The Dow Jones Industrial Average gained ground Monday even as hurdles emerged over a new debt plan by House Speaker Mike Johnson to avert a government shutdown. Meanwhile, famed investor Cathie Wood snapped up a plunging stock. And Tesla (TSLA) rallied amid a Cybertruck move while other Magnificent Seven stocks such as Nvidia (NVDA) and Apple (AAPL) were mixed.
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A trio of noteworthy names attempted breakouts despite the mixed action. Leaderboard play Sprott Uranium Miners ETF (URNM), PTC (PTC) and Camtek (CAMT) all tested entries.
Stocks struggled early after Moody’s Investors Service on Friday cut its outlook on U.S. debt to negative from stable. The firm cited high budget deficits and political polarization as the reason for the move. While it retained its AAA rating on U.S. sovereign debt for now, future progress on these issues is key.
Johnson Debt Plan Meets Resistance
But there is already trouble emerging after new House Speaker Mike Johnson unveiled at the weekend a two-step plan to avert further government shutdowns. A Nov. 17 deadline now looms large.
“This two-step continuing resolution is a necessary bill to place House Republicans in the best position to fight for conservative victories,” Johnson said. He also claimed the bill will stop “absurd” tradition of “massive, loaded-up spending bills introduced right before the Christmas recess.”
The stopgap bill would fund some agencies and programs until Jan. 19 and others until Feb. 2.
His proposal already faces opposition from a group of conservative lawmakers that includes Rep. Marjorie Taylor Greene, R-Ga., and Rep. Chip Roy, R-Texas.
And White House Press Secretary Karine Jean-Pierre said in a written statement that the proposal “is just a recipe for more Republican chaos and more shutdowns.”
Nasdaq Struggles As Growth Stocks Shine
Among the major indexes, the tech-heavy Nasdaq struggled and gave up slight ground. Electric-vehicle stock Lucid (LCID) outperformed with a near 6% gain. Meanwhile, Warner Bros. Discovery (WBD) was a laggard as it fell nearly 3% after Guggenheim analyst Michael Morris flagged worries over its lack of NFL coverage.
The S&P 500 was roughly flat. DaVita (DVA) rallied more than 7%, though it remains well off recent highs.
The S&P 500 sectors were mixed. Energy and health fared best on the stock market today. Real estate and utilities were the worst performing areas.
Small caps were mildly positive, with the Russell 2000 up slightly. Growth stocks excelled, though, with the Innovator IBD 50 ETF (FFTY) up almost 1%.
Dow Jones Today: Disney Earnings Boost Stock
The Dow Jones fared best out of the major indexes, but it turned in only a modest gain of nearly 50 points, or 0.1%.
Boeing (BA) was the top performer, rising nearly 5%. It was lifted after Emirates announced a $52 billion order for 95 Boeing aircraft.
The aerospace giant also got a boost from a Bloomberg report that China may end its commercial freeze on the purchase of Boeing 737 Max jets. The news emerged ahead of the meeting between U.S. President Joe Biden and China leader Xi Jinping at the Asia-Pacific Economic Cooperation in San Francisco this week.
On the flip side, Nike (NKE) and Intel (INTC) lagged most on the Dow Jones today.
Cathie Wood Snaps Up Trade Desk Stock After Plunge
Big-name investors are often brave enough to buy on the dip. And famed Ark Invest Chief Executive Cathie Wood certainly showed some courage as it was reported she snapped up a plunging digital ad firm.
Trade Desk (TTD) fell by as much as 22% on Friday on a post-earnings crash. But that was not enough to stop Wood’s ARK Innovation ETF (ARKK) from snapping up just shy of 543,000 that same day. Third-quarter earnings and revenue edged Wall Street views but the company’s own outlook came in well below views.
TTD flashed a sell signal Friday by falling away from the 50-day line and plunging below the 200-day moving average, MarketSmith analysis shows. This is a distinctly bearish look.
Wood’s ARKK fund also recently snapped up nearly 208,000 shares in Unity Software (U) and sold about 712,000 shares of Leaderboard name DraftKings (DKNG)
While raking around for bargains can be tempting, IBD recommends buying stocks with strong earnings and price performance rather than laggards. Look for leaders in strong industries that are showing superior earnings growth and sales.
Magnificent Seven: Tesla Stock Gains Amid Cybertruck Move
Tesla stock topped the so-called “Magnificent Seven” list today. It was up after new terms of its Cybertruck order agreements say that buyers cannot sell the vehicle within the first year of ownership without permission from the Elon Musk-led firm.
The document states Tesla “may seek injunctive relief to prevent the transfer of title of the vehicle or demand liquidated damages from you in the amount of $50,000.” It also said Tesla may opt to refuse to sell violators of the agreement any future vehicles.
TSLA stock was near highs for the day, rising nearly 5%. It looks on the verge of closing back above its 200-day moving average. It is now up nearly 110% for the year so far.
Nvidia was another of the Magnificent Seven stocks having a solid session. It rose 0.8%. It gained amid the news it has unveiled its H200 Ai chip. It can generate output at almost double the speed of its current H100 chip.
It is trading in a buy zone above a double-bottom entry of 476.09, MarketSmith analysis shows.
Meta Platforms (META) gained nearly 1% while Google parent Alphabet (GOOGL) was roughly flat.
Other Magnificent Seven stocks were lower. Microsoft (MSFT) and Apple lagged most with near 1% dips. AAPL is well shy of a 198.23 entry while MSFT is in a buy zone above a 366.78 entry. Amazon.com (AMZN) fell fractionally.
Outside Dow Jones: 3 Stocks Test Entries
With the market in a confirmed uptrend, investors should be looking out for breakouts.
The Sprott Uranium Miners ETF is just below its buy point after earlier testing a cup-with-handle entry of 47.77. URNM is in the top 4% of issues in terms of stock market performance over the past 12 months. It is also a member of the prestigious IBD Leaderboard list.
Also PTC stock is in a buy zone after clearing a consolidation entry of 152.09. The relative strength line hit fresh heights, an encouraging sign. Overall performance for the software stock is strong, with its IBD Composite Rating coming in at 93 out of 99.
Camtek has cleared a consolidation pattern entry of 65.13. This is not ideal though, as earnings are due early tomorrow. Buying now would be risky.
An approach highlighted by Investor’s Business Daily is to use options as a strategy to reduce risk around earnings. It’s a way to capitalize on the upside potential of a stock’s move around earnings, while reducing the downside risk.
Please follow Michael Larkin on X, formerly known as Twitter, at @IBD_MLarkin for more analysis of growth stocks.
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