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Dow Jones stocks and other major indexes licked their wounds and started climbing back Tuesday after a massive three-day sell-off. Among those sparking a recovery were Magnificent Seven players such as Nvidia (NVDA) And Metaplatforms (META). Meanwhile, famed investor Cathie Wood bought shares of Palantir Technologies (PLTR), which soared on the stock market today.
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Avoid the Crowd: Get Paid with the Contrarian Trade
The Dow Jones Industrial Average rose after the previous session’s painful decline. It rose almost 500 points, or 1.2%.
The tech-heavy Nasdaq composite rose 1.8%. Constellation Energy (CEG) was among the better performers, with an increase of more than 6%. Chinese e-commerce stocks PDD (PDD) also proved strong and rose by almost 6%.
And the benchmark S&P 500 also did well in early trading, up 1.7%. Rideshare shares Uber Technologies (UBER) was more than 9% higher thanks to better than expected results for the second quarter.
Meanwhile, the S&P 500 sectors were all in positive territory. Real estate and technology were the strongest, while energy and materials had the smallest gains.
Bears have been tearing apart small caps in recent sessions, but these stocks got some relief on Tuesday. The Russell 2000 rose 1.3%.
Growth stocks did even better. The Innovator IBD 50 (FFTY) the exchange traded fund was not at its peak, but continued to rise almost 3%.
Magnificent Seven: Google ruling hits Apple
The so-called Magnificent Seven stock group was anything but brilliant on Monday. According to Dow Jones data, they lost a combined $653 billion in market capitalization, the largest single-day loss as a collective.
The group of premium stocks tried to climb back into the stock market today. Nvidia benefited from strength in chips, rising nearly 5%. But the Leaderboard share remains almost 13% below the 50-day moving average.
Microsoft (MSFT) and Meta Platforms, Facebook’s parent company, also rose, up more than 2% and almost 5% respectively. Amazon reversed course and added more than 1%. Tesla also came out of the red and rose 0.7%.
Google parent Alphabet (GOOGL) And Apple (AAPL) struggled after U.S. District Judge Amit Mehta ruled yesterday that Alphabet’s Google is illegally maintaining a search monopoly. Alphabet fell lower, while Apple fell 0.4%.
According to Morgan Stanley, the ruling “will likely impact the more than $20 billion annually that Apple receives from (Google), although there was no clarity on possible future solutions/timeline.” However, it remains to be seen whether the ruling will stand as Google plans to appeal the decision.
What also hurt Apple was the lingering fallout from last weekend’s news Berkshire Hathaway (BRKB), led by Warren Buffett, has roughly halved its stake in the company.
Stock Market Today: These Issues Show Strength
It’s a good idea to look for stocks that are relatively strong amid the recent negative stock market action. Here are a few stocks whose relative strengths hit new highs today.
Hamilton Beach Brands (HBB) is in a buy zone after clearing a cup base entry of 25.24. The RS line climbed to a new high. It reported strong profits last week, but trading is sparse.
It has an EPS Rating of 80 out of 99 and ranks in the top 3% of issues in terms of price performance over the last 12 months.
Castle Biosciences (CSTL) also saw its relative strength line reach a new high. The medical services play has approved a consolidation entry of 25.91. This is a first phase pattern, a bonus.
The company beat earnings estimates on Monday. It went from a loss of 70 cents per share to a profit of 31 cents per share. Sales increased 74% to $87 million.
Given the current stock market conditions, it is currently not advisable to make new purchases. Instead, adding it to someone’s watchlist is a wiser approach.
10:55 am ET
Dow Jones Today: Caterpillar Swings Higher After Earnings
There was mixed action among the Dow Jones components, but a good majority of them were higher.
Caterpillar emerged as the best performer, trading up more than 4% after the industrial equipment titan beat earnings estimates.
Earnings rose 8% to $5.99 per share, while revenue fell 4% to $16.69 billion. Both were better than analyst expectations.
Caterpillar is recovering from the 200-day moving average, but remains below the 50-day line.
Other components that perform well are included Dow Inc. (DOW) And American Express (AXP), each of which increased by more than 3%.
The much talked about artificial intelligence stock, Palantir Technologies, was higher on the stock market today. This soared after the company posted second-quarter profits and revenue that exceeded Wall Street targets.
Earnings rose 80% to 9 cents per share, while revenue rose 27% to $678 million. The Denver-based company also raised its 2024 revenue guidance by about 2% to between $2.742 billion and $2.75 billion.
CEO Alex Carp said in a letter to shareholders that there is a “relentless wave of customer demand for artificial intelligence systems that go beyond the merely performative and academic.”
Still, there was some skepticism about the company among analysts.
“While second-quarter results are encouraging, we continue to believe that PLTR must consistently demonstrate stronger execution and growth to justify a significantly higher valuation,” Mizuho analyst Gregg Moskowitz said in a note to clients.
Warren Buffett once said that investors should “be afraid when others are greedy, and be greedy only when others are afraid.”
This approach paid off for ARK Invest CEO Cathie Wood, who used Monday’s painful share price drop as an opportunity to add to ARK Innovation Fund’s holdings. One move that paid immediate dividends was adding 33,492 shares of Palantir before earnings reports. Buying before a report is a risky strategy that goes against IBD investing principles.
She also took the opportunity to add more than 23,000 shares 10X Genomics (TXG). This is also a risky move, although it could also provide a sharp upside as the stock was down more than 68% from its December 20 high of 57.90. Another problem is that the company has not yet made a profit.
The fund also bought more than 30,000 Roku (ROKU) shares for the ARK Innovation Fund. Roku stock is currently stuck below the 50- and 200-day moving averages. The MarketSurge analysis shows this. In the current stock market, shares are down about 52% from their recent high of 108.84 on December 14.
Other moves by the reckless Wood included the purchase of Amazon.com (AMZN), Coinbase worldwide (MINT), Robinhood Markets (CAP) And Advanced micro devices (AMD)
This was offset by some sales, including decorations from Teladoc Health (TDOC), Block (SQ), UiPath (PATH) And Zoom video communication (HM)
Follow Michael Larkin on X, formerly known as Twitter, at @IBD_MLarkin for more growth stock analysis.
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