Stocks slipped at Tuesday’s starting bell, threatening to put a damper on the market’s two-day bounce, despite strong early moves from AmerisourceBergen (ABC) and a handful of China-based stocks.
XThe Dow Jones industrial average, S&P 500 and the Nasdaq composite all opened down 0.4%.
In global stocks, China’s markets picked up on the U.S. rally and retook lost ground ahead of their weeklong Lunar New Year holiday, which begins Friday. Hong Kong’s Hang Seng index popped 1.3%, while the Shanghai Composite rallied 1%. The Shanghai exchange will close Thursday through Wednesday. Hong Kong’s exchange will be closed Friday and Monday.
In Japan, the Tokyo Stock Exchange reopened after Monday’s holiday, with the Nikkei 225 stumbling 0.7%.
Europe’s markets remained mixed in afternoon trade. Frankfurt’s DAX and the CAC-40 in Paris were down 0.2% and 0.1%, respectively. London’s FTSE 100 held a 0.1% gain.
3M Leads, Microsoft Lags On Dow; Under Armour, China Names Surge
On the Dow, Microsoft (MSFT) dropped 1.4%, heading up the early downside. Shares have been finding support at their 10-week line, just after clearing a flat base in December.
Mega-cap 3M (MMM) took over the early lead among Dow Jones stocks, rising 0.7%. The stock is looking to add a third day to its rebound from support at its 200-day moving average.
Medical system and supply names posted the deepest losses among S&P 500 stocks, after Amazon.com (AMZN) announced plans to expand its medical supplies business across the hospital supply chain. Henry Schein (HSIC) dived 10% and Patterson (PDCO) dropped more than 8% in opening trade.
Vertex Pharmaceuticals snapped up 2%, to the top of the Nasdaq 100, after the Food and Drug Administration approved the company’s Symdeko to treat cystic fibrosis. Vertex said it would begin shipping the drug this week. Vertex shares had pulled back more than 8% below a 167.95 buy point, triggering the automatic sell rule. Shares have been testing support at their 10-week moving average.
Drug wholesaler AmerisouceBergen spiked 11% in premarket action, after news reports said the company was in talks with Walgreens Boots Alliance (WBA) regarding a possible takeover. Walgreens owns 26% of the company, which holds a market capitalization of more than $19 billion. During the market sell-off, AmerisourceBergen had pulled back 9% below a buy point at 94.54. That triggered the automatic sell rule. The stock opened back above that entry on Tuesday, but the market’s correction means the move is not a valid breakout.
Walgreens shares rose 2% in early trade. Its shares are trading deep in a yearlong consolidation. AmerisourceBergen competitors Cardinal Health (CAH) and McKesson (MCK) dropped 4% and 2%, respectively, in early trade.
Under Armour (UAA) grabbed a 16% gain, despite a mixed fourth-quarter report, as revenue came in stronger than expected. Shares ended Monday up 25% from a November low, and down 73% from its September 2015 peak.
China-based names were early leaders, with IBD 50 name Weibo (WB) up 5% after an across-the-board fourth-quarter beat. Weibo shares are testing support at their 10-week moving average, after falling more than 8% below a 122.31 buy point and triggering the automatic sell rule.
Sina (SINA) rolled ahead 5% after a generally strong fourth-quarter report. Sina, which holds a controlling stake in Weibo, also fell more than 8% below its 119.30 cup-base buy point, making it also subject to the automatic sell rule.
Vipshop Holding (VIPS) swung 4% higher. The online retailer turned in its fourth-quarter report late Monday, topping analysts’ earnings and revenue targets, and raising its first-quarter revenue guidance above expectations.
Oil, Bitcoin Slip: Natural Gas, Bonds, Copper Rise
Crude oil traded lower, after posting a 0.2% gain Monday — just enough to snap a six-day downtrend. U.S. benchmark crude was down 1% in early action, trading below $59 a barrel. Among other commodities, natural gas popped 2% — looking for a rebound after falling hard in nine of 10 recent sessions. Copper rose more nearly 2%, after posting a 1.7% gain Monday.
The dollar pulled back against the euro, and slipped to a five-month low vs. the yen. Bonds gained ground, trimming the 10-year yield two basis points to 2.83%.
Bitcoin slipped to near $8,600, down 3% from Monday’s high. Bitcoin- and blockchain-related stocks were generally quiet:
- Riot Blockchain (RIOT): down 5.6%
- Bitcoin Investment Trust (GBTC): down 1.6%
- Mara Patent Group (MARA): unchanged
- Overstock.com (OSTK): down 0.1%
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