Stocks opened to narrow gains Tuesday, as chip stocks came under pressure, oil prices ticked higher and Nike (NKE) gained ahead of its earnings due after the close.
The S&P 500 struggled to hold a fractional gain. Oil names were prevalent, with oilfield equipment play TechnipFMC (FTI) leading and Helmerich & Payne (HP) and ConocoPhillips (COP) near the top of the index. Chip stocks were among the index’s strongest and weakest early moves.
The Nasdaq Composite toggled in and out of early losses. Satellite radio broadcaster NetEase (NTES) and NvidiaNVDA were early leaders. Facebook (FB) and chipmakers Analog Devices (ADI) and Microchip (MCHP) dropped more than 2% to the bottom of the list.
The Federal Open Market Committee launches its two-day meeting today in Washington Tuesday morning. Investors anticipate a rate hike announcement Wednesday afternoon, which would mark the year’s third increase. The press conference with Fed Chair Jerome Powell following the announcement will be closely scrutinized for guidance on how the Fed is estimating the impact on the economy from the U.S.-China trade war. They’ll also examine whether a fourth rate increase might do more harm than good.
Nike, Nvidia Jump, Facebook, IHS Market Stumble
Nike trimmed its early gain to 0.1%, ahead of its earnings report scheduled after the closing bell. The stock has scored a 2.5% gain so far in September, well behind its gains in June and August, but taking out new highs. A 1.5% dip on Monday left shares back in the buy zone above a flat base buy point at 81.10.
Nike is one of seven blue-chip stocks currently in buy zones, including Boeing and ExxonMobil (XOM).
KB Home (KBH), also due to report after Tuesday’s close, slipped 0.3% at the open. Its shares are attempting to scale up from a nine-month consolidation.
Financial data leader IHS Markit (INFO) fell 2% after reporting fiscal third-quarter results. A 2% earnings gain beat expectations for a slight loss. An 11% revenue rise also topped estimates, but full-year earnings guidance was below analyst targets. The stock is less than 5% above a 52.71 buy point in a six-week flat base.
Facebook dropped more than 2%, following news that Instagram founders Kevin Systrom and Mike Krieger were stepping down from the company. Facebook had acquired Instagram for $1 billion in 2012. Shares of Facebook are down 24% from their July high, and trading below key levels of support.
IBD Leaderboard stock Nvidia gained 0.9% in opening action. Shares have slipped to a test of support at their 50-day moving average, narrowly below a 269.30 buy point in a nine-week flat base.
Marijuana stock Tilray (TLRY) rebounded hard, up nearly 14% in early trade. The stock dived 19% on Monday, leaving shares down 67% from Wednesday’s high, but still 485% above their July IPO price. Among Tilray’s pot stock peers, Cronos Group (CRON) gained 1%, Canopy Growth (CGC) clocked a 3% increase.
Oil Prices Climb, Home Price Growth Slows
Housing markets receive an early double dose of economic news. The Case-Shiller 20-City Home Price Index for July rose 5.9% year-over-year, slower than June’s 6.3% increase and below expectations for another 6.3% gain.
The Federal Housing Finance Agency’s Housing Price Index rose 0.2% for July. That was equal to June’s gain, but below views for a 0.3% advance.
Oil prices pressed higher, with West Texas Intermediate up 0.6% to $72.48 per barrel. Europe’s Brent crude benchmark gained 0.9% to $81.95. Brent is trading near four-year highs. WTI is up almost 13% since Aug. 16, and less than 4% below its July peak above $75.
A decision over the weekend by the OPEC-Russia alliance not to increase production in order to compensate for supply trimmed by U.S. sanctions against Iran is helping to pressure prices higher.
That has some analysts forecasting Brent will hit $100. But BP’s head of Asian trading warned Tuesday that markets have not priced in damage to demand caused by the U.S.-China trade war.
The trading unit of Chinese refining giant Sinopec said Tuesday it had halted plans to increase imports of U.S. oil, as it assesses the impact of the trade war.
Stocks in Europe added to their early gains in afternoon trade. Asian markets were mixed with Tokyo up 0.3%, and Shanghai down 0.6%. Hong Kong was closed for a one-day holiday.