The Dow Jones Industrial Average climbed after House Speaker Kevin McCarthy warned President Joe Biden about the debt ceiling. Shake Shack's (SHAK), a popular restaurant chain, soared after an activist investor made a move. Meta Platforms' (META) stock jumped on the back of an analyst upgrade. Microsoft (MSFT), which has been gaining ground since a regulator increased its bid to acquire Activision Blizzard, (ATVI), gained a little.
A trio of stocks have managed to surpass buy points in spite of the mixed trading. Heico (HEI), HSBC(HSBC)and CPKC(CP)all tested their entries.
Treasury yields are mixed. The 10-year yield increased by four basis points to 3.50%, while the 2-year yield decreased slightly to 4%. The yield curve is still inverted.
McCarthy throws down the debt ceiling gauntlet
McCarthy gave Biden the gauntlet, before he warned about the debt ceiling. He will meet the president on February 2nd and has made it clear that he is looking for a quick resolution to this potential crisis.
McCarthy stated that the two sides were still "far apart." McCarthy accused Biden of not being serious and claiming that his aides were more interested in creating the appearance of talks.
McCarthy added a sense urgency to proceedings by saying, "I think that we have to get a deal done this weekend."
The House Speaker had previously stated that he wanted to reach a comprehensive agreement rather than a quick deal in order to extend the time for negotiations.
This comes after Biden stated Sunday that he was "optimistic," a deal would be reached to avoid a possible default.
Nasdaq shines as small caps jump
The Nasdaq closed the day with a 0.7% gain, better than any other major index. JD.com, the China-based ecommerce company, soared 6.7%.
The benchmark S&P500 gained 0.3%, which is less impressive. Western Digital (WDC), which surged by 11.2%, was the star of this rally.
The S&P sectors ended mixed. The strongest performers were materials, financials, and technology. Health care and defensive utilities were also struggling.
Russell 2000 rose 1.2%. The Innovator IBD50 ETF (FFTY), which tracks growth stocks, closed up 0.6%.
Dow Jones Today: Microsoft stock up after deal boost
The Dow Jones index lags behind the other major indices, but rallies at the close. It ended the day with a gain of 48 points or 0.1%.
Intel (INTC) according to MarketSmith's analysis is getting closer to the end.
Dow Jones also saw gains of 1.4% each for American Express (AXP), Walgreens Boots Alliance, and CRM.
Microsoft managed to squeeze out a 0.2% gain after Activision Blizzard's takeover bid got a boost.
The EU has approved a proposed $69 billion deal. The U.K. regulators, however, have blocked the deal due to competition concerns.
Microsoft has been sued by the U.S. Federal Trade Commission to stop this deal. The base price of MSFT has been increased to 276.86.
Activision Blizzard ended the session with an increase of 1.2%.
Stock SHAK soars on Activist Interest
Shake Shack stock soared when it was revealed that activist investor Engaged Capital had the company on its radar. The Wall Street Journal reports that the activist investor is planning to fight for three board positions through proxy voting.
Engaged believes that it can double the profits of Shake Shack in two years. It wants the company to remove its staggered boards.
It appears that the activist firm is at odds with management, resulting in a possible battle.
Shake Shack released a statement saying that "our stock has increased by more than 50% since the beginning of the year and we are in a good position to continue adding value for our shareholders."
The stock has been extended beyond a buy point of 61.49. SHAK ended the day with a 7.8% gain and has now gained nearly 70% this year.
META Stocks Pop After Upgrade
Meta Platforms (META), the leaderboard stock, ended the day with a comfortable gain after it received an upgrade.
Loop Capital upgraded it from hold to purchase, and also increased its price target from 220 to 320.
The company expects the revenue outlook for social media giant to improve. The company also stated that the stock had been "rerated significantly this year mainly on expense reductions."
Meta stock closed the day with 2.2% gains. The stock has been extended beyond a 197.26 purchase point.
The company had previously forecast revenue between $29.5 billion to $32 billion for Q2. The midpoint was far above analyst expectations of $29.5 billion.
Mark Zuckerberg, the CEO of Facebook, said earlier this year that 2023 would be the "Year of Efficiency".
Three stocks tried to break out.
Heico's stock jumped when it was announced that the company had acquired Wencor Group, a privately-held aircraft parts manufacturer for around $2 billion. Heico stock broke above the 177.65 buying point of a base with heavy volume.
Banking play HSBC cleared a cup with handle entry of 38.54. With an IBD Composite rating of 94 out 99, the overall performance of HSBC is impressive. However, it would be risky to buy a bank at this time. HSBC, on the other hand, is based in Britain.
On its weekly chart, railroad stock CPCK trades around the entry point of a flat buy base of 83.06. The key strength is earnings. CP's stock has an EPS rating of 93 out 99.
Onto Innovation (ONTO), a chip stock, also broke out from a base. This entry level is 89.85. A strong performance all around has earned it a Composite rating of 87.