Dow Jones futures rose slightly late Tuesday, along with S&P 500 futures and Nasdaq futures, as Walt Disney (DIS), Beyond Meat (BYND) and MercadoLibre (MELI) were among the many earnings reports overnight after the coronavirus stock market rally continued to advance.
XMicrosoft (MSFT), Shopify (SHOP), PayPal (PYPL), ServiceNow (NOW), Adobe (ADBE) and Chegg (CHGG) cleared buy points Tuesday, even as the Dow Jones and other major indexes slashed gains in the final hour.
MercadoLibre stock looks set to join them, blasting higher overnight. Beyond Meat stock rose but is well off highs. Disney stock woes continued overnight.
Adobe stock, ServiceNow stock, Chegg stock and Microsoft stock are all on IBD Leaderboard. All four boast perfect 99 IBD Composite Ratings. PayPal stock has a stellar 97 Composite Rating. Shopify stock has a 96 Composite Rating, while MercadoLibre stock has an OK 80 CR.
SHOP stock and PYPL stock broke out ahead of quarterly reports Wednesday, with Shopify earnings before the open. Microsoft stock had multiple entries, while Adobe stock moved back into a buy zone. ServiceNow stock cleared a buy point after surging last week on earnings. Chegg stock gapped higher on earnings.
Adobe and ServiceNow teamed up on customer service software, giving a lift to ADBE stock and NOW stock
MSFT stock is on SwingTrader. Adobe stock, ServiceNow stock and Chegg stock are on the IBD 50 list.
Microsoft stock, ServiceNow stock and Adobe stock are on IBD Long-Term Leaders list. PayPal stock is on the Long-Term Leaders watchlist.
Dow Jones Futures Today
Dow Jones futures were 0.2% above fair value, with Disney stock a modest drag. S&P 500 futures climbed 0.2%. Nasdaq 100 futures rose 0.4%. No longer surging limit up or down, Dow Jones futures can still be volatile in overnight trading.
Remember that overnight action in Dow futures, MercadoLibre and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Coronavirus News
Coronavirus cases worldwide are above 3.71 million. Covid-19 deaths have reached 257,000.
Coronavirus cases in the U.S. have topped 1.23 million, with deaths of at least 72,000.
Coronavirus Stock Market Rally
The coronavirus stock market rally was looking powerful in midafternoon, but then pared gains substantially in the final hour of trading. The Dow Jones Industrial Average still closed up 0.6%. The S&P 500 index advanced 0.9% and the Nasdaq composite tacked on 1.1%.
It's nicer when the stock market rallies into the close, as the Dow Jones and major indexes did on Monday, but Tuesday's gains were still solid. Looking on a weekly chart, the indexes are near the top of their range.
Growth Stocks Lead
While the major indexes had solid gains, leading stocks stood out Tuesday
ServiceNow stock: NOW stock rose 4.5% to 370.64, breaking out of a 363.05 cup-base buy point, according to Marketsmith analysis.
Shopify stock: SHOP stock leapt 4.1% to 686.11 on Tuesday, blasting above a 665.84 alternate entry after consolidating above a cup base. Shopify earnings are due early Wednesday. Analysts expect a Shopify loss of 18 cents per share on sales of $443.1 million for the period ended March 31.
Buying a breakout before quarterly results is risky, unless using an earnings options strategy.
PayPal stock: PYPL stock climbed 1.4% to 125.43, above a 124.55 cup-base buy point. PayPal earnings are out Wednesday night. The relative strength line for PayPal stock hit a record high. The RS line, the blue line in the charts provided, track a stock's performance vs. the S&P 500 index.
Chegg stock: CHGG stock exploded for a 32% gain to 57.92. Tuesday's IBD Stock Of The Day, Chegg stock was actionable soon after the open but now looks a little extended. Chegg's earnings growth accelerated, with revenue growth picking up for a third straight quarter.
Microsoft stock: MSFT stock rose 1.1% to 180.76, closing above a 180.10 handle buy point for the first time. MSFT stock already was above a 175.10 entry from a double-bottom base.
Adobe stock: ADBE stock advanced 2% to 356.13, reclaiming a 350.48 cup-with-handle buy point and hitting a two month high. Adobe stock was Tuesday's IBD 50 Stocks To Watch pick.
More broadly, growth stocks fared well. Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rallied 1.9%. The iShares Expanded Tech-Software Sector ETF (IGV) rose 2.1% to a two-month high. MSFT stock, ADBE stock and NOW stock are all big weights. The VanEck Vectors Semiconductor ETF (SMH) climbed 1.3%.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Disney Earnings
Disney earnings tumbled 63% to 60 cents a share, with the entertainment titan pegging coronavirus losses at $1.4 billion. Revenue grew 20% to $18.01 billion, boosted by the $71.3 billion buy of 21st Century Fox entertainment assets in March 2019. Analysts expected Disney earnings of 83 cents a share on revenue of $18.03 billion.
Disney suspended its dividend.
With Disneyland and other theme parks closed, movie theaters shut down and ESPN bereft of sports, the Dow Jones media and entertainment giant is struggling mightily. Disneyland Shanghai will reopen on May 11, but U.S. parks may be shut for several more months.
Disney+ subscribers hit 54.5 million as of May 4, but the new streaming service will be a money loser for years.
Disney stock fell nearly 3% late. DIS stock slid 2.05% to 101.06 on Tuesday, hitting resistance at its fast-falling 50-day line. The RS line for Disney stock has been falling steadily for months, hitting its lowest level since 2012 on Tuesday.
Beyond Meat Earnings
Beyond Meat earnings came in at 3 cents a share vs. a 14-cent loss a year earlier. Revenue spiked 141% to $97.1 million. Analysts expected a 6-cent loss on sales of $86.88 million.
Beyond Meat has been rapidly expanding, seeking partnerships with restaurants and grocery stores to build market share as competition grows. Fears of meat shortages have helped lift BYND stock in the past couple of weeks.
Beyond Meat stock rose 5% late, signaling another test of its 200-day line. BYND stock rose 5.25% to 100.16 on Tuesday.
MercadoLibre Earnings
In the first-quarter MercadoLibre earnings report, the Latin American e-commerce and payments giant lost 44 cents a share vs. a 13-cent gain a year earlier.Revenue grew 38% to $652.9 million. The per-share loss beat some views and missed others, while the revenue clearly beat.
MercadoLibre said sales have rebounded strongly on its site since hitting a low in the week of March 18-24.
Like Shopify, MercadoLibre is making big investments, triggering losses for now with the aim of stronger growth ahead.
MercadoLibre stock surged 15% to 715 in volatile, active trading. That would be well above the 633.30 cup-with-handle buy point for MELI stock, but investors could buy the earnings gap. MercadoLibre stock closed up 2.2% to 620.94, after momentarily edging into a buy zone intraday. MELI stock hit a record 756.48 on Feb. 20.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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