Stocks opened to firm gains Tuesday, as earnings reports fired up early trade and a rally in China spilled over into global markets.
Etsy (ETSY) broke out of a base, Twilio (TWLO) bolted to new highs on earnings results. U.K.-based drugmaker Mallinckrodt (MNK) extended its three-month advance. Weight Watchers (WTW), Marriott International (MAR) and Tenet Healthcare (THC) fell following earnings reports. Illumina (ILMN) advanced on an analyst upgrade. Biomarin Pharmaceutical (BMRN) surged, Spark Therapeutics (ONCE) crashed, as Spark’s Q2 report included clinical trial results.
The Nasdaq Composite popped 0.4%, the Dow Jones industrial average muscled up 0.5%. Caterpillar (CAT) rose 1.9% to lead the Dow. Walt Disney (DIS) ticked up 0.8% as the company prepares to report its fiscal third-quarter results after the close.
China’s markets charged higher on signs of broader policy support for infrastructure and business. The gains snapped a four-day losing streak in Shanghai, as well as Hong Kong’s five-day decline. The Shanghai Composite settled up 2.7%. Hong Kong’s Hang Seng Index bolted 1.5% higher. The sentiment carried over into Japan, where Tokyo’s Nikkei 225 rallied 0.6%.
Investors in Europe picked up on the mood, sending markets there sharply higher. Frankfurt’s DAX rose 0.8% and CAC-40 in Paris rose 0.8% apiece. The FTSE 100 in London rallied 1.1%.
Exxon and Chevron helped boost both the Dow and the S&P 500 early Tuesday, as oil prices leaned toward a second day of gains. West Texas Intermediate traded 0.5% higher, holding above $69 per barrel. WTI rose 0.8% on Monday. Oil prices fell 7.3% in July, their worst month since July 2016. The American Petroleum Institute releases weekly oil supply estimates later today, ahead of official weekly supply data due Wednesday morning.
IBD Leaderboard stock Etsy was a clear early winner, up 13%, despite second-quarter earnings that came in at 3 cents a share, missing adjusted views by a penny. Revenue climbed 30% to $132.4 million, beating recently raised views. The arts-and-crafts online retail platform also increased its guidance for the second time in a month.
The opening gain marked a breakaway gap breakout above a flat-base buy point of 45.98. Investors can mark a 5% buy range beginning at the stock’s opening price of 49.78.
Disney traded higher, following a strong move on Monday and ahead of its earnings report due after today’s closing bell. Disney stock is in buy range from 113.29 flat-base entry.
Mallinckrodt rocketed nearly 24% higher after scoring big second-quarter beats on both its revenue and earnings lines. Management also boosted its 2018 EPS guidance to well above consensus views. The Ireland-based drugmaker has climbed in 11 of the past 13 weeks, lifting it 158% since early May. Shares remain deep in a multi-year correction.
Genetic screening tools maker Illumina climbed 1.5%. Morgan Stanley upgraded the stock to equal weight, from underweight and reset its price target at 320, up from 240. Illumina has been carving new highs, following a breakout and May and two rebounds from its 10-week moving average.
Spark Therapeutics tanked 32%, as uncertainties regarding clinical trial results for its hemophilia gene therapy treatment outweigh a huge profit surprise and a wide beat in revenue growth. The trial results were generally positive, setting the stage for Spark to move its gene therapy treatment forward into late-stage trials. But two patients suffered allergic reactions during treatment, which spooked investors. Biomarin, Spark’s key competitor in the race to develop hemophilia gene therapy, jumped 5% in early trade.
Dentsply Sirona took one of the morning’s harshest hits, down more than 19%. The dental supplies maker reported Q2 sales and earnings narrowly above expectations, but full-year revenue and earnings guidance missed consensus targets. Shares have been climbing since June, attempting to start up the right side of a deep, seven-month consolidation.
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