The stock market rebounded smartly Tuesday, overcoming coronavirus flu fears to post solid gains for the first time since last week. With virus fears abating, a spate of better-than-expected earnings reports buoyed markets. Apple (AAPL) and Advanced Micro Devices (AMD) both rose in anticipation of earnings releases after the close.
The Dow Jones Industrial Average rose 0.7%, partly reversing Monday’s 1.6% drop. The Nasdaq gained more than 1.4%, while the S&P 500 Index jumped 1%. The small-cap Russell 2000 Index rose 0.9%.
Volume fell from the same time on Monday. On the NYSE exchange, turnover declined 11%. Nasdaq trade dropped 16%.
The Dow’s relatively modest gain would have been much larger but for two stocks: 3M (MMM), which plunged 5.7%, and Pfizer (PFE), which dropped 5.1%.
Both reported disappointing results for the final quarter of 2019. While 3M beat EPS estimates for the quarter, revenue results came in below expectations and the company announced a global restructuring, to include 1,500 layoffs. Pfizer’s EPS of 55 cents came in 3 cents below analysts’ forecasts.
But other Dow stocks sparkled, including chipmaking giant Intel (INTC), which rose 2.5%, and cellphone and entertainment megacap Apple, which gapped up 3% after Monday’s 2.9% decline. Apple remains 43% extended in price from a 221.47 buy point. Intel blasted out of a buy zone above a 59.23 entry from a flat base just last week. It rose 8.2% on Jan. 24, a day after reporting a 19% gain in Q4 EPS, beating analysts estimates.
Stock Market: IBD Leaderboard Winners
With earnings due after the close, Leaderboard stock and chipmaker AMD bounced 2.7%, as it remains extended above a 41.89 alternate entry from a three-weeks-tight formation.
Also on Leaderboard, specialty retailers RH (RH) and Tempur Sealy (TPX) both rose strongly. Formerly known as Restoration Hardware, RH jumped 3.2% as it continues to consolidate below a 243.77 buy point. Meanwhile, mattress chain Tempur Sealy surged 4.4%, breaking out of a flat base in powerful volume above a 92.43 buy point. It’s now in the buy zone.
Stocks found on the IBD 50 list showed broad gains. The Innovator IBD 50 ETF (FFTY), an exchange traded fund, gained 1.8%. That ETF gives investors a stake in the IBD 50 list of top growth stocks with just one click.
IBD 50 stocks showing big gains included Israel-based maker of cosmetic procedure devices InMode (INMD), which rebounded 7.7% after plunging 10.2% in Monday’s fear-driven trading. InMode, an August IPO, is now forming a base. After testing the 50-day moving average line early in January, InMode stock has recaptured its support above that level.
Software stocks also rallied. On the Big Cap 20 list, cloud-based human-capital software provider Paycom (PAYC) resumed its gains, adding 1.8% Tuesday after breaking out of a flat base with a 280.05 correct buy point in early January. Despite declines in the past two trading sessions, Paycom remains extended by 18% above its buy point after just three weeks.
Another cloud-based workflow and business software company, ServiceNow (NOW), rose 2.1%. It’s now in the buy zone above a 303.27 entry point above a consolidation pattern.
RingCentral (RNG), a creator of software that lets businesses communicate with workers over a variety of devices, increased 2.9% as it also rises out of a consolidation pattern. It is now 13% extended in price since its early-January breakout above a 178.09 buy point.
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