Leaderboard listing Roku (ROKU) gained 0.9%. The maker of streaming entertainment devices said on Tuesday its ad-selling season was stronger than expected. Shares finished Tuesday 8% below what IBD MarketSmith analysis pinpoints as a 463.09 buy point in a deep 21-week cup-with-handle base. Leaderboard reads the stock as extended above a 463.09 buy point in a double-bottom base.
Roku and ASML Holding are also both IBD 50-listed stocks.
Dow Jones Bases: Goldman Sachs, United Health
Goldman Sachs (GS) has formed a six-week flat base with a potential buy point at 393.36. The stock is up almost 43% since the start of the year, and the base shows solid support at its 50-day/10-week moving average. It is also a bullish base-on-base pattern, built on top of a cup base formed in March and April.
UnitedHealth Group (UNH) remains a Dow Jones stock to watch. Shares are now working on a possible fourth straight weekly advance. That has moved them to within 2% of a 426.08 entry in what IBD MarketSmith analysis charts as a 10-week flat base.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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