Stock futures rattled off moderate gains Monday, as earnings and analyst actions influenced early trade and the Nasdaq and Dow Jones industrials looked to extend seven-week rallies.
Tesla (TSLA), Boeing (BA) and Electronic Arts (EA) climbed after analyst upgrades. Restaurant Brands International (QSR) and business process outsourcer Insperity (NSP) both approached buy points following quarterly earnings reports.
Merger news also drove early action, as Morgan Stanley (MS) edged up after announcing it had agreed to buy Canada’s Solium Capital in a $900 million deal. NuVasive (NVUA), a surgical tools vendor, surged 15% on reports that it was in talks with U.K.-based Smith & Nephew (SNN).
Nasdaq 100 futures jumped 0.5%, while futures for the Dow Jones Industrial Average firmed up 0.4% above fair value. S&P 500 futures also added 0.4%.
Boeing jumped 1% to lead the Dow. Tesla and Electronic Arts led among Nasdaq 100 stocks. On the S&P 500, Electronic Arts led with a 4% gain, while Goodyear Tire (GT) and Nvidia were at the bottom of the list.
Dow Jones, Nasdaq Divided
The Dow Jones Industrial Average and the Nasdaq are both shooting to add an eighth week to their current rallies. The primary factor dividing the market at this point is the 200-week moving average. The Dow is holding support just above that line. The Nasdaq and S&P 500 have been unable to break above that line, indicating some potential resistance to the market’s current confirmed uptrend.
A break above the 200-day level by the Nasdaq and/or the S&P 500 would indicate positive momentum for the uptrend. A slip below the line by the Dow could increase the level of resistance holding back the uptrend.
For more detailed market analysis, read the Big Picture.
Deadlines: U.S. Shutdown, China, Brexit
Three important deadlines are bearing down on the U.S. and global economies.
In Washington, the federal government will go back into shutdown mode after midnight Friday if lawmakers fail to reach a budget compromise. Talks were reportedly stalled Monday, still hung up on details of immigration and border protection policy.
In the China trade war, tariffs on China-made goods valued at $200 billion per year are set to increase from 10% to 25% after March 1. China has said it would retaliate in equal measure. U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are scheduled to arrive in Beijing today to continue negotiations.
Britain is scheduled to exit the European Union on March 29. Britain’s opposition Labour and ruling Conservative parties are struggling to find common ground, in order to hash out an exit proposal both sides support and around which they can then negotiate with European Union commissioners. Britain is technically set to lose its preferred trade status as an EU member following the deadline. Data released Monday showed the U.K. economy turned in its worst economic growth in six years during 2018.
Tesla Upgraded, Insperity Eyes Buy Point
Tesla popped 2% in premarket trading. Canaccord Genuity upgraded the stock to buy, from hold, and cranked up its target price 36%, to 450. The note projected “a more stable 2019” for the company as its EV market penetration improves.
Tesla shares are attempting to start up the right side of a nine-week consolidation.
Kingwood, Texas-based Insperity bolted 8% higher. The provider of payroll, insurance and records-keeping services for businesses reported a 25% earnings gain and a 17% rise in revenue, both above analysts’ fourth-quarter estimates. Management boosted first-quarter and full-year earnings guidance well above forecasts.
NuVasive Suitor, Morgan Stanley Gets Cloudier
NuVasive spiked 15% after news reports late Friday said UK-based Smith & Nephew was in discussions to possibly acquire the company. The deal was loosely valued around $3 billion, according to London’s Financial Times. NuVasive provides tools and supplies used in spinal surgeries. Smith & Nephew shares slumped 5% in premarket trade.
Morgan Stanley edged up almost 1%, after reporting it would pay $900 million to acquire Solium Capital. Solium is a provider of cloud-based equity administration, financial reporting and compliance services. Solium’s client list includes Instacart, Levi Strauss and Shopify.
Burger King and Tim Hortons owner Restaurant Brands International surged more than 2%. Fourth-quarter earnings and revenue met or narrowly beat analyst targets. The stock ended Friday less than 3% below a 64.27 buy point in a seven-month cup-with-handle base.
Restaurant Brands holds an IBD Composite Ratings of 97, vs. a best-possible rating of 99.
UK, Europe, China Stocks Rally
China’s markets are back up and running following the week-long Lunar New Year holiday. The Shanghai Composite leapt 1.4%. The Shanghai Composite, which reopened for trade on Friday, rose 0.7%.
The Tokyo Stock Exchange was closed Monday for its one-day, National Founding Day holiday.
In the UK and Europe, markets rose despite weak GDP growth numbers out of the UK. Frankfurt’s DAX and the CAC-40 in Paris each soared 1.1%. London’s FTSE 100 was up 0.7% in afternoon trade.
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