Stock market profits from taxes, climate, health law; 6 breakouts amid a mixed week of gains| Investor’s Business Daily

The stock market rallied Monday after the US Senate passed a big tax, health and climate bill over the weekend, as investors braced for another busy week of earnings. At least six stocks broke out of the bases.




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The Nasdaq Composite gained 0.5%, while the S&P 500 gained 0.3%. The Dow Jones Industrial Average rose 0.4%. The Russell 2000 small-cap index rose 1.3%.

Volume rose on the Nasdaq but fell on the NYSE from the same time on Friday.

The Nasdaq and S&P begin what may be their fourth straight week of gains. Last week, the Nasdaq closed up 2.1% and the S&P 0.4% higher. The Dow lost 0.1% this week.

The Dow Index is on track to close at or above 32,877.66 to break out of the correction zone, which is defined as a 10% decline according to Dow Jones Market Data.

Overview of today’s US stock market

index symbol Price loss of gain % change
Dow Jones (0USD) 32939.22 +135.75 +0.41
S&P500 (0S&P5) 4159.30 +14.11 +0.34
Nasdaq (0NDQC) 12717.08 +59.52 +0.47
Russell 2000 (IWM) 193.23 +2.43 +1.27
IBD 50 (FFTY) 29.32 +0.05 +0.17
Last updated: 12:02 PM ET 8/8/2022

The Senate on Sunday, with a landmark vote from Vice President Kamala Harris, passed legislation that will spend hundreds of billions of dollars on climate and health programs while increasing taxes on large, profitable companies. The legislation provides tax incentives to reduce carbon emissions, allows Medicare to negotiate the price of some prescription drugs, allocates about $80 billion to the Internal Revenue Service and extends health insurance subsidies under the Affordable Care Act. The House of Representatives is expected to take up the bill on Friday.

The week begins with mixed earnings results

The latest earnings season hasn’t gone as badly as feared, which Yardeni Research says is contributing to the market’s recent rebound. By midweek, 356 (or 71%) of the S&P 500 companies had reported second-quarter results. Revenue beat consensus forecasts by 2.5%. Revenue beat estimates by 5.6%. So far, 68% of Q2 reporters have reported an upbeat sales surprise, while 77% have beaten earnings forecasts.

To start the week of Q2 earnings, Tyson Foods (TSN) reported that quarterly revenue rose 8%, but rising expenses wiped out any earnings growth. Shares plunged 9% Monday morning. The maker of chicken and other packaged meats had sales of $13.5 billion. Analysts polled by FactSet had expected revenue of $13.31 billion. Profit was flat from a year earlier amid rising costs for wages, animal feed and transportation.

Palantir Technologies (PLTR) on Monday reported June quarter earnings missing views while earnings were edged by Wall Street targets. PLTR stock fell 12% as its revenue guidance fell short of expectations

New breakouts for the stock market

In other news, Pfizer (PFE) officially announced on Monday that it has agreed to the purchase Global blood therapeutics (GBT) for $5.4 billion. Pfizer said Monday it would pay $68.50 a share in cash for Global Blood Therapeutics, which has one of the few approved treatments for sickle cell disease.

Rumors of the deal first surfaced on Friday, sending GBT shares up 26%. On Monday, GBT shares traded more than 4% higher, while PFE shares traded slightly higher.

In the meantime. Several stocks broke out of the bases on Monday. Brazilian oil (PBRA), Brazil’s state oil company, broke out of a cup base with a buy point of 13.70.

Manufacturers of building products griffon (GFF) also broke out of a cup base with a buy point of 31.12 and easily hit the top of its 5% buy range.

Other outliers are truck parts manufacturers Paccar (PCAR), waste management (WM), transport company CH Robinson Worldwide (CHRW) and New fortress energy (NFE).

Gas & Energy Infrastructure NFE broke out a cup basis with a buy point of 52.47. At a time when energy stocks aren’t doing well, NFE is one of the IBD 50 stocks to watch.

Outlook for the stock market

Stocks in Asia and Europe were mostly higher on Monday, with London’s FTSE 100, Germany’s DAX and France’s CAC 40 all gaining. Japan’s Nikkei 224 and Shanghai core index also rose, while Hong Kong’s Hang Seng Index fell 0.8%.

The US 10-year Treasury yield rose 10 basis points to 2.78%. Crude oil rose 1% to $89.90 a barrel.

The innovator IBD 50 ETF (FFTY) gained 0.1%, lagging gains from the broader market.

Walt Disney (DIS) will lead another busy week of earnings reports as the stock market grows more optimistic about a soft landing for the US economy. Other strong price performers with gains ahead include, among others Celsius (CELH), Aspen technology (AZPN), grocery store (Go and shock wave medicine (SAV).

Follow Michael Molinski on Twitter @IMmolinski

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