Dow Jones futures fell slightly Thursday morning, along with S&P 500 futures and Nasdaq futures, as Nvidia (NVDA) headlined earnings reports. The stock market rally tumbled to close at session lows Wednesday amid conflicting coronavirus news.
XTesla (TSLA) broke out past a buy point Wednesday as Nio stock and other China EV rivals Xpeng Motors (XPEV) and Li Auto (LI) consolidate their recent gains.
Pfizer (PFE) and BioNTech (BNTX) expect to submit their coronavirus vaccine for FDA approval within days after releasing final late-stage trial data that was even stronger than the initial reading. But New York City is closing schools as Covid restrictions pick up as coronavirus cases soar across the country.
Key Earnings
Late Wednesday, Nvidia earnings and revenue easily beat third-quarter views, with the chip giant also guiding high on Q4 revenue. But NVDA stock fell slightly in extended trading. Advanced Micro Devices (AMD), which competes with Nvidia in chips for PC gaming and data centers, also tilted lower.
Sonos earnings were better than expected, as stay-at-home trends fuel demand for its high-end speakers. Sonos stock, which had closed in a buy zone, skyrocketed overnight.
Brazilian payments firm PagSeguro (PAGS) topped revenue views on strong payment volume growth. PAGS stock rose in extended trade, flirting with a 45.86 buy point, according to MarketSmith analysis.
Tesla and Nvidia stock are on IBD Leaderboard. Tesla stock is on SwingTrader. Nvidia is on the IBD 50 list.
Dow Jones Futures Today
Dow Jones futures fell 0.1% vs. fair value. S&P 500 futures lost 0.1%. Nasdaq 100 futures lost 0.2%, with Nvidia stock a drag.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live.
Coronavirus News
Coronavirus cases worldwide reached 56.71 million. Covid-19 deaths topped 1.35 million.
Coronavirus cases in the U.S. have hit 11.87 million, with deaths above 256,000. Hospitalizations are at record highs and rising fast. New deaths are rising fast, hitting 1,964 on Wednesday, the most since early May.
New York City is closing down schools for in-person learning due to rising coronavirus cases.
Pfizer and BioNTech said Wednesday that their coronavirus vaccine is 95% effective, based on a final analysis of their late-stage trial. That's vs. the initial efficacy of more than 90% and just above the 94.5% mark set by Moderna coronavirus vaccine in its interim reading. Pfizer and BioNTech plan to seek FDA approval "within days." In all likelihood, Moderna (MRNA) will be close behind.
That raises the prospect of health care workers and other high-risk groups starting to get vaccinations next month, though it may be mid-2021 before most Americans are immunized.
Pfizer edged up 0.8%, but has been slumping since the Nov. 9 intraday jump on its interim coronavirus vaccine news. BioNTech stock popped 4% after plunging earlier this week on the Moderna Covid vaccine news. Moderna stock slid 4.6%, now slightly down for the week after a 9.6% spike on Monday.
Why This IBD Tool Simplifies The Search For Top Stocks
Stock Market Rally Wednesday
The stock market rally traded much of the day mixed or with slim losses, but then sold off hard in the last 30-45 minutes. It's not clear what the catalyst was, though the NYC school closure may have focused investors' minds on coronavirus cases now vs. the prospect of Covid vaccines in the months ahead.
The Dow Jones Industrial Average fell 1.2% in Wednesday's stock market trading. So did the S&P 500 index. The Nasdaq composite retreated 0.8%.
Growth stocks also pulled back. Among the best ETFs, the Innovator IBD 50 ETF (FFTY) sank 1.1%. The iShares Expanded Tech-Software Sector ETF (IGV) backed up 0.7%. The VanEck Vectors Semiconductor ETF (SMH) dipped 0.5%. Nvidia stock and AMD are major holdings of the SMH ETF.
Tesla Stock Breaks Out
Tesla stock jumped 10% to to 486.64 on Wednesday, blasting above a 466 handle buy point. That followed Tuesday's 8.2% jump on news that TSLA stock will join the S&P 500 index on Dec. 21. On Wednesday, Morgan Stanley raised its Tesla price target.
In recent months, various news about the Tesla business — Battery Day, third-quarter deliveries, Q3 earnings, FSD Beta — didn't buoy Tesla stock. The last two Tesla stock breakouts have come on TSLA stock news — the 5-for-1 stock split announcement and now the S&P 500 nod. But both of those breakouts were powerful price moves on heavy volume.
The last remaining hurdle for TSLA stock is the Sept. 1 all-time high of 502.49.
The relative strength line for Tesla stock, which had been sliding, is moving back toward all-time highs. The RS line, the blue line in the charts provided, tracks a stock's performance vs. the S&P 500 index.
Tesla was Tuesday's IBD Stock Of The Day.
Nio Stock
Tesla stock had moved sideways for the prior two months while China electric car rivals Nio (NIO), Xpeng and Li Auto skyrocketed. Nio stock sank 3.3% on Wednesday after reporting better-than-expected quarterly results and offering bullish guidance and plans for two new electric cars. Xpeng stock and Li Auto, which both gave upbeat forecasts last week, fell 1.7% and rose 1.3%, respectively. All have been taking a breather over the past few days following near-vertical moves.
The next few months will be interesting for the Chinese electric car market. Nio, Xpeng, Li Auto and the more-established BYD Co. (BYDDF) are all expanding production, while made-in-China Tesla Model Y and Volkswagen ID.4 should launch in early 2021.
Nvidia Earnings
Nvidia earnings jumped 63% to $2.91 a share. Revenue swelled 57% to $4.73 billion, the second straight quarter of accelerating top-line growth. Analysts expected Nvidia earnings of $2.56 a share on revenue of $4.41 billion.
The graphics chip maker, which is used heavily by data centers and for artificial intelligence applications, guided to about $4.8 billion for the current quarter, also above consensus.
Nvidia stock fell 2% in the premarket. Shares edged up 26 cents to 537.15 on Wednesday, continuing to trade tightly just above their 50-day for the past several sessions. After a failed breakout last week from a cup-with-handle base, NVDA stock has a new handle and buy point of 587.76.
AMD stock edged lower. Shares fell 1% in Wednesday's session, still above the 50-day line as AMD stock works on a double-bottom base.
Data center chipmakers such as Nvidia and AMD have been big winners but came under pressure on the recent coronavirus vaccine news. Instead, Apple chipmakers and several semiconductor equipment makers have been leading the chip sector in recent weeks.
Stock Market Analysis
The stock market rally is holding at record highs, with the Nasdaq hitting resistance at its September and October peaks. That could end with the stock market rally powering higher in the next day or two — or 20 — or the indexes could retreat. Meanwhile, it's still unclear which stocks and sectors will lead the next leg of the market rally, with coronavirus news sending powerful, mixed messages. The lack of many good setups — Tesla stock as a notable exception Wednesday — offers another reason to be relatively cautious about new buys.
This is definitely an environment for staying engaged and being flexible. Don't get locked into a bullish or bearish position, or betting that this sector is sure to thrive. Continue to evaluate your holdings and update your watchlists.
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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