Stocks slipped to mixed trade Friday as earnings news powered busy early action and markets reacted to disappointing July payrolls data, and word of new tariffs from China.
Networking stocks Sierra Wireless (SWIR) and Acacia Communications (ACIA) posted double-digit premarket gains. Dish Networks (DISH) popped 5% after reporting its second-quarter results. Take-Two Interactive (TTWO), Medifast (MED) and HMS Holdings (HMSY) were poised to seize new highs, as energy stocks SolarEdge (SEDG) and Noble Energy (NBL) posted sharp declines.
The Nasdaq Composite backed out of early gains and slipped 0.2%. The S&P 500 narrowed its early gain to 0.1%, while the Dow recovered from an opening dip and rose 0.2%. Take-Two Interactive posted the strongest move on both the S&P 500 and Nasdaq 100. Security software play Symantec (SYMC) lodged the deepest decline on both indexes.
Apple (AAPL) weighed on the Dow, trading down 0.9%, but still trading 8% higher for the week. IBD (IBM) clocked the Dow’s strongest move, up 1.4% in early trade.
A volatile week of earnings reports, generally positive economic news and an expansion of the battle lines in the U.S. world trade war saw markets stumble, then regain their footing. The Dow heads into Friday’s session down 0.5% since Monday and tracking toward its first weekly drop in five weeks. The S&P 500 is up 0.3% and looking to add a fifth straight up week. The Nasdaq has a 0.8% gain as it aims to rebound from two weeks of declines.
All three indexes are showing some resilience: The Dow is holding above 25,000 — and the S&P 500 above 2,800 — with both indexes above their 50-day lines of support. The Nasdaq has rebounded over the past three sessions from a test of support at its 50-day line. It is trading less than 2% from the record high placed on July 25.
July Hiring Disappoints, China Announces Potential Tariffs
U.S. non-farm employers added 157,000 workers in July, the Labor Department said Friday. That number is not only down from 248,000 new hires in June, it was below analyst projections for 190,000 new jobs. Unemployment ticked lower, as expected, to 3.9%, from 4%, even as the labor force participation rate held steady at 62.9%.
Growth in hourly earnings also remained steady, up 2.7% and in line with the consensus target. Manufacturing payrolls increased to 37,000 workers, vs. 36,000 additions in June. Private payrolls additions fell sharply, to 170,000 hirings, down from June’s 202,000 new workers.
China’s Ministry of Finance announced a new round of retaliatory tariffs early Friday, aimed at U.S. made imports to the country totaling $60 billion per year. Duties ranging as high as 25% will be imposed on a list of 5,207 U.S.-bade products if the U.S. escalates its tariffs schedule to $200 billion in China-made goods. The U.S. added tariffs to $34 billion in China-made products in June, and is preparing tariffs on another $16 billion. The White House has threatened to expand the schedule to another $200 billion in trade goods if China refuses to renegotiate its trade relationship with the U.S.
Medifast Takes New Highs; Wingstop In Buy Range
Take-Two Interactive led the Nasdaq 100, and S&P 500, spiking 12% at the open. The New York-based video game maker delivered mixed second-quarter results late Thursday. But Chairman and Chief Executive Strauss Zelnick reported “better-than-expected recurrent consumer spending on Grand Theft Auto Online and NBA 2K18.” He said sales of Grand Theft Auto V were approaching 100 million units. Take Two shares reset their base count with a consolidation begun in February. But a failed breakout attempt from that pattern left the stock with no valid current buy point.
Diet plan stock Medifast scorched 26% higher in early trade. One of this year’s market-leading health and wellness companies, Medifast reported huge wins on both its revenue and earnings lines in the second quarter. Earnings soared 84%, revenue leapt 55% and management lifted its full-year revenue and earnings forecast well above analyst targets. Medifast shares were up 154% for the year at Thursday’s close, and extended after a breakout in March.
Healthcare cost containment specialist HMS Holdings knocked out a 10% gain at the open. The Irving, Texas, outfit’s second-quarter performance beat on revenue, came in ahead on earnings and hoisted full-year revenue guidance above analyst targets. The stock is extended after clearing a year-long base pattern in May.
Wingstop (WING) soared 13% at the starting bell, scoring a breakout at the open. The Dallas-based fast casual chain late Thursday reported a 35% earnings gain and a 17% rise in revenue. Both numbers were above analyst forecasts, and management reported a sharp decrease in coast of sales during the quarter, as chicken-wing prices fell. Shares were in buy range above a 54.87 buy point in a double-bottom base.
ATM network operator Cardtronic (CATM) rocketed 30% higher. Second-quarter revenue and earnings declined much less than projected by consensus targets. Management boosted its 2018 revenue and earnings guidance above expectations. The move put share briefly above a 31.70 buy point in a two-month cup base.
IBD 50 stock SolarEdge was taking an early beating, down 14% after a mixed second-quarter report. A 67% revenue gain topped analyst expectations, but growth of 49% on the earnings line was short of views. The loss sent shares sharply below support at the stock’s 10-week moving average.
