Nasdaq Futures Lead As Chip Drug Stocks Power Premarket Gains

Stock futures hammered out modest early gains Monday, as chip stocks and drugmakers defined much of the premarket tone.

Futures for the Dow Jones industrial average wrestled to 0.3% above fair value, as a strong early gain by Merck (MRK) was partially held back by Intel (INTC), as shares responded to the latest development in Broadcom's (AVGO) effort to take over Qualcomm (QCOM).

S&P 500 futures were 0.2% higher, and Nasdaq 100 futures gained 0.4%, as Broadcom and Micron Technology (MU) led the index in early trade and Biogen (BIIB) and Intel fell to the bottom of the list.

The market's uptrend got its groove back Friday, after a surprisingly strong February jobs report triggered a risk-on rally. Two of the three major indexes cleared key levels of resistance, and the Nasdaq shook off a distribution day. Monday's action will provide a test of how durable those gains — and the market's upgraded status — might be.

Merck Paces Dow, Broadcom Leads Nasdaq, Oclaro Spikes On Lumentum Deal

Merck jumped 1.2% to lead the Dow in premarket trade. The New Jersey-based drugmaker last week announced it would invest up to $5.8 billion to jointly develop, with Japan's Eisai, the Lenvima-Ketruda combination cancer treatment which, in January, earned the Food and Drug Administration's 'breakthrough' designation as a kidney cancer treatment.

Intel posted one of the Dow's few early losses, down 0.4% after reports that the company was considering a takeover bid for Broadcom, as a means to upend Broadcom's effort to merge with Qualcomm. Broadcom is wrestling to retake support at its converged 10- and 40-week moving averages in a four-month consolidation.

Oclaro (OCLR) surged 25% in premarket trade, after Lumentum (LITE) announced it would acquire the company in a $1.7 billion cash/stock deal. Lumentum, reportedly a supplier of technology used in Apple's (AAPL) Face ID applications, said the combination aimed to fast-forward its participation in the market for 3D sensing technology.

Oclaro's shares trade below 10. Lumentum shares ended Friday up 64% from a February low, and in buy range above a 66.80 buy point in a four-month cup base. The IBD 50 stock's futures rose 1.5% in premarket trade.

IPOs also played a part in early action, as China-based Qudian (QD) popped 7% on stronger-than-forecast fourth-quarter results, including a 53% surge in its number of borrowers, to 6.9 million, and a 70% increase in its total transactions, to $3.9 billion, during the quarter. Shares ended Friday 40% above a November low, but still 34% below the stock's October IPO price.

Global Stock Markets: Asia Rallies, Europe Holds Tight Gains

Asia's stocks market logged strong gains as the dollar climbed on the heels Friday's U.S. jobs report. Hong Kong's Hang Seng index jumped 1.9% and the Nikkei 225 in Tokyo vaulted 1.7% higher. Markets in Europe traded unevenly higher near midday. Frankfurt's DAX led, up 0.7%.

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