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IBM Crimps Dow; EBay Gets Double Upgrade

Stock futures climbed out of mixed trade and into firm gains ahead of Wednesday’s open, as another round of large-cap earnings news powered early trade.

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Nasdaq 100 and S&P 500 stock futures led early action, rising 0.4% above fair value. CSX (CSX), eBay (EBAY) and Intuitive Surgical (ISRG) hauled both indexes higher. Lam Research (LRCX) posted the largest decline among Nasdaq 100 and S&P 500 stock futures.

Futures for the Dow Jones industrial average exited early losses and added 0.2%, despite IBM’s (IBM) 4.8% premarket dive. No other Dow issue advanced or declined more than 1% in early action.

The three benchmark indexes all punched above their 50-day moving averages in a powerful, earnings-driven session on Tuesday. That provided the market’s week-old uptrend with a new level of technical support. The next few sessions will provide some sense of whether the market will build on that support, or be be bogged down in a struggle in order to maintain it.

Crude oil prices jumped 1.5% early Wednesday, with U.S. benchmark crude climbing back above $67 per barrel. That is below Friday’s high, which marked oil’s strongest level since Nov. 2014.

The American Petroleum Institute on Tuesday reported a slightly smaller-than-expected draw on crude inventories during the prior week, but a surprise 2.47 million-barrel draw on gasoline supplies, vs. expectations for a 0.2% takeout. The API numbers are generally considered preliminary to weekly supply data from the Energy Information Administration, which are due out at 10:30 a.m. ET.

Stock Futures: CSX, Intuitive, Textron Rocket; ASML, Lam Slide

Earnings news drove the lion’s share of Wednesday’s premarket session, with action among stock futures sharply divided after reports.

In addition to IBM’s early loss, chip equipment makers Lam Research and ASML Holding (ASML) dropped 5.2% and 2.2%, respectively. Broadband cable systems maker Adtran (ADTN) tumbled 9%.

On the upside, Morgan Stanley (MS) rose 2.6%, United Airlines (UAL) surged 2.9%, CSX throttled up 5.5% and Interactive Brokers Group (IBKR) gained 1% following their quarterly results.

Intuitive Surgical bolted 5.d% higher. The maker of the da Vinci robotic surgical system reported a 25% EPS gain and an 18% rise in revenue for its first quarter late Tuesday. The number of surgical systems shipped soared 39% during the quarter, with procedures performed using the da Vinci system rising 15%.

Intuitive’s shares rose 4.7% in regular trade Tuesday, the stock’s best session since January. Shares are more than two months into a new base, closing Tuesday less than 4% below the potential buy point at 452.10.

Defense contractor Textron (TXT) powered up 6.8% early Wednesday after scoring big beats in its first-quarter revenue and earnings. The premarket move implies a starting bell breakout above a 62.29 buy point in a two-month flat base. Premarket moves among stock futures do not always carry through into regular trade.

EBay Price Target Hiked 60%

EBay stock futures rumbled ahead nearly 6%. Morgan Stanley raised its price target on the stock by more than 60%, to 38, from 36, and raised its rating two notches to overweight, from under-weight. The note based its upgrade on eBay’s recent announcement that it was developing a new payment systems with Netherlands-based Adyen. EBay shares are rebounding from support at their 40-week line, within a two-month consolidation.

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