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China, Earnings Drive Extended Trade; 2 Houston-Based Builders Soar

Tech stocks continued to show strength in extended trade Tuesday, as a handful of late earnings reports hinted at Wednesday’s early action. In addition, late news on negotiations regarding China’s ZTE Corp. boosted related stocks, including Acacia Communications (ACIA) and Qualcomm (QCOM).

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Earnings news drove China-based IPO Huya (HUYA) and Houston-based construction plays Layne Christensen (LAYN) and NCI Building (NCS) to notable late gains. Ollie’s Bargain Outlet (OLLI) clocked one of the heaviest after-hours declines.

Futures for the Dow Jones industrial average and S&P 500 traded 0.1% above fair value. Nasdaq 100 futures were up 0.2%.

China trade negotiations and fluctuating oil prices will remain under the market’s microscope on Wednesday, as the Nasdaq looks to hold its record high, and the S&P 500 closes in on the 2800 mark.

Oil prices pulled up after a sharp dive on Monday, ending a three-day sell-off as West Texas intermediate crude gained 1.8% Tuesday. That left the benchmark at $65.52 per barrel.

Oil received some support from American Petroleum Institute data released late Tuesday, which showed a 2-million-barrel decrease in weekly oil inventories. Official stockpiles data are due out Wednesday morning from the Energy Information Administration. The consensus estimate projects a 3.6-million-barrel decrease in oil supplies and a 500,000-barrel decrease in gasoline stores.

Trade balance data for April and first-quarter cost and productivity estimates are also expected before the market opens.

Apple Steady, Ollie’s Stumbles, Biotechs Take a Hit

Apple (AAPL) and the four FANG tech leaders traded with very narrow gains in extended trade. Amazon.com (AMZN) and Netflix (NFLX) both rose more than 1% during Tuesday’s session to take out new highs.

Retail stocks were among the market’s best performers Monday and Tuesday, but extended trade was mixed on that front. Ollie’s Bargain Outlet tumbled more than 5% despite scoring better-than-forecast sales and earnings — and a strong beat in its comparable-store sales. A seven-week advance left the stock extended at Tuesday’s close, up 21% since breaking out above a flat base in April.

Biotechs Uniqure (QURE) and Immunogen (IMGN) were set for pullbacks early Wednesday. Immunogen traded down 4.6% in after-hours action, and Uniqure fell 2.6%. Uniqure was up 89% for the year through Tuesday; Immunogen was up 79%. Both companies have yet to turn a profit.

Layne Christensen, NCI Poised For A Strong Start

Two Houston-based building plays worth watching are Layne Christensen and NCI Building Systems.

Construction and mineral exploration drilling contractor Layne Christensen climbed nearly 3% in post-market action. The company reported a second straight quarter of triple-digit earnings growth, although revenue held to a 3% gain — below analyst expectations. The stock ended Tuesday below a 16.17 buy point in a cup-with-handle base.

NCI was set to capitalize on a breakout above a cup-with-handle buy point at 19.50. The maker of metal wall and roof systems reported above-forecast fiscal Q2 sales and earnings. The company also restructured its debt during the quarter, extended the payback term and halved its interest costs. The stock broke narrowly above the base’s buy point in heavy trade on Tuesday. Extended trade suggested a gap-up move beyond buy range at Wednesday’s open.

Among China-based names, IBD 50 stock YY Inc. (YY) traded quietly, up less than 1% ahead of its first-quarter earnings report. YY shares have climbed in six of the past seven weeks, lifting the stock up the right side of a six-month base.

China-based IPO Huya, spun off from YY last month, surged more than 6% in extended trade. Investors were just digging into the livestreaming gaming platform’s first-quarter results, reported after the close. Shares are well-extended above an IPO base, ending Tuesday up nearly 22% from the base’s 24.45 buy point.

China’s ZTE Agrees To Play By The Rules

Reuters reported late Tuesday that Chinese telecom equipment maker ZTE Corp. had agreed in principle to a set of rules that would lift the U.S. trade restrictions that had shut the company down in April.

Reuters quoted Commerce Department spokesman James Rockas saying that “no definitive agreement has been signed by both parties.”

But fiber-optic telecom stocks linked to ZTE were in play in extended trade: Oclaro (OCLR) rose 2.1%, Lumentum Holdings (LITE) jumped 2.5%, and Acacia Communications popped 3.8%.

An agreement with ZTE could also clear the path for Qualcomm’s proposed $44 billion takeover of NXP Semiconductors (NXPI). Qualcomm rose 1% in late trade. NXP was down 0.8%.

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