Dow Jones futures were little changed early Friday, along with S&P 500 futures and Nasdaq futures. The coronavirus stock market rally erased strong gains as President Donald Trump said he planned a Friday news conference on China as tensions rise.
XMeanwhile, Trump signed an executive order targeting social media firms, notably Facebook (FB) and Twitter (TWTR). Hours later, Twitter said a new Trump tweet broke its rules by "escalating violence."
Salesforce.com (CRM), Veeva Software (VEEV), Okta (OKTA), Zscaler (ZS) and Costco Wholesale (COST) reported earnings late Thursday. Salesforce stock fell solidly in overnight trade, after briefly clearing a buy point intraday. Veeva stock and Okta stock fell, both extended from bases. Zscaler soared while Costco stock retreated.
CRM stock is on the IBD Long-Term Leaders watchlist. VEEV stock is on the IBD 50.
Dow Jones Futures Today
Dow Jones futures were slightly above fair value. S&P 500 futures advanced 0.15%. Nasdaq 100 futures climbed 0.3%. During the coronavirus stock market rally, Dow Jones has been less volatile, but is still prone to big moves.
Remember that overnight action in Dow futures, Salesforce stock and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Trump China News Conference Looms
The coronavirus stock market rally erased gains and turned lower in the final hour of trading after President Trump said he will hold a news conference on Friday. He had already signaled an end-of-the-week announcement, but Thursday's statement came after China imposed a national security law on Hong Kong. Trump had signaled he would impose sanctions if Beijing went ahead with that. On Wednesday, Secretary of State Mike Pompeo notified Congress that Hong Kong was no longer "autonomous." That threatens Hong Kong's special trading rights with the U.S.
On Friday, President Trump seems likely to announce he'll sign recently passed legislation that targets Chinese officials for imprisoning more than one million Muslims in internment camps
U.S. sanctions vs. China, along with possible Beijing retaliation vs. U.S. companies, could undermine an economic recovery from the coronavirus pandemic. Attitudes toward China, both within the U.S. and among allies, are hardening.
The coronavirus stock market rally has largely ignored rising China tensions, but if rhetoric turns into more-sweeping action, that may be hard to maintain.
Trump Social Media Order
At the same time as his China news conference announcement, Trump said he would sign a social media executive order. He did so following the stock market close. The executive order limits the social media companies' liability protections regarding user content.
Trump's order comes after Twitter labeled two of his recent tweets about mail-in voting "potentially misleading" and linked to news coverage on the issue. Trump said that Twitter was censoring him.
Overnight, the Trump-Twitter feud escalated when Twitter said that an overnight Trump tweet on the violent Minneapolis protests violated company rules by "glorifying violence." Twitter said it was "in the public's interest" that the tweet remain.
Twitter stock fell 1% in the premarket after sinking 4.45% on Thursday. Facebook stock edged higher after a 1.6% loss Thursday. Snap (SNAP) and Pinterest (PINS), which aren't the focus of Trump's ire, rose solidly during Thursday's session. Snap stock is just below an 18.56 cup-with-handle buy point.
Coronavirus Stock Market Rally
The coronavirus stock market rally was solidly higher until President Trump's China announcement hit, sending the major indexes lower at the close.
The Dow Jones Industrial Average fell 0.6%. The S&P 500 index dipped 0.2%, holding above its 200-day line. The Nasdaq composite retreated 0.5% after topping Tuesday's peak intraday.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 0.5%. The iShares Expanded Tech-Software Sector ETF (IGV) climbed 1.2%, with Salesforce a notable member. The VanEck Vectors Semiconductor ETF (SMH) fell 2.1%, with chips vulnerable to a U.S.-China blowup.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Salesforce Earnings
Salesforce earnings fell 25% to 70 cents a share. Revenue climbed 30% to $4.87 billion, boosted by its Tableau acquisition. Analysts expected Salesforce earnings of 69 cents per share on revenue of $4.85 billion.
The cloud-based software maker gave weak guidance.
Salesforce stock fell 3% in the premarket. CRM stock rose 2.55% to 181.10 on Thursday, after hitting 184.80 intraday, briefly clearing a 183.40 buy point. Technically, Salesforce stock had already cleared a 164.41 cup-with-handle buy point, but that was just above the midpoint of its base.
CRM stock has a 98 IBD Composite Rating out of a possible 99.
The relative strength line for CRM stock is not far from record highs. The RS line, which tracks a stock's performance vs. the S&P 500 index, is the blue line in the charts provided. Salesforce stock has been a big winner, but not so much in the past couple of years.
Veeva Earnings
Veeva earnings rose 32% to 66 cents a share as revenue jumped 38% to $337.11 million. Wall Street forecast Veeva earnings of 58 cents per share on revenue of $325 million.
The medical software specialist guided in line to slightly higher for the year.
Veeva stock sank 3% before the open. Shares had jumped 6.4% to 204.20, a record close. VEEV stock is extended after clearing a long consolidation in mid-April. The RS line for Veeva stock is near recent all-time highs.
VEEV stock has a perfect 99 Composite Rating.
Zscaler Earnings
Zscaler earnings rose 40% to 7 cents a share while revenue also climbed 40% to $110.5 million. Analysts expected Zscaler earnings per share of 2 cents on sales of $106.1 million.
The cybersecurity company, which has benefited from the work-at-home trend, offered bullish guidance.
Zscaler stock leapt 15% in extended trade, signaling a move to near its July peak of 89.56. ZS stock rose 1.7% to 75.80 on Thursday. The RS line is at nine-month highs, but off its 2019 peak.
Zscaler stock has a 93 Composite Rating.
Okta Earnings
Okta lost 7 cents a share vs. a 19-cent loss a year earlier. Revenue rose 46% to $182.9 million. Wall Street had expected a 17-cent loss on revenue of $171.4 million.
The cybersecurity firm also announced an integration with Amazon Web Services. Full-year revenue guidance was slightly above views, though that came after the Q1 beat.
Okta stock fell 1.6% overnight. Shares rallied 2.5% to 183.92 on Thursday, close to record highs and extended from a prior base. The RS line is near record highs.
Okta stock has an 82 Composite Rating, reflecting its lack of profits.
Costco Earnings
Costco earnings were flat at $1.89 a share, with revenue up 7% to $36.45 billion. Analysts expected Costco earnings of $1.91 per share on revenue of $37.66 billion. Costco's core same-store sales rose 7.8% with U.S. comps up 8%, both beating. E-commerce sales, which are still a relatively small share of revenue, leapt 61%.
Costco stock fell 2% overnight. COST stock climbed 1.2% to 309.56 on Thursday, a day after rebounding from its 200-day line. Costco stock has a 325.36 buy point, but its RS line has been lagging for several weeks.
Costco stock has an 86 Composite Rating, reflecting its OK stock performance and modest EPS growth.
Coronavirus News
Coronavirus cases worldwide climbed to 5.92 million. Covid-19 deaths rose to 362,000.
Coronavirus cases in the U.S. hit 1.76 million, with deaths at 103,000.
For a second straight day, Brazil led in terms of new coronavirus cases, topping the U.S.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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