Stock futures settled into narrowly mixed trade ahead of Tuesday's open, after President Donald Trump on Monday declared a state of emergency in Washington, D.C., on Monday and the Pentagon called up 10,000 troops for deployment to the capital. Electric vehicle makers Tesla and Xpeng were poised for early rebounds. Rent-A-Center, Shopify and Datadog hovered near buy points. And Walmart led the Dow Jones today, after announcing plans to launch a fintech startup.
XDow Jones futures shed the bulk of their early gain to trade flat. S&P 500 futures eased to less than 0.1% above fair value. Nasdaq 100 futures erased early losses and slipped into the red on the stock market today. Baidu (BIDU), Tesla (TSLA) and Nvidia (NVDA) all held top slots on the Nasdaq 100.
Small caps modestly outpaced the early action, with Russell 2000 futures up 0.6% as WW International (WW), the old Weight Watchers, rallied 6.7%. Luminex (LMNX) jumped 5.9% after guiding fourth-quarter and 2021 revenues above analyst targets.
The Nasdaq led the market's pullback on Monday, pausing for at least some brief consolidation after flashing some mild signs of overheating after its 15.4% fourth-quarter rally. While investors appeared to rotating away from growth stocks, many leaders still had a good day, sending the Innovator IBD 50 ETF (FFTY) up 1% in its third-straight advance.
On Tuesday, the top of the S&P 500 showed a healthy mix of stocks. Insurer Aflac (AFL) leapt 4.7% after Morgan Stanley upgraded the stock to overweight. Aflac shares ended Monday less than 5% below a 46.53 buy point in a flat base.
Dow Jones Today: Walmart To Jump Into FinTech
Walmart (WMT) climbed higher on the Dow Jones today, up 1.3%, after announcing it would launch a fintech start-up in partnership with Ribbit Capital. Ribbit is one of the venture capital firms backing the online trading platform Robinhood. CNBC reported the company's board would include Walmart U.S. Chief Executive John Furner, Walmart Chief Financial Officer Brett Biggs and Ribbit Capital managing partner Meyer Malka. The company planned growth through acquisitions and partnerships.
Walmart shares rose 22% in 2020. They are up 2.2% so far in January.
Goldman Sachs (GS) also pounced higher on the Dow, up 1.2%, after JPM Securities raised the stock's price target to 320 from 285 ahead of Goldman's fourth-quarter report on Jan. 19. Goldman stock is working on 11 straight weekly advances, and is up more than 30% following a breakout in November.
S&P 500: Tesla, Enphase
Tesla traded high on the S&P 500. So did Enphase Energy (ENPH), up 2.6% after Truist initiated coverage with a buy rating and a 254 price target. Oil issues also bolstered early action, with Occidental Petroleum (OXY) and Marathon Oil (MRO) trading among the S&P 500's top 10 advances.
Emergent BioSolutions (EBS) climbed 3.8%, after updating its full-year 2020 earnings and revenue outlook to above forecasts.
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Stocks to watch for Tuesday include Rent-A-Center (RCII), which ended Monday in a buy range above a 41.52 buy point in a bullish ascending base pattern. Shopify (SHOP) has been bobbing over and under a buy point at 1,147.01. Datadog (DDOG) is hunkered down just below a 111.59 buy point in a cup-with-handle base.
Central Garden Pet (CENTA) is trading below several potential buy points. The standard entry would be a 41.20, but the stock is also shaping a possible handle, which could provide a lower entry point.
China Stocks In Motion: Baidu, Futu
China-based stocks once gain flashed early signs of strength. Baidu led the Nasdaq 100, up 3%. But Baidu's positive premarket trade on Monday devolved into an 8.6% drop during the regular session.
On the IBD 50 list, Futu Holdings (FUTU) rallied 7%. The online trading platform soared more than 31% above a 51.20 buy point after a breakout last week, then pulled back almost 5% on Monday. The stock has technically triggered the eight-week hold rule for the second time in two months, a rarity. But the nature of the Chinese initial public offering gives that hold rule some specific qualifications of which investors should be aware.
Bitcoin Approaches $36,000; Marathon, MicroStrategy Jump
Bitcoin rebounded more than 6%, trading above $35,600 early Tuesday, according to CoinDesk. That was up from an early low around $30,525, but still below Friday's high at $41,529. Despite the pullback, Bitcoin remains up almost 22% since the start of January, after rallying more than 50% in December.
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Among Bitcoin-related stocks, Marathon Patent Group (MARA) bounced 8% higher. MicroStrategy (MSTR) took a 4.1% bounce. IBD Leaderboard stock PayPal Holdings (PYPL) rose 0.8%. PayPal stock is extended, up a bit more than 10% since clearing a cup base buy point at 215.93.
State of Emergency, Troops Called Up
On Monday, President Donald Trump declared a state of emergency in Washington, D.C. The order enables the Federal Emergency Management Agency and Department of Homeland Security to mobilize federal resources, "to save lives and to protect property and public health and safety, and to lessen or avert the threat of a catastrophe in the District of Columbia."
The city itself had been under a state of emergency ordered by Mayor Muriel Bowser, since pro-Trump supporters ransacked the Capitol building on Wednesday. The Secret Service and Department of Homeland Security have broadened their National Special Security Event status due to security concerns in the lead-up to the Jan. 20 inauguration of Joe Biden and Kamala Harris.
The Military Times reported Monday the Defense Department had called up 10,000 National Guard troops into the city, and had authorized more.
"Right now we have 10,000 inbound and we're authorized to go to [15,000]," National Guard Bureau Chief Gen. Daniel Hokanson told the Times. Hokanson declined to say whether the troops would be armed, but said plans were to "work very closely" with law enforcement to determine if there is a need for that, the Times reported.
25th Amendment, Impeachment, FBI Warning
The House today will vote today on a resolution calling on Vice President Mike Pence to "convene and mobilize the Cabinet to activate the 25th Amendment to declare the President incapable of executing the duties of his office, after which the Vice President would immediately exercise powers as acting President." A blog from historian Heather Cox Richardson notes the resolution does not address the physical or mental health of the president, but focuses instead "on his inability to fulfill his duty to respect the legitimate results of the Presidential election," and to accept the peaceful transfer of power.
If Pence does not act on the resolution by Wednesday, House Leader Nancy Pelosi said the House will take up impeachment proceedings. The House could impeach as early as this week. The Senate does not fully reconvene until Jan. 19, suggesting a trial would not occur to potentially follow up the impeachment with a conviction until after Biden has taken over the presidency.
Acting Homeland Security Secretary Chad Wolf resigned late Monday, ceding control of one of the key departments overseeing security for the inauguration to Federal Emergency Management Agency head Pete Gaynor. Gaynor has officially been in his role at FEMA since January 2020. Wolf is the third Trump cabinet member to resign since last Wednesday's events at the Capitol. The White House, Justice Department, FBI and Department of Homeland Security have provided no briefings in the interim.
ABC News reported that a memo from the FBI warned government agencies about "far-right extremist groups" planning demonstrations at all 50 state capitol buildings during the Jan. 16-17 weekend, ahead of the Jan. 20 inauguration. Information said groups could storm government offices, A statement released by the FBI said, "Our focus is not on peaceful protesters, but on those threatening their safety and the safety of other citizens with violence and destruction of property."
EV Makers: Tesla, Xpeng Climb
Luxury electric automaker Tesla bounced 3% in early trade, after a 7.8% retreat on Monday snapped an 11-day win streak. Monday's Big Picture noted: The electric vehicle maker's skyrocketing move since mid-November has given it a market capitalization close to $770 billion, making it the sixth-largest company on the Nasdaq. Thus, Tesla's 7.8% slide Monday was a big influence on the index, and will continue to be one.
Tesla currently represents 5.5% of the Nasdaq 100's weighting, just behind Amazon.com (AMZN), Microsoft (MSFT) and Apple (AAPL). Tesla shares have been flashing some signals of a possible climax top.
Among other EV makers, China-based Xpeng (XPEV) clawed up 3.5% after entering into a $1.98 billion credit agreement, with plans to use finds to support and expand its operations. Xpeng stock has been hugging its rising 50-day line, attempting to climb off the floor of a seven-week, 50% deep correction. Shares are up about 196% from their August initial offering.
Dow Jones Today: Chevron Follows Oil Prices Higher
Chevron moved up 1%, trading high on the Dow Jones today, as West Texas Intermediate oil prices climbed to their highest level since late February. WTO moved up 0.6% to $52.84 per barrel, after International Energy Agency Executive Director Fatih Birol told Bloomberg that U.S. shale oil was necessary in the short-term to fill the global gap in supply versus demand.
But Birol warned that shale producers should not underestimate the electrification of the transportation sector, and should be cognizant of crude's declining share of the future global energy mix.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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