Stocks opened to only the thinnest of gains early Thursday, effectively flat as markets awaited a second day of congressional testimony from Federal Reserve Chairwoman Janet Yellen.
The Fed chief heads to the Senate this morning to speak before the Committee on Banking, Housing, and Urban Affairs at 10 a.m. ET. Yellen lifted stocks Wednesday by outlining a policy strategy likely to hold rates below prior cyclical levels as the economy continues its trend of gradual growth. Fed Governor Lael Brainard speaks at 1 p.m. ET in Cambridge, Mass.
Facebook, PayPal Face Test; Target Triggers Early Retail Gains; Delta Dives
Facebook (FB) will be in focus early Thursday, to see whether it will build on or retreat from the new high established Wednesday. Shares opened up less than 0.1%.
PayPal (PYPL) had also clocked a new high Wednesday, after joining the list of payment options at several Apple retail venues. The IBD 50 stock jumped more than 1% at Thursday’s open, after Monness, Crespi & Hardt raised the stock’s price target to 70, from 54, and named the stock the group’s “top idea” for 2017. Shares remained in a buy range above a 55.24 flat base buy point.
Shares of Yandex (YNDX) spiked 16% at the starting bell, after Uber announced it was exiting Russia, and merging its ride-hailing operations in Russia and five neighboring countries with Yandex. Netherlands-based Yandex operates the largest search engine on Russia’s internet. The gain sent shares 8 above a 29.33 buy point in a flat base. This breakaway gap created a new buy range, between 31.40 and 32.97.
Retailers were on the move in early action, led by Target (TGT), up 3% after guiding same-store sales and earnings higher in the second quarter, because of improved traffic in April and May. Management put EPS at between 95 cents and $1.15, vs. consensus views for $1.06. Same-store sales are now expected to show a narrow increase, vs. expectations for a slight decline. Target shares have fallen 25% since November.
The Target news appeared to buoy Wal-Mart (WMT), which ran up 1.5% to lead the Dow industrials.
Delta Air Lines (DAL) dropped neaerly 2%. The Atlanta-based carrier reported second-quarter earnings and revenue just below consensus targets. CFO Paul Jacobson said 2017 was “a transition period for Delta,” and that improving unit revenues increases conviction in the company’s “ability to expand margins as we move through the back half of the year.” Delta shares ended Wednesday’s session just below new highs, and 10% above a buy point cleared in late May.
Another IBD 50 stock, Taiwan Semiconductor (TSM), edged a fraction higher after reporting weaker-than-expected second-quarter earnings and revenue, and lowering its Q3 revenue guidance to below consensus targets. The stock has been fighting to retake and hold support at its 10-week moving average.
Producer Prices Rise, Core Growth Slows; Jobless Claims Dip
Prices paid to producers rose 0.1% in June, the Labor Department reported, up from a flat performance in May and above expectations for another month of no change. Minus energy and food, prices were still up 0.1%, a sharp slowdown from May’s 0.3% rise and below consensus views for a 0.2% advance.
First time unemployment claims eased to 247,000 in the week ended July 8, while the prior week’s estimate received a boost from 248,000 to 250,000 claims. Economist consensus had project a dip to 246,000 claims in the July 8 week. The four-week moving average edged up to 245,750, a second straight increase.
The Treasury Department releases its June budget report at 2 p.m. ET.
China’s markets rallied Wednesday, with Hong Kong’s Hang Seng Index jumping 1.2% and the Shanghai Composite up 0.6%. In Japan, Tokyo’s Nikkei 225 clung to a thin gain, hurt as the dollar slipped vs. the yen after Yellen’s testimony.
Europe’s benchmarks turned mixed in their afternoon session. London’s FTSE 100 and Frankfurt’s DAX flattened, while the CAC-40 in Paris held a 0.4% gain.