Dow Jones futures were little changed vs. fair value Monday morning, along with S&P 500 futures and Nasdaq futures. It's a big week for the coronavirus stock market rally, with earnings from Tesla, Microsoft, Chipotle Mexican Grill and Intel. AstraZeneca is expected to release data on its experimental coronavirus vaccine, which is further along than Covid-19 vaccine candidates from Moderna and others.
Last week the coronavirus stock market rally start off with wild action, then calmed down. There was some sector rotation into homebuilders, financials, industrials and other "real economy" stocks. Growth stocks, notably highflying cloud software names, suffered damage, but generally found support at or near key levels.
The Tesla earnings report is especially important a profitable Q2 may push TSLA stock into the S&P 500 index. Going forward Tesla faces increasing electric vehicle competition from Volkswagen, Ford Motor and a slew of other traditional automakers and EV startups.
Last week Tesla stock reversed sharply from record highs but then settled down, even as China rival Nio and electric and fuel-cell truck startup Nikola suffered big losses.
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Microsoft stock has pulled back to a key technical level. Chipotle stock is in buy range as the burrito eatery has fared very well during the coronavirus crisis.
Intel stock is in a base but has been lagging the S&P 500 index and especially leading semiconductor stocks during the coronavirus market rally. Still, Intel earnings and guidance will offer a good picture about the chip industry.
Tesla stock, Microsoft stock and Chipotle stock are all on IBD Leaderboard. MSFT stock is on IBD Long-Term Leaders. Both Microsoft and Intel stock are on the Dow Jones Industrial Average.
Dow Jones Futures Today
Dow Jones futures fell 0.3% vs. fair value. S&P 500 futures retreated 0.2% and Nasdaq 100 futures climbed 0.2% vs. fair value. Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
European leaders, meeting in person since Friday, still haven't reached a deal on an EU recovery fund, though French President Emmanuel Macron said Monday that progress has been made. So did the Austrian and Dutch prime ministers, with the latter the leader of four EU nations favoring more-limited aid.
Meanwhile in the U.S., extra unemployment benefits are set to expire starting this week. President Trump and Congress have already recently begun to focus on the next coronavirus stimulus package. Coronavirus stimulus checks, jobless air and business loans have helped a nascent economy recovery begin, but more is likely needed.
DJIA futures pared losses overnight as the Shanghai composite jumped 3%. Chinese regulators raised caps on how much insurance companies could invest in equities. Some U.S.-listed Chinese stocks, such as Alibaba were rising early Monday. Alibaba stock also rose as its Ant Financial arm said it planned a dual listing in Shanghai and Hong Kong.
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Coronavirus Cases
Coronavirus cases worldwide are at 14.66 million. Covid-19 deaths have reached 609,000.
Coronavirus cases in the U.S. have topped 3.89 million, with deaths above 143,000. The U.S. added a record 74,987 new Covid-19 cases on Friday. There may be some signs of plateauing in new cases in the hard-hit states of Florida, Texas, Arizona and California.
Coronavirus deaths in the U.S. have turned higher over the past week or so. But deaths are far below their April peaks. That may reflect more widespread testing, earlier detection, young coronavirus patients and better standard of care.
AstraZeneca Coronavirus Vaccine Data
AstraZeneca and Oxford University reportedly will release phase one data Monday on their coronavirus vaccine candidate. Those early reports suggest a strong antibody response as well as "killer T-cell" production in healthy adults. A phase three trial is already underway.
AstraZeneca stock leapt 14% last week, blasting through a buy zone on those coronavirus vaccine reports. Moderna stock erupted for a 51.5% gain last week, also roaring past a buy zone, after giving some preliminary phase one data on its coronavirus vaccine. Moderna is close to launching its own phase three trial.
Pfizer and BioNTech also had big gains last week after the FDA gave a fast-track designation to two of the coronavirus vaccine candidates that they are collaborating on.
Pfizer and BioNTech stock rose early Monday after reaching a vaccine dose supply deal with the U.K. A coronavirus vaccine or vaccines would severely slow the spread and allow the global economy to recover fully. That's definitely part of the bull thesis driving the coronavirus stock market rally.
Stock Market Update: The Raging Bull Sabbatical
Coronavirus Stock Market Rally
U.S. Stock Market Today Overview |
||||
|---|---|---|---|---|
| Index | Symbol | Price | Gain/Loss | % Change |
| Dow Jones | (0DJIA) | 26672.46 | -62.25 | -0.23 |
| S&P 500 | (0S&P5) | 3224.75 | +9.18 | +0.29 |
| Nasdaq | (0NDQC ) | 10503.19 | +29.36 | +0.28 |
| Russell 2000 | 146.59 | +0.43 | +0.29 | |
| IBD 50 | 35.46 | +0.27 | +0.77 | |
Last Update: 4:36 PM ET 7/17/2020 |
||||
The coronavirus stock market rally started off with whipsaw action then calmed down.
The Dow Jones Industrial Average rose 2.3% in last week's stock market trading. The DJIA reclaimed its 200-day moving average. The S&P 500 index climbed 1.25%. The S&P is near the top of a "handle," closing near the top of its weekly range. The Nasdaq composite fell 1.1%. The Nasdaq reversed sharply from a record high Monday but, once again, rebounded from its 21-day exponential moving average the next day. The tech-heavy Nasdaq never closed below its 10-day line and and finished right in the middle of its weekly range.
Among the best ETFs, the Innovator IBD 50 ETF sank 2.8%. The iShares Expanded Tech-Software Sector ETF retreated 4%, as software took the hardest hits. Microsoft stock, a major component, tumbled 5.05%. The VanEck Vectors Semiconductor ETF actually edged up 0.15%, with Intel stock a key holding.
Tesla Earnings
Tesla earnings are due late Wednesday. Analysts officially expect a loss of 47 cents a share vs. a loss of $1.12 a share vs. a year earlier. Revenue should tumble 21% to $5 billion. Tesla now has the Shanghai plant, but the Fremont plant was shut down for eight weeks.
However, there is strong sentiment among TSLA stock bulls and bears that Tesla will deliver a profit. CEO Elon Musk scope to report Tesla earnings by recognizing more emission credits and "Full Self Driving" revenue.
If the electric vehicle maker does report a Q2 profit, there's a strong expectation that the S&P 500 index will add Tesla stock. S&P 500 inclusion, if it happens, likely would come a few weeks later.
Tesla stock has surged in recent weeks on earnings and S&P 500 hopes. On Monday, TSLA stock spiked 16% to a record 1,794.99 before reversing for a 3% drop. But after that, TSLA stock traded tightly, closing the week down 2.8% at 1,500.84.
The relative strength line for Tesla stock is holding at record highs after a huge run. The RS line, the blue line in the charts provided, tracks a stock's performance vs. the S&P 500 index.
Still, Tesla stock is greatly extended from any conceivable buy point, especially with earnings and S&P 500 news coming.
Electric Vehicle Rivals
Some other EV stocks came under pressure. Nio stock plunged 26% last week. Nikola stock fell 10%, its fourth straight weekly loss. NKLA stock plunged early Monday after Nikola discussed upcoming stock sales by the startup and existing holders in a late Friday. SEC filing.
Going forward, Tesla should be able to produce record numbers of vehicles. How strong will Model Y demand be after the initial launch? Meanwhile, more EV competition is coming, including the Polestar 2 from Volvo parent Geely, the VW ID.3 in September and the Ford Mustang Mach-E before year-end.
Microsoft Earnings
Microsoft earnings also are late Wednesday. Wall Street expects Microsoft earnings to rise 1% to $1.38 a share, with revenue up 8% to $36.49 billion. Cloud-computing services and other cloud revenue likely will drive Microsoft gains once again.
Microsoft earnings and guidance will be important for other software companies, cloud rival Amazon.com and video game publishers.
Microsoft stock fell 5.05% last week, closing Friday below its 21-day line for the first since April. But it's still nearly 5% above its 10-week line. A rebound from the 10-week line could offer a new buy point, especially for investors treating MSFT stock as a Long-Term Leader.
Intel Earnings
The Intel earnings report is late Thursday. Analysts expect Intel earnings per share to rise 4% to $1.10 a share, with revenue climbing 12% to $18.51 billion.
Intel stock rose 0.8% to 60 last week. INTC stock has a 65.21 buy point from a flat base next to a cup-with-handle pattern. But shares are still stuck between their 50-day and 200-day lines. The RS line for Intel stock has been lagging throughout the coronavirus stock market rally.
Still, the PC and server chip giant will provide insight into the overall health of the semiconductor industry. Texas Instruments, Skyworks Solutions, Teradyne and more are reporting this week.
Ford will partner with Intel's Mobileye unit to improve its driver-assist systems across its global lineup of vehicles.
Chipotle Earnings
Chipotle earnings are after Wednesday's close. Analysts see Chipotle earnings tumbling 94% to 22 cents a share, with revenue down 9% to $1.31 billion. Indoor seating was shut down in much of the country for much of Q2, with restrictions returning in recent weeks. Digital sales have surged during the coronavirus pandemic, and the company is rolling out more drive-thru "Chipotlanes."
Chipotle stock rose 1.6% to 1,136.22 last week. That's technically still in range from a 1,087.10 buy point from a flat base, according to MarketSmith analysis. But investors should cautious about making buys heading into earnings. CMG stock might be buyable after earnings, if it clears the little consolidation above the flat base.
The RS line for Chipotle stock is just below record highs.
Stock Market Rally Seeks Direction
The coronavirus stock market rally arguably has been due for a real pullback or pause for several weeks. That would let big market rally winners to set up new bases and let 10-week lines catch up, while other sectors join in on the advance. All of this be normal and healthy. But it's unclear if that will happen or whether this is just another momentary pause in the stock market rally.
For investors, analyze your stocks and overall portfolio. Which holdings are, well, holding up best? Does your portfolio have leaders from a variety of sectors? Update your watchlists. Make sure to consider a wide variety of quality names, especially with market leadership potentially in flux.
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