Blue chips led the advance out of the starting gate Tuesday, as oil prices surged and stocks looked to extend their rally to a fourth day.
XPepsico (PEP) and Marathon Oil (MRO) led the S&P 500 in early trade. Tesla (TSLA) cranked up an early gain on news that it would launch a manufacturing site in China. Energy names including Marathon and EOG Resources (EOG) looked to overtake buy points as oil prices ticked higher. EBay (EBAY) lost ground after an analyst downgrade.
The Dow Jones industrial average popped 0.4% at the open. The S&P 500 climbed 0.2%. The Nasdaq fought to hold a fractional gain, as heavy early losses by Biogen (BIIB) and Cerner (CERN) hindered progress. (For updates on this story and other market coverage, visit the Stock Market Today.)
The market launched into Tuesday's session near several key benchmarks. The Nasdaq Composite ended Monday's session 0.6% off its June 20 high. The S&P 500 closed 0.6% below the 2,800 level. The Dow on Tuesday starts its first session above its 50-day line since June 20, and 0.9% below the 25,000 level, which it gave up on June 20.
Europe's markets rose Monday and traded firmly higher at mid-session on Tuesday. Top level-government cabinet resignations in the U.K. left Prime Minister Theresa May struggling to piece together support for her Brexit trade strategy with the European Union.
In China, Hong Kong's Hang Seng index dipped a fraction, taking a breather after a two-day advance. The Shanghai Composite rose 0.4%, giving it a third straight gain. In Japan, Tokyo's Nikkei jumped 0.7%, also logging a third straight advance.
Strike Boosts Oil Prices; Marathon Breaks Out
Oil prices will be in focus today, ahead of two key data releases and as oil workers begin their strike in the North Sea. Brent crude jumped 1.6%, back above $79 per barrel, in early action after Royal Dutch Shell (RDSA) announced the shutdown of one oilfield off Norway's coast due to striking workers. U.S. benchmark West Texas Intermediate rose 0.7%, trading above $74 per barrel. The American Petroleum Institute releases its weekly oil inventory data late today. The Energy Information Administration reports its weekly oil stockpile estimates on Wednesday.
Marathon Oil surged 2.9%, breaking out past a 22.22 buy point. EOG Resources gained 1.1%, enough to clear its cup-with-handle buy point at 126.42. Noble Energy (NBL) gained 2%, putting it less than 1% from a flat base buy point at 37.77.
In earnings news, Pepsico scored an early 3% advance, after reporting above-forecast fiscal second-quarter earnings and revenue. Management held its full-year earnings forecast above consensus views, and projected that foreign exchange impact on revenue and earnings would be neutral for the year. Pepsico shares are up 13% from a May low, and are finding resistance at their 40-week moving average.
Tesla Seeks Support; KB Home Upgraded; Ebay Slips
KB Home (KBH) edged up 0.8% in early action after Susquehanna upgraded the stock to positive. Analysts expect the Los Angeles-based builder to report a 60% earnings advance in its third-quarter results. For the year, consensus views project a 6% decline in earnings per share. The company has yet to announce a reporting date for its third-quarter results. KB shares are above their 10-week support line, looking to turn up the right side of a seven-month consolidation.
Tesla climbed 1.4% in opening trade, as Bloomberg reported the company planned a manufacturing facility in China with capacity to turn out 500,000 of its luxury electric autos per year. Chief Executive Elon Musk was scheduled for a round of meetings in Shanghai on Tuesday, and Beijing on Wednesday and Thursday. News reports on Monday said Tesla raised the price of its S and X models sold in China by about 20%, following China's imposing of retaliatory trade tariffs on Friday. Tesla shares are fighting to retake and hold support at their converged 10- and 40-week moving averages.
EBay traded 1.6% lower after SunTrust Robinson Humphrey downgraded the stock to hold, from buy. The note also lowered the stock's price target to 40, from 48. The report said the U.S. Supreme Court's recent ruling on payment of tax for internet sales will place pressure on eBay's gross merchandise value growth in 2019 and beyond. EBay shares have been in a downtrend, fighting to regain support since February.
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