The Dow Jones Industrial Average jumped as much as 339 points early Tuesday after the European Union agreed to a coronavirus stimulus package, as the stock market rally continues. Dow Jones stocks Coca-Cola and IBM rallied on earnings results.
XBlue chip stocks Apple (AAPL) and Microsoft (MSFT) fell 0.7% and 1.1% in today’s stock market. Dow Jones stocks Coca-Cola (KO) and IBM (IBM) rallied 2% and 1%, respectively, on earnings reports. Stocks in buy zones are IBD Leaderboard stocks Lululemon (LULU) and Vertex Pharmaceuticals (VRTX).
Dow Jones Today: EU Coronavirus Stimulus
The Dow Jones industrials rallied 1.1% early Tuesday, while the S&P 500 rose 0.4%. The tech-heavy Nasdaq composite reversed lower to fall 0.6%, as it continues to trade near another record high amid a recent pullback.
Late Monday, the European Union agreed to create an $858 billion recovery fund to help member nations recover from the economic impact of the coronavirus.
|U.S. Stock Market Today Overview|
|Last Update: 10:30 AM ET 7/21/2020|
Among exchange traded funds, Innovator IBD 50 (FFTY) lost 0.8% Tuesday morning. The ETF of top growth stocks is about 2% off its 52-week high. The Nasdaq 100-linked Invesco QQQ Trust (QQQ) ETF moved down 0.8%. Meanwhile, the SPDR S&P 500 ETF (SPY) gained 0.45%.
The coronavirus outbreak continues to spread across the U.S. According to the Worldometer data tracker, the cumulative number of confirmed U.S. cases topped 3.9 million Tuesday. On Friday, daily new cases hit another record at more than 74,000. However, while daily new cases continue to surge, there has yet to be a corresponding rise in the number of daily deaths, a key metric to monitor.
The cumulative total of Covid-19 cases confirmed since the start of the outbreak worldwide topped 14.8 million Tuesday, with more than 614,000 virus-related deaths.
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Coronavirus Stock Market Rally
According to IBD’s The Big Picture, the coronavirus stock market rally remains in an uptrend after rebounding from lows nearly four months ago on March 23. The major stock indexes confirmed the rebound as a new uptrend on April 2.
Per Monday’s The Big Picture, “Either way, the Nasdaq’s brute strength and the quality of companies backing this leading index’s phenomenal recovery from the February-March sell-off proved highly timely. After all, quarterly reports and new outlooks on earnings and sales for many S&P 500 companies and smaller firms will flood the market the next few weeks.”
Stocks to watch include the top stocks on IBD Long-Term Leaders, which focuses on companies with stable earnings growth and price performance.
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Within the coronavirus stock market rally, the tech-heavy Nasdaq is up 20% for the year through Monday’s close. Meanwhile, the S&P 500 is up 0.7%, while the DJIA is down 6.5%, year to date, through the July 20 close.
Dow Jones Earnings: Coca-Cola, IBM
Coca-Cola jumped 2% after the company’s mixed results in the second quarter. The company topped earnings estimates, but missed on revenues.
Coke stock remains more than 20% off its 52-week high and is still below its long-term 200-day moving average line.
IBM stock gained 1% early Tuesday after the company’s better-than-expected earnings results late Monday. The company reported adjusted earnings of $2.18 per share on revenue of $18.1 billion. Wall Street expected IBM earnings of $2.06 per share on revenue of $17.4 billion, according to FactSet Research.
The Dow Jones stock is approaching a 135.98 buy point in a cup with handle with a 135.98 buy point, according to MarketSmith chart analysis. A key flaw is the stock’s lagging relative strength line, indicating sharp underperformance vs. the broad market. Another weakness is the stock’s 43 out of a best-possible 99 IBD Composite Rating.
Top Stocks Near Buy Zones: Lululemon, Vertex
New IBD Leaderboard stock Lululemon is in the 5% buy zone from a 324.86 buy point in a flat base according to MarketSmith chart analysis after Monday’s breakout. The 5% buy zone runs up to 341.10. Shares edged lower Tuesday morning.
According to IBD Leaderboard commentary, “Lululemon is still in buy range after a breakout from a flat base. It was added as a half position on Leaderboard Monday.”
IBD Stock Checkup shows Lululemon has a 90 out of a best-possible 99 IBD Composite Rating. The Composite Rating an easy way to identify top growth stocks is a blend of key fundamental and technical metrics to help investors gauge a stock’s strengths.
Among the other top stocks to watch, IBD Leaderboard stock Vertex Pharmaceuticals is in the 5% buy zone past a 295.65 entry in a flat base. The buy zone runs up to 310.43. Shares slid 3.7% early Tuesday, and are back below the entry.
Shares initially broke out past the buy point on June 23, but they had difficulty sustaining their upward trajectory. After a successful test of the 50-day moving average, shares jumped nearly 3% Monday to reclaim the buy point and move back into buy range.
Vertex boasts a best-possible 99 IBD Composite Rating due to its strong fundamental track record and impressive price action.
Both stocks were featured in this week’s Stocks Near A Buy Zone column.
Dow Jones Leaders: Apple, Microsoft
Among the top Dow Jones stocks, Apple moved down 0.8% early Tuesday, as the stock looks to add to Monday’s 2.1% advance. Shares are just 2% away from new highs after they reached an all-time high of 399.82 on July 13.
Shares are above the 20%-25% profit-taking zone from a cup with handle’s 288.35 buy point. Bullishly, the stock’s RS line is near new highs, indicating sharp stock market outperformance. The RS line measures a stock’s price performance vs. the broad market.
Software leader Microsoft lost 1.1% Tuesday morning, giving back a bit of Monday’s 4.3% gain. Shares are just 2% away from all-time highs.
The blue-chip giant is the top-performing Dow Jones stock in 2020, with a 34.2% advance through Monday’s close. It is also an IBD Leaderboard stock idea and an IBD Long-Term Leader.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.
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