Stock market indexes gapped up at the start of Tuesday's session and lifted above Monday's highs. The Russell 2000 small cap index led the upside, in an unusual burst of speculative fervor. Bond yields rose while commodities ran in place, awaiting the next series of economic catalysts.
The Dow Jones Industrial Average is trading higher by 1.8% this afternoon on Wall Street, while the S&P 500 and Nasdaq composite are beating those gains, rising 2.1% and 2.5%, respectively.
Tuesday volume followed Monday's mixed theme, rising on Nasdaq but flat to lower on the NYSE. That makes sense, given today's outperformance in broad-based small caps.
Major benchmarks are testing three-week highs, near midpoints of the ferocious early June selloff that dropped the Dow by more than 3,500 points.
Biotech stocks shone Tuesday, with 19 of the top 20 weighted sector issues in the S&P SPDR Biotech ETF posting gains.
IBM reported solid second quarter results but warned about currency headwinds. The stock fell 6.5% into the afternoon session.
Even so, CEO Arvind Krishna was upbeat about future prospects, noting "We always remain paranoid. But demand is pretty strong and on a global basis technology is the counterbalance to higher interest rates and inflation."
Johnson & Johnson earned $2.59 per share, beating estimates of $2.54 per share. It lowered fiscal year guidance to $10.00 — $10. 10 per share, also citing currency headwinds. The stock is trading lower by 1.4% at this hour and off 3.5% for the week so far.
Twitter rallied 3.7% to a 6-week high after a Delaware judge scheduled the Elon Musk trial for five days in October.
Netflix Predicted 2 Million Q2 Sub Loss In April
Netflix gapped down nearly 30% after the Q1 report on April 20, warning it would lose 2 million subscribers in the second quarter. It also reported the first quarterly loss in subscribers in a decade. The streaming giant hasn't updated guidance since that time, instead focusing on plans to offer subscribers a lower cost ad tier. That effort hasn't eased legitimate fears that worldwide subscription growth is hitting the saturation point.
The stock fell to 2017 levels about three months ago and has been grinding sideways since then. The Accumulation/Distribution Rating has improved to "B-", indicating that bottom fishers are active, while the SMR Rating has lifted to "A." The company is obviously profitable but 2022 annual EPS estimates don't compare well with 2021, dropping from $11.24 to $10.79.
Tuesday Stock Market Highlights
Let's look at three IBD 50 components that have rallied toward or above their buy points in Tuesday's stock market.
AstraZeneca rallied through the buy point at 67.50. The stock holds a 98 Composite Rating, as well as perfect "A" SMR and Timeliness Ratings. An A-rated SMR identifies companies with superior Sales Growth, Profit Margins and Return on Equity ratios.
The company has grown annual EPS every year since 2019 and is expected to earn $3.32 per share in 2022.
Phoenix-based Verra Mobility traded above the 16.83 buy point after a failed rally in Monday's stock market. The relative strength line has lifted to a 52-week high at the same time. This price action completed the initial stage of a cup-with-handle breakout. Quarterly earnings growth has been flat since the Sept. 2021 quarter but the company has beaten estimates in each report since that time.
Annual EPS is expected to surge to over $1.00 per share in 2023, compared to $0.74 in 2021. On Tuesday, Verra raised full-year revenue guidance.
Genuine Parts lifted within two points of the 142.10 buy point. This is a complicated setup that completed a 107-day cup-with-handle pattern in early June. Price action then eased into a flat base that shows a nearly identical breakout level.
The stock holds a perfect 99 Composite Rating.
Follow Alan on Twitter: @msttrader
