The stock market neared weekly highs Thursday while rising layoffs stoked recession fears. Goldman Sachs upgraded Oprah Winfrey's weight loss stock, sending it soaring. Gold and crude oil held steady at multi-month highs, adding to worries about a commodity bull market.
The March producer price index (PPI) fell 0.5% from the previous month, lower than expectations for a 0.1% rise. The core also fell, shrinking to 0.1% vs. 0.2% estimates. At the same time, the Labor Dept. reported that weekly unemployment claims rose to 239,00, ahead of the 236,000 consensus. California led the pack with layoffs, highlighting aggressive cost-cutting at bloated Silicon Valley tech operations.
Taken together, they add to the risky scenario of prices and demand falling in tandem, in line with an economy headed for recession.
Formerly known as Weight Watchers, WW surged another 19% to 7.75 Thursday, bringing the three-day rally to over 80%. Goldman Sachs upgraded the Oprah Winfrey stock Tuesday, raising it to buy from neutral with a 13 target. WW stock has traded in single digits for the last year.
Oprah Winfrey joined the WW board in 2015, taking a huge stake in the weight loss company. In 2020, she lowered her position size to 5 million shares, with an option to buy more, according to Barron's. The rally has added more than $15,000,00 to Oprah Winfrey's holdings this week.
WW stock mounted the 7.17 buy point of a six-week cup base Thursday. 2024 earnings are forecast to rise an astounding 883%.
Delta Air Lines kicked off first-quarter earnings season, initially trading higher after a mixed quarterly report. But aggressive sellers returned after the opening bell, dropping the stock more than 1.3% into the lunch hour.
The carrier missed on Q1 2023 earnings estimates but raised Q2 guidance. It also reaffirmed full-year EPS and raised revenue estimates. American Airlines dragged down the group Wednesday, falling nearly 9% despite raising Q1 EPS guidance. AAL stock lost another 0.3% Thursday.
According to CEO Ed Bastion, Delta will be the only airline with "meaningful profits" in the first quarter. He also noted the carrier has seen no signs of a consumer slowdown.
Southern Copper broke out above a 78.75 buy point and traded close to 2021's all-time high. Commodities have been a tear lately and this breakout highlights growing odds for a commodity bull market measured in decades, rather than months or years.
That wouldn't be good for long-term interest rates.
Swiss gene editing upstart Crispr Therapeutics soared nearly 15% after Cantor Fitzgerald issued an overweight rating and 72 price target.
Novo Nordisk rallied 1.8%. The Denmark-based pharma giant raised its 2023 sales and operating profit outlook on higher expectations for the red-hot Wegovy obesity drug. Total sales rose 25% in the first three months of 2023 while operating profit surged 28%.
NVO stock is extended past a 146.04 buy point and is trading at an all-time high.
Thursday's Stock Market
The Dow Jones Industrial Average rose 0.5% in the first half of Thursday's stock market trading while the S&P 500 added 0.7%. The Russell 2000 small-cap index found willing buyers, posting a 0.9% gain. The Nasdaq composite led the upside on the strength of Big Tech, gaining 1.4%.
The growth-heavy Innovator IBD 50 ETF rallied 1.1%. Bank indexes rose around 1% in quiet action ahead of the upcoming earnings flood.
NYSE and Nasdaq volume fell in the first half compared to Wednesday's session, despite broad-based strength. Asian markets traded quietly higher while European bourses matched U.S. gains.
The 10-year Treasury note yield was flat at 3.41%. Bitcoin held above $30,000.
The Nasdaq, S&P 500 and Dow Jones remain well above their 50-day and 200-day moving averages, supporting IBD's outlook of a "market in confirmed uptrend."
However, the Russell 2000 is stuck below those resistance levels after failing a key test last week. This bearish divergence raises a red flag because it negatively impacts market breadth readings.
Crude Oil, Gold Probe New Highs
West Texas intermediate crude oil futures held above $82.50 per barrel. Gold futures traded above the $2,000 level for the third day in a row.
Crude oil hit a five-month high Wednesday and could easily mount a rally into the low 90s. The WTI contract tends to hit seasonal peaks in April, May and November, according to MacroMicro.
Energy costs contributed to Wednesday's better-than-expected CPI inflation report, with the energy component falling 3.5% month over month and 6.4% year over year. This beneficial trend is reversing gears right now and will accelerate higher unless crude oil sells off soon.
Meanwhile, gold futures are grinding toward a key test of the 2020 and 2022 highs at $2,078. Momentum for a historic breakout seems to be building, suggesting the Fed's goal of 2% inflation is an unachievable pipe dream.
Stock Market Today: Inside The IBD 50
IBD 50 stocks were on the move in Thursday's stock market.
Exane BNP Paribas raised IBD 50 component DraftKings to neutral from underperform, lifting the stock 3.0%. Shares are grinding through a consolidation, still well below the 21.72 buy point. DKNG stock's Composite Rating has risen to a respectable 89.
Recently added to the IBD 50, BeiGene surged toward the 280.72 buy point of a three-month cup base. The China biotech has never been profitable but sales have surged double- and triple-digit percentages in recent quarters. The company, now expanding into Brazil, develops innovative, molecularly-targeted immuno-oncology drugs. BGNE stock gained more than 4.5%.
Also in the IBD 50, global payments processor Flywire rallied past the 29.41 buy point of a two-month consolidation. Its 2024 earnings are expected to grow a whopping 115%. FLYW shares are 3.5% higher.
Follow Alan Farley on Twitter at @msttrader.
