Stocks rallied into the final trading week of a widly volatile year Monday, as the signing of a federal stimulus bill, the rollout of Covid-19 vaccine in Europe, and a new record high for Bitcoin boosted early trade. IBD 50 stocks Logitech and Taiwan Semiconductor rose near buy points. Leaderboard stock Generac entered a buy range. And Apple took top billing on the Dow Jones today, aiming to extend its leadership of the blue chip index for the year.
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The Dow Jones Industrial Average jumped 220 points at the starting bell for a 0.7% gain — enough to hammer out a new high above 30,460. The S&P 500 also swung 0.7% higher, with cruise line operators and airlines running hot as expansion of vaccines and the passage of stimulus measures stirred investor optimism. American Airlines Group (AAL) led the S&P 500 with a 3.5% gain.
The Nasdaq traded up 0.6% on the stock market today, as stimulus- and vaccine-related Cintas (CTAS) and Booking Holdings (BKNG) jumping between 2% and 3% higher. Tesla (TSLA) was not far behind with a 2% gain. Chips were active, with Micron Technology (MU) up more than 2% to lead the Philly Chip Index after Mizhuo raised its price target. The VanEck Vectors Semiconductor ETFSMH gained 0.8%.
IBD Leaderboard stock Generac (GNRC) gained 2.1%, climbing back into a buy range above a flat base buy point at 234.65. The stock briefly cleared, then settled back below the entry during the Christmas Eve session.
Markets had a close eye on China-based stocks, after the country’s regulators tightened controls on Alibaba’s Ant Group, reining in its expansion from its core payments operations into consumer lending and wealth management. Alibaba Group Holdings (BABA) pared its opening losses to 0.7%, following a 14% dive on Thursday.
Dow Jones Today: Apple, Walt Disney Rally
Apple (AAPL) rallied 2.5% on the Dow Jones today, as investors continued to crowd into the stock in the final week of the year. Apple stock, an IBD Leaderboard listing, is just beyond the buy range of an alternative buy point at 125.49. The buy range extends to 131.76. It ended trade on Thursday less than 5% below a traditional cup-based buy point of 138.08, according to MarketSmith chart analysis.
Walt Disney (DIS) gained 2%. Disney stock technically broke above a double-bottom base buy point at 131.46 on Nov. 9. Shares have since advanced 32%.
President Signs Stimulus
President Donald Trump prevented a government shutdown that loomed for Tuesday and opened the door for the Treasury to turn loose $900 billion in coronavirus stimulus support to U.S. businesses and consumers. Trump initially was widely expected to sign the bill, which passed through Congress early last week. A quick pass-through at the White House may have made possible distributions before the end of the year, critical timing for consumers facing rent and mortgage payments, and for Republicans fighting to hold two Senate seats in Georgia’s Jan. 5 runoff elections.
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But the President balked at the bill, saying $600 payments to consumers were too small, and that there was too much spending baked into the legislation that wasn’t related to Covid-19. The president signed the bill without alteration, although House Democrats plan to vote Monday on a bill to increase the stimulus deal’s direct checks to $2,000, up from $600.
The GOP-led Senate also reportedly plans to vote on raising the direct checks to $2,000 and repeal Section 230 that provides liability protection to internet companies. It also plans a probe into Trump’s claims of voter fraud.
PayPal, MicroStrategy, Bitcoin
PayPal Holdings (PYPL) rose 1.2%, early Monday, as Bitcoin held up after rallying to record highs on Sunday. Bitcoin rebounded to just below $27,000, according to Coinbase, up more than 38% since the start of December and just below Sunday’s record high at $28,387. A Pantera Capital report on Dec. 23 said PayPal was absorbing 100% of all newly minted Bitcoin supply. Database software developer MicroStrategy (MSTR) spiked 13% early Monday. MicroStrategy last week announced a $650 million purchase of Bitcoin, lifting its total investment to $1.125 billion, and reportedly holds 70,470 Bitcoins.
PayPal is an IBD Leaderboard listing, and extended after retaking a cup base buy point at 215.93 on Dec. 14. MicroStrategy, the No. 3-ranked stock in IBD’s Database Software industry group, has gained 113% following a breakout from a nine-month cup-with-handle base in mid-September.
Europe Joins Vaccine Rollout
The European Union began administering its first doses of Covid-19 vaccine on Sunday, joining the U.K. in distributing the compound jointly developed by Pfizer (PFE) and Germany-based BioNTech (BNTX). That vaccine, as well as another from Moderna (MRNA), is being broadly rolled out in the U.S. The most recent update from the Centers for Disease Control’s Covid Data Tracker, as of Friday morning, reported almost 9.55 million doses of vaccine had been distributed in the U.S., with nearly 1.945 million doses so far administered.
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Shares of BioNTech dropped 5.7%, while Pfizer fell 0.3% in premarket trade Monday. Moderna slumped 3.7%. AstraZeneca (AZN) climbed 2.2%, taking back a portion of last week’s 7.5% dive, after its Lynparza treatment was approved for use on advanced cancers in Japan. AstraZeneca shares have declined since the company announced Dec. 12 it would acquire Alexion Pharmaceuticals (ALXN) for $39 billion. Alexion shares are up 26% since the announcement.
Coronavirus Update
The number of U.S. coronavirus cases reported daily has been in a downtrend since Dec. 18. New cases reported on Sunday, gauged using a seven-day average, were 183,772. That was down from a peak of 223,898 on Dec. 18, and up from 164,456 on Nov. 30, according to Worldometer data.
Virus-related deaths reported on a daily basis have trended lower since Dec. 22. The average for deaths reported daily on Sunday was 2,238, down from 2,780 on Dec. 22, but still 47% above the Nov. 30 tally of 1,522 deaths.
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Among the states with the largest number of coronavirus cases, California has seen a 76% increase in its total case count since Nov. 30. Pennsylvania’s total soared 70%. Ohio’s case count increased 62%, while Tennessee and Arizona saw increases of more than 50%.
Among the 15 states with the highest number of total coronavirus cases, Pennsylvania reported the largest increase in deaths during the month. Its 4,652 virus-related deaths sent its total up 45%. Wisconsin reported a 42% rise in deaths, while fatalities in Tennessee rose 43%. Among states with the largest populations, deaths in California rose nearly 27%. Texas saw a 24% rise in fatalities, while deaths New York held to an 9% increase.
IBD 50: Logitech, TSM Head For Buy Points
IBD 50 stock Logitech International (LOGI) rallied 1.9% early Monday. The gain placed shares just pennies below a 95.81 buy point in what MarketSmith chart analysis plots as a 95.81 buy point.
Taiwan Semiconductor (TSM) climbed 1.6%, moving shares narrowly below a 107.94 buy point in a three-weeks-tight pattern. TSM is also an IBD Leaderboard stock.
S&P 500: Top 3, Bottom 3 YTD
The S&P 500 ended Friday with a year-to-date gain of 14.6%. Information technology accounted for 69%, while consumer discretionary contributed 22% of that advance. Communications services was 14% and healthcare drove 11% of the gains, according to a Sunday note from S&P Senior Index Analyst Howard Silverblatt.
Meanwhile, the energy sector was down 11% for the year, with financials posting a 10% loss and utilities and real estate down more than 2% apiece.
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The three biggest contributors to the S&P 500’s gains were no surprise: Apple (which is also the leading Dow Jones stocks) as well as Amazon.com (AMZN) and Microsoft (MSFT). Apple’s 79.8% year-to-date advance accounted for more than 24% of the S&P 500’s gain, according to Silverblatt. Amazon’s 71.7% rise gave the index 17.5% of its push. Microsoft turned in a 41.2% gain through Thursday, accounting for about 15% of the S&P 500’s advance.
At the bottom of the list, Wells Fargo (WFC), Exxon Mobil (XOM) and AT&T (T) provided the greatest drag, down 44.5%, 40.4% and 26.6%, respectively.
Apple, Amazon and AT&T are also Dow Jones stocks. Apple and Microsoft are current IBD Leaderboard stocks.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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