The Dow Jones Industrial Average closed higher Thursday as Boeing neared a new buy point. Meme stock GameStop cratered after the CEO got axed and investor Ryan Cohen took on a new role. Amazon.com popped on a bullish analyst call while Smartsheet got a shellacking after earnings.
A trio of stocks moved closer to entries despite a quiet day for breakouts. Adobe, Paccar and HSBC are all stalking buy points.
Initial unemployment claims jumped to 261,000 vs. 232,000 the previous week. This was higher than expectations for 235,000, according to Econoday. Claims hit their highest level since October 2021. This was the final labor data point ahead of the Fed's Open Market Committee meeting next week to set interest rates, and the data bolsters the case for a pause.
Nasdaq Shines As Small Caps Slip
The Nasdaq fared best out of the major indexes as it closed up 1%. Warner Bros. Discovery impressed with a pop of 6.9% as it continued to gain following the departure of CNN CEO Chris Licht.
The benchmark S&P 500 rose 0.6%. Sector Leader stock Artista Networks was a star here as it lifted 4.3%. The stock hit a 7% sell signal from a 171.44 buy point earlier this week.
The S&P 500 sectors were mixed with a bias to the positive. Consumer discretionary and technology were the top performers. Real estate and energy lagged the most.
Small caps were got bit by the bears, though, with the Russell 2000 down 0.4%. Growth stocks impressed, with the Innovator IBD 50 ETF finishing up 1%.
Dow Jones Today: Boeing Stock Lifts Toward Entry
The Dow Jones Industrial Average was lagging the other major indexes. Nevertheless, its gain of nearly 200 points translated to a 0.5% lift.
Boeing was the top-performing component as it gained 2.9%, finishing off highs for the day. The stock is nearing a flat base entry of 221.33, MarketSmith analysis shows.
Overall performance for BA stock is strong, but not ideal. It boasts an IBD Composite Rating of 83 out of 99.
Meanwhile Dow Inc. lagged most on the Dow Jones today. It fell 2%, solidly in excess of the 1% loss suffered by Visa, the next worst performer.
GameStop Stock 'Doomed' Despite Ryan Cohen Move
GameStop stock was given a shellacking after it emerged the firm had fired CEO Matthew Furlong without providing a reason for the axing.
Furlong, a former executive at Amazon, had been trying to carry out a cost-cutting plan at the video game retail chain.
GameStop also announced quarterly sales of $1.2 billion, lower than the previous year's $1.37 billion for the same period. A loss of 17 cents a share improved from a 52-cent loss. Analysts had expected sales of $1.14 billion and a loss of 25 cents per share, according to Zacks Investment Research.
In addition, Ryan Cohen, whose firm RC Ventures has an 11.9% stake in the company, has been appointed as executive chairman and looks set to take a more active role.
Worryingly, the firm called off its earnings call, which meant investors could not get further insight into what was going on behind the scenes.
Wedbush analyst Michael Pachter, who rates the stock as a sell with a 6.20 target, was scathing about the company's future prospects.
"We remain convinced that GameStop is doomed, with declining physical software sales and a shift of sales to subscription services and digital downloads sealing its fate," he said in a research note.
In addition, he was not impressed by the CEO firing, saying, "we think that the lack of clear direction and the callous termination of Mr. Furlong all but ensures that Mr. Cohen will have difficulty attracting a qualified replacement."
GameStop, which gained popularity as a meme stock, ended the session down 17.9%, off lows for the day. It triggered a sell signal by falling under the 50-day moving average in high volume.
AMC Entertainment, another one-time darling of meme stock investors, fell 1.1%. Despite this, it still holds a 19% gain so far in 2023.
Amazon Stock Jumps On This Call
Amazon stock climbed 2.5% after it was the subject of a bullish Wall Street call. Wells Fargo analyst Ken Gawrelski initiated coverage with an overweight rating and 12-month target of 159.
The analyst believes the e-commerce giant may return to pre-pandemic profit margins sooner as inflation eases and cloud spending resumes.
"We see North America retail margins improving more quickly than consensus with 2018 margins returning by 2025, implying significant OI (operating income) upside," he said in a research note.
AMZN is currently trading well clear of its major moving averages, It is in the top 12% of stocks in terms of price performance over the past 12 months.
Smartsheet Stock Smacked Down
Cloud-based work management software stock Smartsheet fell 16.9% following its latest earnings report.
While the firm beat analyst revenue and earnings targets it was shellacked on disappointing billings and sales outlook.
For its fiscal second quarter, Smartsheet predicts adjusted earnings of 7 to 8 cents a share, vs. analyst views for 7 cents. It projected sales of $228 million to $231 million, up 22% to 24% year over year. The midpoint of its sales outlook was lower than analyst targets of $230.4 million.
Futures: Dow Giant, Apple Chipmaker In Buy Areas; Tesla Keeps Running Late
Outside Dow Jones: Three Stocks Near Entries
While it was a quiet day for breakouts, a trio of noteworthy names moved closer to entries.
Adobe is closing in on a long cup base entry of 451.15. This is a first-stage base, which means its more likely to net big gains.
Overall excellent performance has netted ADBE an IBD Composite Rating of 98 out of 99.
Heavy-duty truck maker Paccar touched a flat-base buy point of 76.72. The relative strength line is moving higher. Earnings are a key strength for Paccar. It currently holds an excellent EPS Rating of 91 out of 99.
HSBC is trading just below a cup-with-handle entry of 38.60. This is a second-stage pattern. This banking play has a strong Composite Rating of 93.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more analysis of growth stocks.
