The Dow Jones Industrial Average held a modest gain along with other major stock indexes in midday trading Friday despite an earnings sell-off for Dow component Nike (OF).
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Nike stock plunged more than 9% after the company missed on revenue for the second straight quarter and also cut its revenue outlook. Further, the company announced plans to cut costs by $2 billion over the next three years.
But several Dow Jones stocks showed gains of at least 1%, including Amgen (AMGN), Walmart (WMT), Merck (MCK) and Intel (INTC).
Amgen gave an early buy signal as it gets closer to a 288.46 entry. 3M, meanwhile, is closing in on a breakout with a 107.63 entry.
Also in the Dow, Chevron (CVX) added 0.6%, helped by rising oil prices. WTI crude oil futures were nearly flat around $74 a barrel after an early pop.
Oil and gas producer Occidental Petroleum (OXY) was off highs but still added 1% on news that Warren Buffett bought an additional 5.2 million shares, boosting his stake in OXY to nearly 28%.
Outside The Dow Jones Index
Small caps carried the leadership baton again Friday, with the Russell 2000 up 1%. The Nasdaq composite and S&P 500 each gained 0.3%.
Winners beat losers on the Nasdaq exchange by around 2 to 1. The ratio was 4 to 1 positive on the New York Stock Exchange.
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In economic news, the latest reading on inflation came and went without much fanfare. On a year over year basis, the PCE price index rose 2.6% in November, below estimates for 2.9% and also below October’s reading of 3%. Core PCE came in at 3.2%, also below forecasts of 3.4% and below October’s reading of 3.5%.
The PCE is the Federal Reserve’s preferred inflation gauge, and it’s getting closer to the Fed’s 2% target. In fact, over the past six months, core inflation is running at an annualized rate of 1.9%, the report says, boosting the chances of interest rate cuts in 2024.
According to CME FedWatchfutures traders now think there’s an 85% chance that the first rate cut will come at the March meeting. Meanwhile, the 10-year Treasury slipped 4 basis points to 3.86%.
Despite strong gains for many Dow Jones components, it was an early bloodbath for a couple of Chinese stocks after China moved to tighten control of the country’s online gaming marketdominated by Tencent (Czech Republic) and NetEase (DETENTION).
Tencent slumped around 10% and NetEase cratered 15%. The selling spilled over into other Chinese stocks outside the gaming sector including New Oriental Education (EDU) as well as e-commerce giants like Ali Baba (BABA), Pinduoduo (PDD) and JD.com (JD).
M&A News
In merger news, Bristol Myers Squibb (BMY) announced plans to buy schizophrenia-drug maker Karuna Therapeutics (KRTX) for $14 billion in cash. The deal values Karuna at 330 a share. BMY popped nearly 2%. KRTX catapulted more than 46% higher in recent action.
In October, BMY struck a deal to acquire Targeted Therapeutics (MRTX) for up to $5.8 billion in a move to strengthen its oncology portfolio.
Software design firm Ansys (ANSS) gapped powerfully above its 200-day moving average but faded off highs. Bloomberg reported that the company is considering putting itself up for sale.
Inside the MarketSmith Growth 250, Altair Engineering (OTHER) and Neurocrine Biosciences (NBIX) scored healthy gains. ALTR soared nearly 10% after JPMorgan initiated coverage with an overweight rating and 86 price target. NBIX also raced higher. The biotech’s weekly chart shows the stock is close to breaking out over its December 2022 high.
Also outside the Dow Jones index, Super Micro Computer (SMCI) slumped more than 4%. The stock gave a buy signal Monday but shares have been under pressure ever since.
Follow Ken Shreve on X/Twitter @IBD_KShreve for more stock market analysis and insight.
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