Dow Jones futures rose modestly late Monday, along with S&P 500 futures and Nasdaq futures. The coronavirus stock market rally rebounded Monday led by DJIA giants Boeing (BA) and Apple (AAPL). Tesla stock jumped above 1,000 again as CEO Elon Musk hinted Tesla (TSLA) could break even in Q2. After the close, Micron stock, Lululemon stock and Wells Fargo stock moved on news.
Micron Technology (MU) reported better-than-expected earnings, Lululemon Athletica (LULU) bought at-home fitness company Mirror. Wells Fargo (WFC) cut its dividend as other big banks kept their payouts steady following annual stress tests.
Micron stock jumped overnight, while several other memory-chip related plays and chip equipment-maker stock Applied Materials (AMAT) rose as well. Lululemon stock popped, while at-home exercise specialist Peloton (PTON) fell. Wells Fargo stock fell a fraction on the somewhat-expected dividend cut.
Dow Jones Futures Today
Dow Jones futures rose 0.2% vs. fair value. S&P 500 futures advanced 0.3%. Nasdaq 100 futures climbed 0.5%. Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
An official China manufacturing index edged up to 50.9 in June from May’s 50.6, slightly topping views. Readings above 50 signal expansion. But while output has increased, exports and employment signaled contraction.
China’s parliament officially passed the Hong Kong national security bill. Hours earlier, the U.S. began eliminating Hong Kong’s special trade privileges, because the former British colony no longer enjoys sufficient autonomy from Beijing.
Coronavirus cases worldwide have now hit 10.40 million. Covid-19 deaths are above 508,000.
Coronavirus cases in the U.S. have run to 2.68 million, with deaths topping 128,000. On Monday, new cases topped 44,000, the fifth straight day above 40,000.
Covid-19 cases have soared in Arizona, Texas, Florida and many other southern states. Hospitalizations also have ramped up in hot spots.
Late Monday, Arizona ordered all bars, clubs and gyms to shut down. California will close beaches and trails for the Fourth of July weekend. Earlier, New Jersey halted reopenings and postponed indoor dining indefinitely. New Jersey cases have fallen sharply from the April peaks, but officials may be concerned of a relapse amid evidence that indoor dining is linked to higher coronavirus outbreaks.
So far, coronavirus deaths have not picked up. But the pause and reversals in easing coronavirus shutdowns, along with increased social distancing, will have an impact on the nascent economic recovery.
Late Monday, Fed chief Jerome Powell stressed the economic importance of keeping the coronavirus under control.
Coronavirus Stock Market Rally
The coronavirus stock market rally opened mixed but picked up momentum on blowout pending-home sales data, with the DJIA and other major indexes finding or reclaiming key support.
U.S. Stock Market Today Overview
Last Update: 5:30 PM ET 6/29/2020
The Dow Jones Industrial Average rose 2.3% in Monday’s stock market trading. Apple stock, the biggest weight in the price-weighted DJIA, climbed 2.3% to 361.78, not far from record highs. Boeing stock spiked 14% as the Boeing 737 Max completed its first recertification flight.
The S&P 500 index advanced 1.5% and the Nasdaq composite 1.2%.
The DJIA rebounded from its 50-day moving average, but is still well below its 200-day line. The S&P 500 moved back above its 200-day line. The Nasdaq, which fell sharply in early trading, rallied above its 21-day.
Even as Covid-19 cases continue to soar, coronavirus plays pulled back, including Zoom Video (ZM), Teladoc Health (TDOC), Fastly (FSLY), DocuSign (DOCU) and Peloton stock. All except Teladoc stock were well extended. Several other coronavirus-friendly software names also retreated, but generally did not show major chart damage.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rallied to close flat. The iShares Expanded Tech-Software Sector ETF (IGV) dipped 0.3%, after rising slightly last week. The VanEck Vectors Semiconductor ETF (SMH) climbed 1%. The SMF ETF has Micron stock as a holding.
Micron earnings declined 22% to 82 cents a share. Fiscal third-quarter revenue rose 14% to $5.44 billion. Analysts expected Micron earnings of 77 cents on revenue of $5.31 billion.
The memory-chip giant also gave bullish guidance for the current quarter.
Micron stock climbed 5.7% to 50.94 overnight. MU stock rose 1.4% on Monday, rebounding from its 50-day line and closing just above its 200-day line. A 50.24 cup-with-handle buy point for Micron stock is technically still valid, but investors might want to focus on 54.92 as a better entry.
However, the relative strength line for Micron stock has drifted lower since early January and generally declined for the past two year. That reflects underperformance for MU stock vs. the S&P 500. The RS line is the blue line in the charts provided.
Micron results also lifted memory plays Western Digital (WDC)and Seagate Technology (STX). Chip-equipment giant Applied Materials (AMAT), which has a lot of exposure to the memory market, also climbed as it trades around a buy zone.
Lululemon Buys At-Home Fitness Play Mirror
Late Monday Lululemon said that it will buy Mirror for $500 million. Mirror offers weekly live classes and thousands of on-demand workouts. It also provides one-on-one personal training.
Lululemon and fellow athleisure apparel giant Nike (NKE) have been expanding at-home fitness offerings during the coronavirus pandemic. They’re taking on pure-play Peloton.
Lululemon stock rallied 3.7% overnight. LULU stock rose 1.7% on Monday to 294.35. Shares have been consolidating for a few weeks since racing from its March low to its June 10 peak. But Lululemon stock needs more time before it has a proper base, and perhaps for the 10-week moving average to catch up.
Meanwhile, Peloton stock fell 1.7% overnight. PTON stock retreated 2.1% on Monday, but after hitting a record high Friday.
Tesla Earnings In Q2?
CEO Elon Musk, in yet another “leaked” email to staff, said that “breaking even is looking super tight,” but possible for Q2. That suggests that a break-even quarter or actual Tesla earnings are likely, if past end-of-quarter Musk hints are any guide.
Tesla production and delivery figures for the second quarter are due in early July, likely late this week. Tesla deliveries will hit 90,000-100,000, RBC Capital predicted Monday. Many Wall Street analysts have pegged deliveries around 70,000, but independent analysis tends to be around 85,000 or so.
In addition to Tesla deliveries, boosted by the Model Y and the Shanghai plant, Elon Musk has plenty of levers if he wants to post a second-quarter profit. Those include recognizing zero emission credits and Full Service Driving revenue. Another quarter of Tesla earnings could spur Standard & Poor’s to add TSLA stock to the S&P 500 index.
Tesla stock, already up before the Tesla earnings news, rose 5.2% on Monday to 1,009.35. TSLA stock rebounded once again from its 21-day moving average. Tesla stock has been consolidating since hitting a record 1,027.48 on June 10. It’s too short to provide a legitimate buy point. On the plus side, the RS line for Tesla stock is at a record high.
Stock Market Rally Conclusions
The coronavirus stock market rally found support at key levels. But that doesn’t mean that the Nasdaq will race back to record highs. The coronavirus stock market rally had been running up at an unsustainable pace. Sideways market action would be normal and healthy. It would allow leading stocks such as Tesla and Lululemon to form new bases and moving averages to catch up
But the stock market rally is going to do what it’s going to do. That might be a quick return to all-time highs or a sharp pullback. Stay engaged, stay flexible.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
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