It was a tale of two stock markets Tuesday as a disappointing earnings report and a 10% decline for Walmart (WMT) weighed on the Dow Jones industrial average, while strength in semiconductor stocks helped cushion a tiny decline for the Nasdaq composite.
X Chip stocks were strong across the board, helped by a 6% rise in NXP Semiconductors (NXPI). Qualcomm (QCOM) raised its bid significantly for NXP to 127.50 a share vs. a prior bid of 110 a share. Broadcom (AVGO) has been spurned so far by Qualcomm in its bid to acquire the San Diego-based company.
At the close, the Dow slumped 1%, ending below the 50-day moving average. The S&P 500 gave back 0.6% and the Nasdaq fell less than 0.1%. Preliminary data showed volume in the stock market today coming in lower than Friday's levels. The Nasdaq on Friday snapped a five-session win streak. The NYSE indexes Tuesday ended six-session win streaks.
Bitcoin was in rally mode again after South Korea's financial regulator said the government will support "normal transactions" of cryptocurrencies. According to CoinDesk data, Bitcoin was recently trading around $11,600, up 4%.
The U.S. dollar index rallied 0.6% on the heels of Friday's 0.7% gain. The dollar is still in a downtrend, however. Meanwhile, the 10-year Treasury yield added 2 basis points to 2.89%. The greenback's strength wasn't good news for gold as SPDR Gold Shares (GLD) gave back 1.3% to 126.24.
Applied Materials (AMAT) extended its win streak to seven sessions, rising 3%. Shares jumped more than 14% last week on strong earnings. Applied Materials is working on a double-bottom base with a 58.83 buy point with strong signs of accumulation as the base forms.
Meanwhile, a soft start for Domino's Pizza (DPZ) ended up looking OK by the close despite a sales miss from the company early Tuesday. After falling more than 5% intraday, shares added 0.3%. Domino's first cleared a double-bottom base with a 211.85 entry, but volume was light. Today, it cleared an alternate entry of 222.01 in very heavy volume but ended below the buy point. Domino's was featured as a possible call-option trade in the latest Earnings Preview column.
IBD'S TAKE: Domino's is one of several top-performing restaurant stocks in IBD's database. For a look at the other leaders in the group, consult an IBD Stock Checkup.
Inside the IBD 50, China Lodging (HTHT) was a big winner, up 4% to 153.52. The stock rallied nicely after a breakout over a 142.90 buy point, but then it erased a double-digit gain from the buy point, good enough for a sell signal. But China Lodging is back above the 50-day line and showing relative strength again.
Amex-listed Cheniere Energy (LNG) is showing good supporting action at the 10-week moving average for the first time after a breakout from a base with a 51.61 buy point. Shares rose nearly 1% ahead of its earnings report Wednesday before the open.
Upcoming economic reports include January existing-home sales data Wednesday along with the release of the minutes from last month's Fed meeting. According to the CME Group FedWatch tool, the market sees an 83% chance of a quarter-point hike at the March 21 meeting, to a range of 1.5% to 1.75%.
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