Dow Jones futures rose slightly late Wednesday, along with S&P 500 futures and Nasdaq futures. Recent IPO Snowflake (SNOW), CrowdStrike (CRWD), Zscaler (ZS), Okta (OKTA) and Elastic (ESTC) reported earnings after the close, with all five software stocks near buy points. Tesla stock rose late on a new analyst upgrade.
The stock market rally erased losses Wednesday as top Democrats signaled hope for a stimulus deal soon. House Majority Leader Steny Hoyer, D-Md., said he planned to meet with Senate Majority Leader Mitch McConnell, R-Ky., on a stimulus deal, with hopes for an agreement by the end of this weekend. Notably, House Speaker Nancy Pelosi and Senate Minority Leader Charles Schumer said a $908 billion bipartisan stimulus proposal released this week should be the basis of talks. Democrats had insisted on a $2.2 trillion stimulus deal, while Senate Republicans wanted a $500 billion package. Both Hoyer and McConnell have suggested that Dec. 11 would be a deadline for a stimulus deal this year. Dec. 11 is when current government funding expires.
The House late Wednesday approved legislation that would require Chinese companies such as Alibaba (BABA), Pinduoduo (PDD), Nio (NIO) or Xpeng stock that trade in the U.S. to submit to U.S. accounting oversight or face delisting. The Senate already overwhelmingly approved the China stocks delistings legislation, which will now go to President Donald Trump’s desk. Beijing bars Chinese companies from foreign accounting oversight. However, the bill wouldn’t require delisting for three years, and leaves a lot of discretion to the Treasury Department. So far, investors don’t seem to be too worried about the Chinese stock delisting threat.
China EV stocks Nio, Xpeng Motors (XPEV) and Li Auto (LI) rebounded from sharp early losses and tests of their 21-day exponential moving averages. Nio stock rose 5.8% and Xpeng nearly 7%, while Li Auto dipped 0.3%. Li Auto joined Nio and Xpeng in reporting strong November sales, though it also announced a new stock offering.
Tesla (TSLA) fell 2.7% on Wednesday but found support at a short-term moving average. After the close, Goldman Sachs upgraded Tesla stock to a buy with a 780 price target. TSLA stock rose 2.5% overnight.
Software Earnings Reports
Software had a tough session, partially due to Salesforce.com (CRM) tumbling following earnings and its announcement it’s buying Slack (WORK). But several others retreated, including Snowflake, CrowdStrike, Okta and Zscaler stock, ahead of their results
Snowflake stock fell after it reported a wider-than-expected loss in its first earnings report since its September IPO. Cybersecurity plays CrowdStrike stock and Zscaler jumped, signaling possible breakouts, while Okta also advanced. Search software provider Elastic stock also popped, suggesting a move to a buy point.
Dow Jones Futures Today
Dow Jones futures rose 0.1% vs. fair value. S&P 500 futures advanced 0.1%. Nasdaq 100 futures climbed 0.2%.
Coronavirus cases worldwide reached 64.83 million. Covid-19 deaths topped 1.49 million.
Coronavirus cases in the U.S. have hit 14.31 million, with deaths above 279,000. U.S. Covid cases topped 200,000 cases on Wednesday, the second time that’s happened. U.S. coronavirus deaths exceeded 2,800, a new daily record.
Hospitalizations have topped 100,000 in the U.S.
The U.K. approved the Pfizer (PFE) and BioNTech (BNTX) coronavirus vaccine, with vaccinations set to start next week. The U.S. is likely to approve the Pfizer-BioNTech vaccine next week, with the European Union doing so on Dec. 29. The Moderna (MRNA) vaccine also is likely to win approvals before year-end.
Pfizer stock rose 3.5% on Wednesday and BioNTech rallied 6.2%. Moderna stock rebounded for a 1.4% gain after a nasty reversal Tuesday.
Stock Market Rally
A day after the S&P 500 index and Nasdaq composite hit record highs, the stock market rally closed mixed. But the major indexes cut or erased modest morning losses on stimulus deal hopes.
Private employers hired 307,000 workers in November, according to ADP, well below the 420,000 estimate from Econoday. It’s the latest sign that economic growth is slowing as coronavirus cases heat up and stimulus aid is spent.
While House Democrats and Senate Republicans may be working on a new stimulus deal, negotiations on fresh coronavirus aid have been off and on for months. Still, the weakening economy, and the Jan. 5 Georgia Senate runoff elections, likely are spurring both sides to try to come together on stimulus. The bipartisan plan doesn’t include a fresh round of direct checks to Americans, something that many lawmakers would want in a stimulus deal, but would raise the price tag.
The Dow Jones Industrial Average rose 0.2% in Wednesday’s stock market trading. The S&P 500 index also climbed 0.2%. The Nasdaq composite pared losses to less than 0.1%. Treasury yields continued a recent rise, sinking homebuilder stocks.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) fell 1%. The iShares Expanded Tech-Software Sector ETF (IGV) lost 0.65%, with Salesforce stock a big drag. The VanEck Vectors Semiconductor ETF (SMH) advanced 0.4%, as chipmakers held up well.
Snowflake lost $1.01 a share with revenue up 119% to $159.62 million. Analysts expected a loss of 26 cents on sales of $148 million.
Snowflake stock retreated nearly 4% in extended trade. SNOW stock fell 4.2% to 292.69 on Wednesday, tumbling back below a 301.10 buy point and extending big weekly losses after hitting a record 342 intraday Monday.
CrowdStrike earnings came in at 8 cents a share vs. a 7-cent loss a year earlier. Revenue jumped 86% to $232.46 million. Analysts forecast a break-even quarter on revenue of $213.5 million.
CrowdStrike stock leapt 12% overnight to 159, signaling a breakout. CRWD stock has a 154 buy point from a cup base. CrowdStrike hit 155 on Monday morning but then pulled back. Shares fell 3.8% to 141.84 on Wednesday, but found support at the 50-day line.
Zscaler earnings jumped 367% to 14 cents a share, with sales up 52% to $142.58 million. Analysts expected Zscaler earnings per share of 6 cents on sales of $132.3 million.
The work-from-home play also generally guided up for the current fiscal Q2.
Zscaler stock ran up 12% to 164.60 in extended trade. Shares slid 3.2% on Wednesday to 146.79, but also found support at the 50-day line. ZS stock has a 158.84 double-bottom buy point.
Okta earnings came in at 5 cents a share vs. a 7-cent loss a year earlier. Revenue shot up 42% to $217.38 million. Analysts expected a 1-cent loss on revenue of $202.8 million.
Okta stock climbed 8.6% to 250 overnight. Shares fell 2.9% to 230.21 on Wednesday, nearing the 50-day. Okta stock has a 251.28 buy point, according to MarketSmith analysis. But a move above Monday’s high of 246.64 could offer an early entry.
Elastic lost just 3 cents a share with revenue up 43% to $144.89 million. Analysts expected a 20-cent loss on $130.5 million in revenue.
The search software firm also guided higher.
Elastic stock rallied 8.4% to 130 in extended action. Shares dipped 0.75% on Wednesday to 119.90. ESTC stock has a 128 buy point.
Stock Market Rally Analysis
The stock market rally had a quiet session for the major indexes, all holding near record highs. The recent pullbacks in some EV stocks and hot IPOs suggest some of the froth is coming off the market. That’s good, with the bulls vs. bears reading setting fresh multiyear highs in territory often associated with at least short-term market tops. The stock market rallies on a wall of worry, not a “no worries, mate” mentality.
Still, the primary market indicators — the major indexes and leading stocks — still look strong.
It’s a time to be invested in the stock market. But it’s also a time to be disciplined about taking profits and paring losses, especially with hot stocks.
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