Dow Jones Today Leads Stocks Higher As Layoffs Evaporate In July; HubSpot, Home Depot, Innovative Industries Ace Breakouts

Stocks opened higher Thursday, unfazed by disappointing weekly jobless claims data, as the Nasdaq looked to add a fourth day to its advance. Earnings news sent HubSpot, MercadoLibre and Innovative Industries past buy points. China-based stocks were once again under pressure. Meanwhile, retail giants topped the Dow Jones today, with Walmart rallying and Home Depot scoring a breakout.

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The Dow industrials snatched a quick 155-point gain, up 0.45% but still holding just below 35,000. The S&P 500 climbed 0.3% to take back a good piece of Wednesday’s decline. The Nasdaq Composite fought 0.35% higher, as MercadoLibre (MELI) and Fox Corp. (FOX) led the Nasdaq 100 in early trade.

IBD 50 stock Moderna reversed early gains and dropped 1% after second-quarter sales and earnings cleared expectations. China-based stocks NetEase (NTES), JD.com (JD) and Pinduoduo (PDD) traded low the Nasdaq 100, as erratic trade in China’s market continued.

On the S&P 500, HanesBrands (HBI) soared 9.8%, Fleetcor (FLT) jumped 5.3% after reporting their results. Regeneron Pharmaceuticals (REGN) climbed 1.5% following its second-quarter report. The biotech heavyweight rose to just below a 595.58 buy point in what IBD MarketSmith analysis charts as a 51-week cup-with-handle base. The stock briefly cleared the buy point on Wednesday, before pulling back to end the pre-earnings session down 1%.

Earnings news sent Datadog (DDOG) up 17% and Adapthealth (AHCO) to a 15% gain. Elf Beauty (ELF) was up almost 10%, racing toward a cup base buy point at 31.39, after turning in a spritely fiscal first-quarter beat late Wednesday. Cigna (CI) dived 12%, Cardinal Health (CAH) tumbled 11%, on earnings reports.

IBD 50 stocks Roku (ROKU), HubSpot (HUBS) and Innovative Industrial Properties (IIPR) were all in motion near buy points Thursday, following quarterly earnings reports.

Dow Jones Today: Walmart Upgrade, Home Depot Breakout

Home Depot (HD) jumped 1.6% to the head of the Dow Jones today. The move sent Home Depot stock — stock that has tended to benefit during periods of tighter Covid restrictions — into a buy range above a 333.55 entry, also in a 12-week cup with handle.

Walmart (WMT) climbed 1% after Wells Fargo upgraded the stock to overweight and lifted its price target from 150 to 165 — more than 16% above Wednesday’s closing price.

Walmart stock has stitched together six straight weeks of tight gains, creeping back above support at its 10-week moving average. The stock is arguably in the 10th week of a flat base, formed within a larger consolidation. Shares are trading a bit more than 1% below a 144.68 buy point, but Walmart’s relative strength rating is scraping the bottom of the barrel at 36.

Econ Data: Jobless Claims, Job Cuts Drop

First-time applications for unemployment assistance dropped to 385,000 in the week ended July 31, the Labor Department reported. That was down from 400,000 claims in the prior week, not quite meeting expectations for a drop to 381,000 applications.

The monthly job cuts report from consultant Challenger, Gray & Christmas showed layoffs by U.S. employers in July falling to 18,942. That was the report’s lowest number since June 2000. Andrew Challenger, senior vice president of Challenger, Gray & Christmas, noted in the report that healthy job markets typically include a robust level of layoff and turnover activity.

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“Right now, things appear to be stalling,” he said. “There are over 9.2 million job openings and 9.5 million unemployed. The positions and workers are not connecting,” he added.

Oil prices strengthened and bond yields were relatively steady after the data release. West Texas Intermediate futures gained 0.6%, climbing above $68 a barrel after sliding 3.4% on Wednesday. A three-day drop put WTI prices down 7.8% for the week, on track for the worst week since April 2020.

The 10-year yield firmed up to to 1.19%, after settling just above 1.18% on Wednesday.

China Volatility Continues

U.S.-traded China stocks were taking hard early hits Thursday, as China’s markets continued to saw back and forth. The Shanghai Composite dropped 0.3%, and Hong Kong’s Hang Seng index slumped 0.8%. Both indexes remained on positive ground after the Shanghai benchmark fell 4.3% and the Hang Seng dived 5% last week.

China’s markets began selling off aggressively on July 23, as authorities rolled out a series of reforms that reframed regulations for education companies, food delivery operations and companies listing on exchanges outside of China. Tech and internet stocks fell hard Tuesday, on fears that online gaming would be the next sector on which the government would focus its broadening crackdown.

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China’s markets rebounded Wednesday, even as the country imposed “massive travel restrictions,” with a large number of airports and rail travel canceled, according to state-run media agency Xinhua. The fast-moving coronavirus Delta variant has now posited China its greatest challenge since the Wuhan peak last year, according to the Associated Press. China’s strategy of isolating cities and individuals during last year’s outbreak was widely considered successful, but wreaked havoc on the country’s economy.

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Among China gauges in the U.S. early Wednesday, the iShares MSCI China ETF (MCHI) dropped 1.1%, and the Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR) faded 0.3%. Technology tracker KraneShares CSI China Internet ETF (KWEB) slumped 2.4% in early trade.

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In Europe on Thursday, stocks were mixed in afternoon trade.  The CAC-40 in Paris showed a 0.4% advance. Frankfurt’s DAX firmed to a 0.2% gain. London’s FTSE 100 dipped 0.1% after the Bank of England left its rate and stimulus strategies unchanged. The SPDR Portfolio Europe ETF (SPEU) swung 0.6% higher, after posting a 0.1% decline Wednesday. The ETF is less than 2% below a 44.06 entry in an eight-week flat base.

IBD 50 Earnings: Roku, HubSpot, Innovative

At least a dozen IBD 50-listed companies have reported or will report earnings this week. Cloudflare (NET) is due to wrap up the IBD 50 list’s earnings for the week, reporting after today’s closing bell. Of the companies reporting this week, Roku, HubSpot and Innovative Industrial Properties were near buy points.

Roku tumbled 6.1% in premarket trade, positioning the stock for a break below its 50-day moving average. Shares had already undercut their 21-day exponential moving average, finishing Wednesday about 9% below a 463.09 buy point in a cup-with-handle base.

HubSpot bolted 8.9% higher. Mizhuo, Citi and Piper Sandler raised price targets after the company reported a solid second-quarter earnings and revenue beat late Wednesday. Citi aimed highest, setting its price target at 750, 27% above where shares finished on Wednesday.

Thursday’s early gain lifted HubSpot out of a buy range above a cup-base buy point at 574.93.

Marijuana stock landlord Innovative Industrial Properties pared an early 7.5% surge to 3.5%. That placed the stock narrowly below a 222.18 entry in a 24-week cup base, after punching above the entry in opening trade. The first-stage base is bullish, forming largely above support at the stock’s 10-week moving average.

Dow Jones Today: Blue Chip Breakout Watchlist

Home Depot is not the only blue chip leader worth minding on the Dow Jones today. Microsoft (MSFT) is extended from a late-June breakout. But seasoned chart readers are watching a tiny shelf pattern that offers an interim entry at 299.09. Microsoft stock rose 0.5% early Thursday.

Microsoft is a Leaderboard half-size position and member of the 25-stock Long-Term Leaders.

UnitedHealth Group (UNH) dropped 2.6% in early trade. Shares ended Wednesday 2% below a 422.63 buy point in a 12-week cup-with-handle base.

Find Alan R. Elliott on Twitter @IBD_Aelliott

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