Dow Jones futures rose solidly Sunday night, along with S&P 500 futures and Nasdaq futures, as the stock market rally trades near highs but with leadership in flux.
President Donald Trump on Sunday walked back an apparent concession to Joe Biden in the 2020 presidential election, insisting on Twitter that he will keep fighting the “rigged” election.
Coronavirus cases continue to soar in the U.S. But Pfizer (PFE) and BioNTech (BNTX) last week announced strong results for their coronavirus vaccine. Expectations are high that Moderna (MRNA) will report similar performance for its Covid vaccine, perhaps as early as Monday. Both coronavirus vaccines use mRNA technology.
Stay-at-home and other coronavirus plays sold off sharply last week on the upbeat vaccine news.
Key Earnings Reports
JD.com (JD), Nio (NIO) and Nvidia (NVDA) are three key earnings reports. JD.com earnings are due early Monday, with the Chinese e-commerce giant near record highs. Nio earnings are late Tuesday, with Nio stock and Chinese electric car rivals Xpeng Motors (XPEV) and Li Auto (LI) greatly extended even after a negative reversal Friday, even as Tesla (TSLA) slumps. Nvidia earnings are late Wednesday as data-center chip stocks struggled last week amid the coronavirus vaccine news.
Apple, Microsoft Holding Up
While many tech leaders sold off, Apple stock, the biggest of them all, edged higher. Also, the Apple (AAPL) ecosystem did relatively well, with Taiwan Semiconductor (TSM) rallying to new highs and iPhone chip suppliers Qualcomm (QCOM) and Qorvo (QRVO) holding steady after big gains.
Microsoft (MSFT), another Dow Jones tech titan like Apple, has formed a new handle.
JD.com stock, Tesla stock, Microsoft and Taiwan Semiconductor are on IBD Leaderboard. Taiwan Semiconductor stock is on SwingTrader. Microsoft stock is on IBD Long-Term Leaders. TSM and Nvidia stock are on the IBD 50.
President Trump Concedes, Then Doesn’t
President Trump appeared to concede, grudgingly, early Sunday, tweeting that Joe Biden “won,” though only because “the Election was Rigged.” A few hours later, Trump insisted, “He only won in the eyes of the FAKE NEWS MEDIA. I concede NOTHING! We have a long way to go. This was a RIGGED ELECTION!”
President Trump and his allies have claimed widespread fraud, but independent analysts say there has been no real evidence provided.
By refusing to concede, Trump is delaying government funding and other efforts for a transition to a Joe Biden presidency.
Dow Jones Futures Today
Dow Jones futures rose 0.75% vs. fair value. S&P 500 futures climbed 0.8% and Nasdaq 100 futures advanced 0.9%.
China industrial production rose 6.9% in October vs. a year earlier, better than expected. Retail sales climbed 4.3%, missing views.
That’s been true over the past week, as Dow Jones futures — and Nasdaq futures — struggle to price in the combination of soaring Covid cases and just-around-the-corner coronavirus vaccines.
Investors also may not get a good idea on which stocks are rising — stay-at-home plays, “real economy” stocks, or something in between like Apple or Microsoft — until individual stocks between trading Monday morning
Coronavirus cases worldwide reached 54.81 million. Covid-19 deaths topped 1.32 million.
Coronavirus cases in the U.S. have hit 11.36 million, with deaths above 251,000. New coronavirus cases hit a record 183,527 on Friday. Daily Covid cases in the U.S. have topped 100,000 every day since Nov. 3, Election Day.
TEsalaCEO Elon Musk said over the weekend that “likely” has a “moderate case of Covid.”
The U.S. is on a pace for one million new coronavirus cases per week, with that likely to rise in the coming days. Hospitalizations are at record levels and rising fast, with hospitals in many communities overwhelmed. Coronavirus deaths are rising, but still well below their spring peaks.
Several states and cities are stepping up restrictions, while other signs point to more social distancing. All of that could slow the economic recovery.
Coronavirus Vaccine News
Pfizer and BioNTech should release safety data for their coronavirus vaccine candidate in the next few days. Assuming the Covid vaccine passes that threshold, an FDA emergency use application will quickly follow.
The Moderna coronavirus vaccine is close behind. The biotech said last week that it has enough coronavirus cases in its late-stage trial to begin an interim analysis. Dr. Anthony Fauci, the nation’s top infectious diseases official, said he expected the Moderna coronavirus vaccine to be as effective as the Pfizer vaccine, which topped 90%.
The Pfizer/BioNTech vaccine must be kept at ultra-low temperatures, making storage and distribution more difficult.
Pfizer jumped 6% last week, but fell back below a buy point from Monday’s peak. BioNTech stock leapt 15%, moving out of a buy zone. Moderna spiked 23%, also clearing a buy zone.
There’s a reasonable chance that both coronavirus vaccines will win FDA approval in December, with millions of vaccinations by year-end. Vaccinations should continue to accelerate in 2021, especially if more vaccines win approval. But, it may not be until mid-2021 or later that most Americans will have received the vaccine, moving toward herd immunity.
However, it’s still possible that the Pfizer or Moderna coronavirus vaccine will not win FDA approval, or even both. Such negative news would likely roil the stock market rally, perhaps reversing in whole or part the recent rotation out of stay-at home companies.
Stock Market Rally Last Week
U.S. Stock Market Today Overview
Last Update: 4:04 PM ET 11/13/2020
The stock market rally had a solid week, if you look at the major indexes.
The Dow Jones Industrial Average leapt 4.1% in last week’s stock market trading. The S&P 500 index rose 2.2%. Both hit all-time highs Monday, but set record closes on Friday. The Nasdaq composite hit a record high Monday, but reversed lower on Monday and kept falling Tuesday. But the tech-heavy index bounced back to lose just 0.55% for the week.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) sank 4.8%. The iShares Expanded Tech-Software Sector ETF (IGV) lost 4%, with Microsoft stock a top holding. The VanEck Vectors Semiconductor ETF (SMH) only dipped 0.4%, despite hefty losses for Nvidia stock, AMD (AMD) and Monolithic Power Systems (MPWR). TSM stock and many chip-gear makers rallied, while Qualcomm just edged lower.
Apple stock rose 0.5% last week to 119.26, but still remains relatively low in its base. The official buy point is 138.08, though investors could use 125.49 as an early entry. With the 5G iPhone cycle just underway, that could be a tailwind for Apple sales in the coming year, as well as iPhone chip plays such as Qualcomm, Qorvo and TSM stock.
Microsoft stock punched above a 225.31 entry point on Monday morning, but reversed lower, closing just below its 50-day line Tuesday. Shares pared losses somewhat, to close off 3.3% at 216.51. MSFT stock now has a proper handle at 228.22, just above Monday’s high.
Tesla stock popped Monday morning, but reversed lower, hitting resistance at its 50-day line and sinking 5% to 408.50. A 466 handle buy point remains.
Assuming Elon Musk recovers quickly from his apparent coronavirus illness, that should negligible impact on Tesla stock. But it’s unclear what will be a catalyst for the big 2020 winner. Tesla stock is slumping even as China EV stocks skyrocket in recent weeks. If Nio, Xpeng and Li Auto roll over, will investors rush back into Tesla stock or exit?
Meanwhile, Nio stock rose 7% last week, Li Auto 18% and Xpeng 21%. That’s even after all three China EV stocks reversed lower Friday, perhaps sparked by a Citron Research sell rating on Nio stock. Xpeng and Li Auto reported strong sales, improving gross margins and bullish guidance last week. Investors will looking for more of the same from Nio, which has higher sales than the two 2020 IPOs do.
Even with Friday’s 7.7% decline, Nio stock closed 65% above its 10-week line. Investors may want to take some profits in Nio stock ahead of earnings to lock in big gains.
Nvidia stock, which broke out on Nov. 6, tumbled 8.7% last week, though it did manage to close above its 50-day line. Investors may want to treat 587.76, just above the Nov. 9 intraday peak, as the new buy point. While Nvidia earnings were strong before the coronavirus and growth should continue after the pandemic, investors may believe data-center chipmakers got an extra boost from the stay-at-home trend. AMD stock fell 5.2%, also just above its 50-day line. MPWR stock plunged 14% last week after soaring nearly 12% in the prior week.
JD.com earnings are before Monday’s open. Wall Street forecasts JD.com earnings per share will climb 41% to 41 cents a share. Revenue should jump 36% to $25.67 billion. That would be the second straight quarter of accelerating growth.
JD.com stock is just below record highs. Arguably it’s just above a buy zone, but that’s after plunging below its buy point early last week before staging a recovery. While looking like one of the stronger tech plays, JD.com stock doesn’t really have a good buy point.
Chinese e-commerce plays are looking strong, boosted by Pinduoduo (PDD), Tencent (TCEHY) and Vipshop (VIPS) earnings last week. That’s despite Beijing issuing draft rules targeting monopolistic behavior by big internet platforms. The notable exception is Alibaba (BABA), which appears to be the focus of the Chinese government’s ire.
What To Do Now
Investors should reevaluate the current holdings. Depending on the stocks they owned going into last week, they could have have a good, middling or rough week. You might have cut some stocks loose as they trigger sell rules. But you might need to do more.
Do a through review of your watchlists. There likely will be a fair amount of turnover. Focus on stocks with strong relative strength and cast a wide net.
This earlier Stock Market Today weekend article analyzed the stock market rally’s recent action, including sector rotation and the paucity of stocks in or close to buy zones.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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