Stock futures ran higher Tuesday, with the Dow industrials set to affirm their lead over the market in the first trading session of June. May manufacturing data and electric vehicle sales boosted China stocks. Oil prices surged ahead of an OPEC production meeting. Boeing rallied atop the Dow Jones today, lifted by an analyst upgrade.
Energy issues dominated the top of the S&P 500 as oil prices jumped to their highest level in more than 30 months. Oil stocks held seven of the index’s top-10 early gains.
IBD SwingTrader stock Norwegian Cruise Lines (NCLH) was also an early riser on the S&P 500. Norwegian shares popped 2.3%. Shares ended Friday about 8% below what IBD MarketSmith analysis charts as a 34.58 buy point in a 13-week consolidation.
On the Nasdaq 100, China-based Pinduoduo (PDD) jumped 4.6%. JD.com (JD) climbed 3.2%. Baidu (BIDU) added 2.6%. All three stocks have been beaten down, but Baidu and Pinduoduo are wrestling to retake key levels of technical support.
Data analytics leader Cloudera (CLDR) spiked 25% in premarket after agreeing to be taken private in a $5.3 billion deal with private equity firm Clayton, Dubilier & Rice.
Shares of AMC Entertainment (AMC) rocketed 15% higher after a social media-fueled short squeeze forced shares 116% higher last week.
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Amgen rose more than 2% after announcing a production/development deal with Japan-based Kyowa Kirin. Amgen will manufacture and commercialize Kyowa’s developing anti-OS40 treatment for atopic dermatitis. The drug is reportedly ready for phase-three trials, after successful phase-two results were announced in February.
Amgen stock is basing, but volatile, ending last week in a test of 40-week support in a five-week flat base.
Boeing swung 1.8% higher, boosted by an upgrade to outperform from Cowen. The note placed a buy point at 290, 17% above where shares ended on Friday. FAA oversight issues and China’s still-pending approval of 737 Max flights could pressure 2021 results, but the outlook for 2022 was much brighter.
Boeing stock is back above key levels of technical support, starting up the right side of a an 11-week consolidation. The pattern shows potential buy points at 260.58 and 278.67.
China, Europe Get PMI Data Lift; U.S. On Deck
Purchasing managers index reports released by researcher Markit showed a “new record improvement” in eurozone manufacturing, while factory activity in China showed “the strongest increase in new work for five months.”
Markets in China gained, with Hong Kong’s Hang Seng Index rallying more than 1%. Stocks in Europe were sharply higher near midday, with Frankfurt’s DAX rallying 1.4% and the FTSE 100 in London riding a 1.1% gain.
Markit is due to release its U.S. manufacturing report at 9:45 a.m. ET. The Institute for Supply Management reports its May U.S. manufacturing PMI at 10 a.m. ET. The Commerce Department also releases construction spending data for April at 10 a.m. ET.
China EV: Nio Reports May Deliveries
China’s hot EV sector began reporting manufacturing and delivering numbers for May.
Nio rallied 4% after the company reported a 95% increase in deliveries. Semiconductor shortages pressured “several days” of manufacturing, but the company can potentially make up that difference in June, management said.
Xpeng shares popped 4.7%. Li Auto (LI) traded 2.8% higher. All three stocks are working to recover, deep within multi-month consolidations.
Oil Prices Surge: OPEC Meeting, Iran Deal
Crude oil prices surged, with West Texas Intermediate oil futures up 2.7% to above $68. That broke past their March high for the year, moving to the highest level for oil WTI since October 2018.
An outlook from the Organization of Petroleum Exporting Countries sees global markets tightening, the surfeit produced by the Covid-19 impact largely gone, and oil inventories headed below tight average levels seen in 2015-2019.
The group meets virtually later today to discuss production quota changes. Under the current OPEC+ agreement (including Russia and other partners), production is set to increase by 350,000 barrels per day in June and by 441,000 bpd in July.
Negotiations with Iran are also a factor in oil price action. Efforts to reactivate the 2015 Joint Comprehensive Plan of Action ran into a snag when International Atomic Energy Agency released on Monday a report saying Iran had failed to explain nuclear material particles at several inspection sites, according to Al-Jazeera. An reinstated agreement with Iran would mean increased global oil supply, pressuring prices lower.
Bitcoin Ebbs After A Tough May
Bitcoin recovered to a high just below $38,000 on Monday, then backed off, falling back below $36,500 early Tuesday, according to Fintech Zoom. Bitcoin dropped almost 36% in May. The cryptocurrency remains up about 26% since the start of the year.
Dow Jones Today: Carries Lead Into June
The Dow Jones today jumps into the first trading day of June sitting on a four-month advance, after wrestling to a 1.8% advance in a difficult May. The S&P 500 managed a 0.55% advance. The Nasdaq Composite dropped 1.5%, snapping its six-month rally.
May was mixed for small caps. The Russell 2000 struggled to a 0.1% gain, just enough to maintain its eight-month run up. Meanwhile, the S&P Smallcap 600 stepped off a 2% gain, also adding an eighth up-month, but still finishing 2% below its record high from March.
May was a tough month for growth stocks, but ended on a positive note. The IBD 50 index fell 2.5% for the month, losing ground in three of five months since January. But the index rallied 2.5% in the final week of the month, ending a four-week decline and finishing just a fraction back above the index’s 50-day moving average.
The Innovator IBD 50 ETF (FFTY) slumped 3.6% in May. But it also ended on a strong note, surging 3.5% last week. The fund ended Friday snug up against the underside of its 50-day moving average, positioning the chart for a test of resistance as growth stocks enter the month of June.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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