Stocks slumped into the final session of 2020, as markets moved to wrap up what is generally a quiet day in the holiday-shortened trading week. China-based stocks reversed premarket gains as Alibaba threatened to snap its three-day rebound. Small caps Celsius and e.l.f. Beauty soared on index listing news. And Apple moved higher on the Dow Jones today, after a positive report on iPhone 12 sales.
The Dow Jones Industrial Average shed 65 points, opening down less than 0.1% as Boeing (BA) dragged at the bottom of the index. Walt Disney (DIS) and Boeing stock have so far posted the two largest gains among the Dow industrials during the fourth quarter.
The S&P 500 also dropped less than 0.1%, with cruise lines Carnival (CCL), Norwegian (NCLH) and Royal Caribbean (RCL) taking the heardest early hits. Western Digital (WDC) and Micron Technology (MU) topped the index, up 3.4% and 1.8%, respectively.
The Nasdaq slipped a fraction lower. Western Digital and Micro also led the Nasdaq 100 on the stock market today. Lam Research (LRCX), biotech Seagen (SGEN) and Zoom Video Communications (ZM) fell to the bottom of the index.
U.S. markets will be closed on Friday for the New Year’s holiday. Exchanges will operate on a normal schedule Thursday, although bond markets will wrap up early with a 2 p.m. ET close.
Stimulus Checks In The Mail, Jobless Claims Dip
The U.S. Treasury Department worked to distribute $900 billion in coronavirus relief funding, including $600 direct payments to many Americans, approved by Congress last week and signed by President Donald Trump on Sunday. Efforts to raise the $600 payments to $2,000 continued to lose traction on Thursday, as the GOP-controlled Senate held to its stance on limiting the additional debt.
First-time unemployment claims dipped to 787,000 during the week ended Dec. 26., according to the Labor Department, down for a second straight week. Economists had, on average, expected a rose to 830,000 new applications, vs. the 806,000 claims fielded in the prior week.
Dow Jones Today: Apple iPhone 12 Supercycle Intact
Apple (AAPL) gave up its premarket gains and dipped 0.2% on the Dow Jones today, moving to extend a two-day pullback. Shares are just below a cup base buy point at 138.08. Apple is an IBD Leaderboard stock.
Apple shares rose in premarke trade after a Wedbush report said iPhone 12 5G demand pointed above the brokerages “bull case” sales scenario for 2021. The iPhone 12 supercycle “reality is meeting the initial hype,” the note said, pointing to sales of more than 240 million, and possibly even 250 million, vs. initial bull case estimates for sales of 217 million.
China Stocks, Small Caps Active
China-based stocks turned sharply lower after the starting bell, with Baidu (BIDU) reversing its early gain and falling 0.4%. Online content provider Bilibili (BILI) tumbled 6.6%. Alibaba Group (BABA) dropped 1.2%, threatening to snap the three-day rebound that left it up 16.4% for the week through Wednesday. JD.com (JD) downshifted 2%. The iShares MSCI China ETF (MCHI) gained 0.4% in early trade.
Ore miner Freeport McMoRan (FCX) shed its early gain and dropped 2.3%. Freeport joined IBD’s SwingTrader stock lineup on Wednesday, as it jumped 7.2% to break out above a 25.53 buy point in a three-weeks-tight pattern.
Among small caps, fitness drink maker Celsius (CELH) spiked 11% on news that Standard & Poor’s would add the stock to its S&P Smallcap 600 Index on Jan. 7. S&P also announced it would add e.l.f. Beauty (ELF) to its small cap index, sending e.l.f. shares up 6%.
Bitcoin Hits High Above $29,000
Bitcoin backed off early highs above $29,000, according to CoinDesk. The cryptocurrency has jumped nearly 50% since the start of December, with a year-to-date gain of more than 300%. Bitcoin-related plays gave up some ground in early trade. MicroStrategy (MSTR) flipped its premarket gain to a 0.6% decline. Overstock.com (OSTK) dropped 4%. Marathon Patent Group (MARA) — up 73% for the month through Tuesday — jumped 1.5%.
IBD Leaderboard listing Paypal Holdings (PYPL) eased 0.6% in early action. PayPal shares are extended above a 215.93 buy point, rallying after it launched a cryptocurrency trading service in late November.
Coronavirus Update: New Cases, Deaths Slow
Coronavirus cases worldwide climbed above 83.17 million. Covid-19 deaths topped 1.81 million. Coronavirus cases in the U.S. have hit 20.21 million, with deaths rising above 350,000 as of Wednesday.
Data collected by Worldometer suggest the growth rate for both new coronavirus cases and deaths slowed in the U.S. during December. The average daily number for new cases on Wednesday was 234,550, up 43% from the beginning of the month. That’s a big jump, but far below November’s 100% increase and the 90% leap seen in October.
Virus-related deaths in the U.S. rose to 3,880 on Wednesday. That lifted the seven-day average to 2,363 deaths — a 55% surge since the start of December. That marked a slowdown from November’s 78% increase. Deaths in October had risen 17%, following a 22% decrease in October.
Deaths had accelerated during December, then declined after a Dec. 22 peak. However, there could be inconsistencies in data reporting for the month. Some authorities contend that the December numbers may be skewed, with issues linked to the holidays causing a decline in reporting after Dec. 22.
Dow Jones Today: The Q4 Surprise
The Dow Jones today rolls into the final session of what has been a deeply ambivalent year for the market. The Nasdaq is set to post one of the five biggest gains in its history, up 43.4% through Wednesday. However, the Dow’s 6.6% gain year-to-date gain puts the year in the positive, but so-so category. The Dow’s strongest gain since the turn of the century was a 26.5% advance in 2013.
The industrials saw a 9.5% rise so far for the fourth quarter. That’s a strong performance but, again, not setting any records. However, the same is true of the Nasdaq, up 15.2% in the fourth quarter, and the S&P 500, which is up 11%.
Still, a closer look shows some surprising performances within the Dow during the fourth quarter. Seven Dow Jones stocks have rallied more than 20% during the quarter through Wednesday. Those performances may give some sense of where the blue chip momentum lies as the market heads into the new year.
Over the past 13 weeks, the Dow’s biggest advancer has been Walt Disney (DIS). The stock has a 25.6% gain for the full year, but is up 46% since Sept. 30. That gain included a couple of jumps that qualify as breakouts. One was above a double-bottom base buy point at 131.46 on Nov. 9. The other, on Dec. 11, was a breakout past a 153.51 buy point in a year-long cup base. IBD MarketSmith chart analysis recognizes both bases: the double-bottom on a daily chart, and the cup base on a weekly chart. The stock is extended above both buy points.
Blue Chip Breakouts: Visa, Goldman Sachs
The Dow’s second-largest advance during the fourth quarter has come from Boeing (BA). Still reeling from the pandemic drop off in travel demand, Boeing has a year-to-date loss of 33.5%. But the progressing revival of the company’s 737 Max aircraft has peeled back one level of catastrophe for the company, helping send Boeing shares up more than 31% since Sept. 30. Boeing stock remains value investor territory for now. But its current consolidation could shape a valid base and buy point worth watching.
JPMorgan (JPM) and Goldman Sachs (GS) have climbed 30.2% and 29.1%, respectively, so far in the fourth quarter. JPMorgan remains down 10% for the year. However, Goldman Sachs is up 13.1% for the year, has had the stronger chart, and is currently sitting atop a nine-week runup. That rally included a breakout from a 17-week saucer base on Nov. 23.
Leaderboard stocks Apple and Microsoft have the Dow’s strongest advances for the year. And both stocks are currently sitting just below buy points in valid bases. Visa (V), up more than 16% for the year and with a 9% advance in the fourth quarter, is attempting to breakout from what could be read either as a flat base or as a handle to a consolidation going back to early September.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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