Dow Jones futures rose slightly vs. fair value late Wednesday, along with S&P 500 futures and Nasdaq futures. The coronavirus stock market rally suffered heavy losses Wednesday, with Apple (AAPL), Microsoft (MSFT), Nvidia (NVDA), Tesla (TSLA), Teladoc Health (TDOC), Zoom Video (ZM) and Walt Disney (DIS) moving on their respective Covid-19 exposures.
XNew York, New Jersey and Connecticut said they will quarantine travelers from U.S. states with high Covid-19 infection rates. Coronavirus cases continue to soar in Florida, California and much of the country, with hospitalization rates increasing as well.
The stock market rally suffered broad-based losses, with airlines, restaurants, retailers and Disney stock hard hit. Among growth stocks, coronavirus plays such as Teladoc stock and Zoom stock held up relatively well.
Economic recovery growth names such as Tesla stock, RH (RH) and Carvana (CVNA) had bigger losses, though RH stock, Apple stock, Microsoft stock and Nvidia stock — big-cap leaders that have fared relatively well in the coronavirus crisis — were somewhat in the middle.
Still, growth stocks generally didn't show much chart damage. That includes Tesla stock, which also faced several negative headlines related to poor quality. Meanwhile, Disney stock and many airlines, which had rallied sharply in May, have tumbled since early June as coronavirus cases and fears return.
Tesla stock, Apple stock, Microsoft stock and Nvidia stock are all on IBD Leaderboard. NVDA stock is on the IBD 50.
Dow Jones Futures Today
Dow Jones futures rose 0.35% above fair value, with S&P 500 futures up 0.3%. Nasdaq 100 futures climbed 0.2%. DJIA futures have been more volatile in recent days,
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 topped 9.51 million, likely heading toward 10 million in a few more days. Covid-19 deaths have reached 483,000.
Coronavirus cases in the U.S. have topped 2.46 million, with daily cases picking up substantially nationwide over the past week. New U.S. coronavirus cases have already topped 38,900 on Wednesday, the most since the April 24 peak and the fifth time in six days they've cleared 30,000.
The surge in coronavirus cases continues in states that weren't hard hit in April and May, including California, Texas, Arizona, Florida and many others. Hospitalizations have picked up substantially in many of these states as well. Texas Gov. Greg Abbott said the state is suffering a "massive outbreak" as Houston and other major cities' health care systems strain at the influx of Covid-19 patients.
Coronavirus deaths in the U.S. are above 124,000. The number of Covid-19 deaths may be starting to turn higher after trending lower well into June. Deaths lag coronavirus cases by several weeks. Also, the average age of new coronavirus patients has fallen substantially.
New York, New Jersey and Connecticut said they will quarantine travelers coming from virus hot spots in the U.S. for 14 days.
Meanwhile Brazil, Mexico, India and Russia are among the many countries experiencing big increases in coronavirus cases.
Coronavirus Stock Market Survival Guide
Coronavirus Stock Market Rally
The coronavirus stock market rally had a negative day. Spiking coronavirus cases and other metrics from California and Florida helped send the DJIA and other major indexes sharply lower Wednesday morning. They extended losses on the New York/New Jersey/Connecticut move to quarantine travelers from coronavirus hot spots.
In addition, the U.S. is mulling new tariffs on $3.1 billion in goods from France, Germany, Spain and the U.K. over European aid to Airbus following a WTO ruling. The U.S. and Europe also are in a spat over Europe's planned digital tax, which would mostly hit U.S. internet giants such as Facebook (FB) and Google (GOOGL).
The Dow Jones Industrial Average fell 2.7% in Wednesday's stock market trading, closing modestly off session lows. The S&P 500 index sank 2.6% and the Nasdaq composite 2.2%.
The Dow Jones today fell back from its 200-day moving average after once again hitting resistance at that key level on Tuesday. The S&P 500 tumbled toward its 200-day line. The Nasdaq retreated from Tuesday's all-time high. It's still well above its 21-day line, which has acted as support since early April.
Apple stock fell 1.8% and Microsoft stock 2% after both hit record highs on Tuesday. With market caps around $1.5 trillion, these DJIA, S&P and Nasdaq components move markets. NVDA stock, an S&P 500 and Nasdaq 100 component, fell 2.3%, but it also came a day after it set an all-time best.
Disney stock fell 3.9%, just below its 50-day line. Thousands of workers at Disney World and Disneyland have petitioned the Dow Jones giant to delay the parks' scheduled July 11 and July 17 reopenings.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) slid 2.2%. The iShares Expanded Tech-Software Sector ETF (IGV) fell 2%. MSFT stock is a major holding, with Zoom stock also in IGV. The VanEck Vectors Semiconductor ETF (SMH) 2.1%, with Nvidia stock a notable component.
Coronavirus Plays: Teladoc Stock, Zoom Stock Hold Up
Teladoc stock dipped just 0.5% to 197.01. TDOC stock closed above a 203.95 buy point on Monday, MarketSmith analysis shows, slipping back on Tuesday. That follows a 17% Teladoc stock surge last week from its 10-week moving average.
Zoom stock actually rose 1.2% to 255.90. ZM stock is well extended after breaking out in late May from a short consolidation.
For telemedicine pioneer Teladoc and videoconferencing leader Zoom Video, the coronavirus crisis is turbocharged growth, with individuals and businesses becoming comfortable with virtual connections. Both companies have grabbed years of growth in a matter of months, and those gains may be sticky after Covid-19 fades into the background.
Economic Recovery Plays Fall
Tesla, RH and Carvana are growth companies that were hard hit in the coronavirus crisis, with their stocks plunging during the market crash. But they've roared back in the coronavirus stock market rally on economic recovery hopes. Resurgent coronavirus cases that slow down recoveries and curb consumer spending are not good news for recovery plays.
Tesla Stock
Tesla stock sank 4.1% to 960.85. TSLA stock has been consolidating for a couple of weeks since hitting a record high. It's still well extended from an 869.92 handle buy point. Arguably, Tesla stock could use a pullback to its 21-day moving average or even a little lower to shake out some holders. Some sideways action over several weeks would let Tesla stock form a new base.
In addition to the broad stock market retreat, Tesla also faced several negative reports. Tesla finished dead last in the J.D. Power Initial Quality Survey, with 250 problems per 100 vehicles, vs. the industry average of 166. That comes amid widespread complaints about Model Y build quality. Meanwhile, the National Highway Traffic Safety Administration is probing the failure of many touch screens in some Model S vehicles. Finally, Business Insider reported that Tesla knew of a Model S battery flaw starting in 2012 that raised the risk of fires, but didn't change it.
RH Stock
RH stock sank a relatively modest 2.1% to 249.72. Shares raced from a deep V-shaped base to hit a record 265.87 on June 4, just above the pre-coronavirus peak. Since then RH stock has been consolidating. In a couple of weeks, the upscale home furnishings retailer could have a healthier-looking new base.
Carvana Stock
Carvana stock plunged 12% to 112.25, technically falling back into buy range from a 109.40 entry. CVNA stock, which has always been volatile, ran up from its own deep base.
On paper, Carvana's online used-car dealership model should fare relatively well in the coronavirus crisis. But an online model still must deal with overall car demand. Also, Carvana faces new rivals, such as Vroom (VRM), as well as legacy automakers and dealerships that moved to online sales during the pandemic.
On Wednesday, used-car dealer stocks sold off on reports that Hertz (HTZ) would unload many of its rental cars as its struggles in bankruptcy.
Also, unlike Tesla or RH, Carvana is losing money, with losses expected for the next few years.
What To Do Now
Keep in mind that a pullback or pause in the coronavirus stock market rally would be normal and healthy, even without any Covid-19 news trigger. The Nasdaq had rallied for eight straight sessions, hitting a record high Tuesday. Arguably a pullback has been "due" for several weeks, but the stock market is going to do what it's going to do.
Continue to review your stocks and overall portfolio. Are you overweight in "recovery" growth names such as Tesla stock? On the flip side, you don't want to be too concentrated in coronavirus plays like Zoom Video stock. Positive coronavirus news — such as strong results for Covid-19 treatments or vaccines — could trigger a rapid reversal in leadership.
Be ready to take some profits, in case Wednesday's stock market retreat turns into something more serious.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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