Dow Jones futures rose modestly late Tuesday, along with S&P 500 futures and Nasdaq futures. The coronavirus stock market rally stepped back after several days of gains, amid soaring Covid-19 cases and a slight uptick in deaths.
Facebook stock was in focus overnight after ad boycott organizers said a meeting with Facebook (FB) CEO Mark Zuckerberg was a “disappointment.” FB stock fell modestly.
Vertex Pharmaceuticals (VRTX) cleared at least one buy point, along with online bond platform MarketAxess (MKTX). Snapchat parent Snap (SNAP) rose as the U.S. mulls whether to ban the popular TikTok app, owned by China’s Bytedance. Snap stock jumped to an all-time high.
Dow Jones Futures Today
Dow Jones futures rose 0.3% vs. fair value. S&P 500 futures advanced 0.3%. Nasdaq 100 futures climbed 0.4%, despite slim overnight losses by big-cap components Facebook stock and Tesla stock. Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Coronavirus cases worldwide have topped 11.95 million. Covid-19 deaths are above 545,000.
Coronavirus cases in the U.S. have reached 3.08 million, with deaths clearing 133,000. Deaths have remained low, but on Tuesday hit their highest level since June 10. At some point that was inevitable, given the number of new cases over the last several weeks.The U.S. added more than 55,000 coronavirus cases on Tuesday.
California hospitalizations hit a new high Tuesday, while Texas reported more than 10,000 new cases.
Brazil President Jair Bolsonaro said he has tested positive for Covid-19. Bolsonaro long downplayed the coronavirus pandemic and resisted efforts to limit the spread. Brazil has 1.67 million Covid-19 cases, second only to the U.S. India, Peru and Saudi Arabia are among the other hot spots.
Regeneron Pharmaceuticals got a $450 million government contract to step up production of its experimental antibody cocktail. The two-antibody therapy is in late-stage trials as both a treatment and preventive for the coronavirus.
Novavax will get $1.6 billion in U.S. funding to support large-scale manufacturing of its coronavirus vaccine candidate, also in trials.
Novavax stock shot up 32% to its best level in nearly four years. Regeneron stock climbed 2.2% to 640.88 after hitting a record 653.53 intraday. REGN stock closed slightly below a 646.43 aggressive entry.
Coronavirus Stock Market Rally
The current stock market rally had a down day, with the Dow Jones and other major indexes closing near session lows. The Dow Jones Industrial Average fell 1.5% in Tuesday’s stock market trading. The S&P 500 index sank 1.1% and the Nasdaq composite 0.9%.
The DJIA fell back below its 200-day moving average after closing back above that key level Monday. The S&P 500 index and Nasdaq broke five-day winning streaks.
Growth stocks held up reasonably well. Among the best ETFs, the Innovator IBD 50 ETF (FFTY) dipped 0.2%. The iShares Expanded Tech-Software Sector ETF (IGV) fell 0.6% and the VanEck Vectors Semiconductor ETF (SMH) 1.2%.
The coronavirus stock market rally arguably is due for a pullback or sideways action lasting a few weeks. So investors can’t get upset about a one-day decline, after the Nasdaq hit yet another record high. The Nasdaq is near top of a steep trading channel, while today’s Big Picture highlights another sign that the tech-heavy index is becoming extended.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
TikTok Ban Buzz A Boon For Snap
Late Monday, Secretary of State Mike Pompeo said the U.S. was considering banning TikTok and other Chinese apps.
Snapchat could be the biggest beneficiary from a TikTok ban; they are similar in terms of style and users. BofA raised its Snap stock price target to 28.50 from 24, citing the potential TikTok ban.
Snap stock leapt 5.9% to 24.81, nearing its March 2017 all-time high.
National security hawks have raised concerns about whether TikTok, owned by Chinese internet giant Bytedance, is too closely tied to the Chinese government. TikTok stresses that it has a U.S. boss, with all its servers out of China. Late Monday, TikTok said it was halting operations in Hong Kong, citing “recent events.” Facebook, Google and Twitter stopped sharing user data with Hong Kong law enforcement, following China’s new security law for the once-autonomous enclave.
Facebook Ad Boycott Meeting
CEO Mark Zuckerberg and other top Facebook executives met with several groups organizing an ad boycott over the social network’s content policies. The groups, including the NAACP and Anti-Defamation League, made several demands. But after Tuesday’s stock market close they said Facebook gave no firm specifics or timetables. Many major advertisers have suspended advertising on Facebook, often halting ads on other social sites as well.
FB stock plunged 8.3% on June 26 as the Facebook ad boycott took hold, followed by a sharp intraday drop in the next session. But Facebook stock rebounded that day and kept rising, hitting a record 247.65 intraday Tuesday, before settling for a 0.2% gain at 240.86. Arguably, 245.29 would be a new buy point for Facebook stock, after repairing much of the chart damage from its brief-but-violent late June sell-off.
In overnight trade, FB stock fell slightly.
VRTX stock jumped to a record 306.08 intraday, paring gains to settle up 2.7% at 299.06, an all-time closing high. Vertex stock moved back above a 295.65 flat-base entry but closed just below an alternate entry of 299.31, just above the June 23 peak.
VRTX stock was one of the early breakouts in the coronavirus market rally, clearing a buy point in early April. But the biotech company tested its buy point in late April before rebounding again, followed by several weeks of consolidation and support at the 10-week line.
In short, Vertex stock has been doing its own thing while the broader market rolls on. The relative strength line, trending higher since late September, rose strongly during the market crash and into the new rally. The RS line, the blue line in the charts provided, tracks a stock’s performance vs. the S&P 500 index. VRTX stock’s RS line is rising again, but is not yet at its mid-May peak.
Vertex earnings and sales growth are booming, and expected to be strong through 2021.
MarketAxess stock rose 2.4% to 533.16, clearing a 527.08 buy point after trying and failing to do so on Monday. MKTX stock broke out of a long double-bottom base on April 15, then advanced for several weeks. The digital bond platform’s RS line is not at a new high, but had a solid prior uptrend.
Tesla Stock And Nio Stock
Tesla stock climbed 1.3% to 1,389.86, hitting yet-another all-time high. TSLA stock is up 15% already this week after soaring 26% last week. But that’s modest compared to Nio stock. The Chinese luxury electric SUV maker shot up nearly 15% on Tuesday. The money-losing EV maker is up 41% this week after spiking 36% last week. Nio stock is just below its September 2018 peak of 13.80, set just after its U.S. IPO.
Both Nio and Tesla stock are well extended from any conceivable buy point for now. Tesla and Nio fell a fraction in extended trade.
Meanwhile, more-speculative EV plays took a breather. Workhorse Group (WKHS) slid 4.3% after also tumbling Monday. Blink Charging (BLNK) sank 15.5%. Electrameccanica Vehicles (SOLO) skidded 19%. Nikola (NKLA), which had surged following its reverse merger, plunged 18% to close below its 50-day line. Nikola stock has fallen for five straight sessions and eight of the last nine.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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