Dow Jones futures turned slightly higher late Wednesday, along with S&P 500 futures and Nasdaq futures. The coronavirus stock market rally faded again in the final hour, with the Dow Jones closing lower. But the Nasdaq composite advanced, and is shifting toward a bullish trend. PayPal (PYPL), Square (SQ), Etsy (ETSY), Peloton Interactive (PTON), Fortinet (FTNT) and Twilio (TWLO) were big earnings movers.
XSquare stock and Etsy stock were losers in late trade, with Etsy stock moving toward its recent breakout. PayPal stock jumped after briefly undercutting a recent buy point. Peloton stock, Fortinet stock and Twilio stock rallied. FTNT stock and TWLO stock are signaling breakouts, while red-hot IPO stock Peloton kept racing higher.
Dow Jones Futures Today
Dow Jones futures rose 0.1% vs. fair value, reversing modest losses. S&P 500 futures climbed 0.1%. Nasdaq 100 futures advanced 0.2%. Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Coronavirus News
Coronavirus cases worldwide are above 3.8 million. Covid-19 deaths are at least 264,000.
Coronavirus cases in the U.S. have reached 1.25 million, with deaths above 74,000.
Coronavirus Stock Market Rally
The coronavirus stock market rally faded into the close for a second straight session, though techs and other growth stocks continued to outperform.
The Dow Jones Industrial Average lost 0.9% and the S&P 500 index 0.7%. The Nasdaq composite held on for a 0.5% gain.
Among the best ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) rose 1.3%. The VanEck Vectors Semiconductor ETF (SMH) advanced 1.2%.
The Stock Market Trend Is Your Friend
The 50-day moving average on the Nasdaq composite is flattening out and is likely to start rising by Friday. (The 50-day line on the big-cap Nasdaq 100 nudged higher Wednesday). The falling 50-day line has been an unusual aspect of the current stock market rally. That's partly due to how fast the major indexes crashed and rebounded. A rising 50-day line on the Nasdaq will be a strong signal that the broader stock market trend is positive and likely to remain so.
The 50-day lines are still falling on the S&P 500 and Dow Jones Industrial Average and are likely to keep falling for the next couple of weeks. Simply put, those indexes are still below where they were 50 days ago.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
PayPal Earnings
PayPal earnings fell 15% to 66 cents a share as revenue climbed 12% to $4.64 billion. Analysts expected PayPal earnings of 75 cents on revenue of $4.74 billion.
The digital payments leader announced a $257 million increase in credit loss provisions.
PayPal guided slightly higher for Q2 revenue growth.
PayPal stock rose 8.5% in extended trade, reversing higher from sharp initial losses that briefly undercut a 124.55 buy point. PYPL stock cleared a cup base on Tuesday, according to MarketSmith analysis. PayPal stock rose 2.3% to 128.31 on Wednesday.
The relative strength line for PayPal stock was at a record high. The RS line, the blue line in the charts provided, tracks a stock's performance vs. the S&P 500 index.
But buying just before earnings can be highly risky. IBD's earnings options strategy offers a way to play stocks heading into results with minimal risk.
Square Earnings
Square earnings turned out to be an adjusted loss of 2 cents a share. Revenue climbed 44% to $1.38 billion. Analysts expected Square earnings of 13 cents on revenue of $1.305 billion.
Gross payment volume also missed views.
Square stock fell 4.2% overnight. SQ stock climbed 2.1% to 68.10 on Wednesday, modestly above its 200-day line. Square stock is working on a consolidation with an 87.35 buy point.
Etsy Earnings
Etsy earnings tumbled 58% to 10 cents a share as revenue grew 35% to $228.1 million. Analysts expected Etsy earnings of 18 cents on sales of $220.2 million.
Etsy stock sank 5.7% to 73.80 overnight. Shares rose 7.5% to 78.24 on Wednesday, hitting a fresh high. On Tuesday, Etsy cleared a 14-month consolidation, topping resistance at just over 71 and the old high at 73.34.
Peloton Earnings
The home fitness specialist lost 20 cents a share in fiscal Q3 vs. a 14-cent loss a year earlier. Revenue climbed 66% to $524.6 million. Analysts expected an 18-cent loss on $486 million in revenue.
Connected Fitness subscribers leapt 94% to more than 886,000. Peloton raised its full-year revenue and subscriber targets once again.
Peloton sells stationary bikes and other exercise equipment that offers streaming video classes by subscription. It's seen as a big coronavirus play with people stuck at home and gyms closed in most of the country.
Peloton stock popped 11% in extended trade. PTON stock rose 5% to 38.03 on Wednesday, hitting a record 39.26 intraday. An argument could be made that 38.18 offers a new entry, but the 2019 IPO has such a wide-and-loose base that it's hard to see "good" entry points.
Fortinet Earnings
Fortinet earnings climbed 30% to 60 cents a share, with revenue up 22% to $576.9 million. Analysts expected Fortinet earnings of 51 cents on sales of $556.7 million.
The cybersecurity firm guided in line for the current quarter.
Fortinet stock leapt 7% to 119.50 overnight. FTNT stock rose 2.7% to 111.46 Wednesday. Fortinet stock broke out from a cup-with-handle base last month but quickly reversed well below the 112.09 buy point. It now has a new handle at 115.08.
Meanwhile, 2019 cybersecurity IPO Ping Identity (PING) beat views late, but shares plunged on a weak outlook.
Twilio Earnings
Twilio earnings rose 20% to 6 cents a share, defying views for an 11-cent loss. Revenue grew 56.5% to $364.86 million, well above forecasts.
The communications software maker also guided higher on Q2, though it withdrew 2020 targets.
Twilio stock gapped up 24% to 152. That would push TWLO stock above a buy point from either a three-month consolidation or a long pattern going back to June 2019 — either a cup-with-handle or double-bottom base. In any of these cases, the entry point would be the same, 133.10. Twilio stock hit a record 151.10 last July.
The RS line for Twilio stock is well off highs, but is well above its short-term peak in February.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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