Stock market bulls crossed fingers and said prayers Thursday after an opening rally faded. Dow Jones component Walt Disney gained ground despite a mixed quarter, announcing cost cuts and layoffs. IBD sister publication Barron's released a disturbing report about crypto traders and their interest in artificial intelligence-linked crypto tokens.
Broad benchmarks sold off from early highs into the noon hour, threatening to drop into the red. Big Tech held up best while small caps headed toward two-day lows.
The Dow Jones Industrial Average traded higher by 0.3% midday while the S&P 500 added 0.2%. The Nasdaq lost early leadership, now up just 0.2%. The Russell 2000 small-cap index led the downside, losing 0.3%.
The Innovator IBD 50 ETF outperformed, higher by 0.9%.
NYSE volume fell while Nasdaq volume rose, compared to the first half of Wednesday's session.
Crude oil slid less than 1% to $77.70 per barrel. Asian markets were mixed while European bourses moved solidly higher.
The 10-year Treasury note yield reversed gears, dropping 5 basis points to 3.60%. In the crypto world, Bitcoin tagged a three-week low near $22,500.
Weekly jobless claims ticked marginally higher, but remain at rock-bottom levels due to the tight jobs market.
Disney Slashes Cost, Realigns Profit Centers
Disney traded higher by less than 2% despite losing another half-billion on Disney+ and other streaming products in the December-ended quarter. It gave up earlier 6%+ gains came after activist investor Nelson Peltz backed out of a proxy fight.
Stock market investors cheered reorganization plans outlined by new CEO Bob Iger, who ran the House of Mouse before former chief Bob Chapek, who was the suddenly fired in November. The entertainment giant will cut 7,000 jobs and slash $5.5 billion in costs. Profit centers are also being realigned to make content creators directly responsible for financial performance.
Disney price action is working up the right side of a 26-week-old cup base. DIS stock is now well-situated above the 21-, 50- and 200-day lines. The company is forecast to post double-digit growth between 17% and 28% in 2023 and 2024.
Crypto Crowd Piles Into AI Bubble
Barron's warned this morning about the growing AI frenzy among former crypto traders, noting similarities between the crypto craze and the developing artificial intelligence bubble.
"Investors have worked themselves into a frenzy over opportunities in artificial intelligence," the article said. "You can tell the froth is reaching peak levels because crypto bros are piling in with big bets on small and speculative cryptocurrencies linked to AI."
In fact, research compiled by data group CryptoSlate shows that an index of 73 AI-linked crypto tokens rallied an extraordinary 87% in the past week. A smaller basket of obscure tokens is booking "even more eye-watering returns."
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Stock Market Today
Longtime laggard DraftKings was added to the IBD 50 list this week, even though the sports gambling platform is expected to lose more than $2 per share in 2023.
DKNG stock is benefiting from membership in the red-hot Leisure-Gaming Equipment industry, which ranks a lofty No. 10 on IBD's list of 197 industry groups. Those gaming stocks caught fire after China's reopening spread to Macao gaming halls.
Current price action looks like the right side of a long cup base with a 21.55 buy point. But pattern development is still early. Shares traded 4.5% lower Thursday.
PepsiCo rallied less 2% after beating Q4 top and bottom-line estimates and lowering 2023 earnings guidance by 10 cents. Shares traded higher after the snack and beverage giant announced a sizable dividend hike.
Tapestry jumped 6% after beating fiscal Q2 2023 earnings estimates and raising full-year EPS guidance.
Nasdaq-100 component and Barbie maker Mattel dumped 10.3%. The toy maker reported terrible Q4 results, missing estimates by wide margins and lowering 2023 earnings guidance. The stock, which had already met resistance at the 200-day line, fell below the 50-day average.
Baxter crashed 12% to a seven-year low. The $20 billion health care products provider reported mixed Q4 results and lowered earnings estimate for the current quarter and full year.
Follow Alan Farley on Twitter at @msttrader.
