Dow Jones futures and S&P 500 futures were little changed Thursday morning, while Nasdaq futures rose slightly. Recent IPO Snowflake (SNOW), CrowdStrike (CRWD), Zscaler (ZS), Okta (OKTA) and Elastic (ESTC) reported earnings after the close, with all five software stocks near buy points. Tesla stock rose late on a new analyst upgrade.
XThe stock market rally erased losses Wednesday as top Democrats signaled hope for a stimulus deal soon. House Majority Leader Steny Hoyer, D-Md., said he planned to meet with Senate Majority Leader Mitch McConnell, R-Ky., on a stimulus deal, with hopes for an agreement by the end of this weekend. Notably, House Speaker Nancy Pelosi and Senate Minority Leader Charles Schumer said a $908 billion bipartisan stimulus proposal released this week should be the basis of talks. Democrats had insisted on a $2.2 trillion stimulus deal, while Senate Republicans wanted a $500 billion package. Both Hoyer and McConnell have suggested that Dec. 11 would be a deadline for a stimulus deal this year. Dec. 11 is when current government funding expires.
The House late Wednesday approved legislation that would require Chinese companies such as Alibaba (BABA), Pinduoduo (PDD), Nio (NIO) or Xpeng stock that trade in the U.S. to submit to U.S. accounting oversight or face delisting. The Senate already overwhelmingly approved the China stocks delistings legislation, which will now go to President Donald Trump's desk. President Trump is expected to sign it, the White House said.
Beijing bars Chinese companies from foreign accounting oversight. However, the bill wouldn't require delisting for three years, and leaves a lot of discretion to the Treasury Department. So far, investors don't seem to be too worried about the Chinese stock delisting threat.
EV Stocks
On Wednesday, China EV stocks Nio, Xpeng Motors (XPEV) and Li Auto (LI) rebounded from sharp early losses and tests of their 21-day exponential moving averages. Nio stock rose 5.8% and Xpeng nearly 7%, while Li Auto dipped 0.3%. Li Auto joined Nio and Xpeng in reporting strong November sales, though it also announced a new stock offering.
Tesla (TSLA) fell 2.7% on Wednesday but found support at a short-term moving average. After the close, Goldman Sachs upgraded Tesla stock to a buy with a 780 price target. TSLA stock rose 4.5% early Thursday.
Software Earnings Reports
Software had a tough session, partially due to Salesforce.com (CRM) tumbling following earnings and its announcement it's buying Slack (WORK). But several others retreated, including Snowflake, CrowdStrike, Okta and Zscaler stock, ahead of their results
Snowflake stock fell after it reported a wider-than-expected loss in its first earnings report since its September IPO. Cybersecurity plays CrowdStrike stock and Zscaler jumped, signaling possible breakouts, while Okta also advanced. Search software provider Elastic stock also popped, suggesting a move to a buy point.
Tesla stock is on IBD Leaderboard, along with Salesforce and Pinduoduo. PDD stock is on SwingTrader. Alibaba and Salesforce are on IBD Long-Term Leaders.
Dow Jones Futures Today
Dow Jones futures were just above fair value. S&P 500 futures were flat. Nasdaq 100 futures climbed 0.2%.
Jobless claims data at 8:30 a.m. ET will likely move Dow Jones futures. On Friday, the Labor Department will release the November jobs report.
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 64.98 million. Covid-19 deaths topped 1.50 million.
Coronavirus cases in the U.S. have hit 14.31 million, with deaths above 279,000. U.S. Covid cases topped 206,000 cases on Wednesday, with coronavirus deaths above 2,800, both new daily records.
Hospitalizations have topped 100,000 in the U.S.
The U.K. approved the Pfizer (PFE) and BioNTech (BNTX) coronavirus vaccine, with vaccinations set to start next week. The U.S. is likely to approve the Pfizer-BioNTech vaccine next week, with the European Union doing so on Dec. 29. The Moderna (MRNA) vaccine also is likely to win approvals before year-end.
Pfizer stock rose 3.5% on Wednesday and BioNTech rallied 6.2%. Moderna stock rebounded for a 1.4% gain after a nasty reversal Tuesday.
Stock Market Rally
A day after the S&P 500 index and Nasdaq composite hit record highs, the stock market rally closed mixed. But the major indexes cut or erased modest morning losses on stimulus deal hopes.
Private employers hired 307,000 workers in November, according to ADP, well below the 420,000 estimate from Econoday. It's the latest sign that economic growth is slowing as coronavirus cases heat up and stimulus aid is spent.
While House Democrats and Senate Republicans may be working on a new stimulus deal, negotiations on fresh coronavirus aid have been off and on for months. Still, the weakening economy, and the Jan. 5 Georgia Senate runoff elections, likely are spurring both sides to try to come together on stimulus. The bipartisan plan doesn't include a fresh round of direct checks to Americans, something that many lawmakers would want in a stimulus deal, but would raise the price tag.
The Dow Jones Industrial Average rose 0.2% in Wednesday's stock market trading. The S&P 500 index also climbed 0.2%. The Nasdaq composite pared losses to less than 0.1%. Treasury yields continued a recent rise, sinking homebuilder stocks.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) fell 1%. The iShares Expanded Tech-Software Sector ETF (IGV) lost 0.65%, with Salesforce stock a big drag. The VanEck Vectors Semiconductor ETF (SMH) advanced 0.4%, as chipmakers held up well.
Snowflake Earnings
Snowflake lost $1.01 a share with revenue up 119% to $159.62 million. Analysts expected a loss of 26 cents on sales of $148 million.
Snowflake stock retreated 3% early Thursday. SNOW stock fell 4.2% to 292.69 on Wednesday, tumbling back below a 301.10 buy point and extending big weekly losses after hitting a record 342 intraday Monday.
CrowdStrike Earnings
CrowdStrike earnings came in at 8 cents a share vs. a 7-cent loss a year earlier. Revenue jumped 86% to $232.46 million. Analysts forecast a break-even quarter on revenue of $213.5 million.
CrowdStrike stock leapt 12% in the premarket to above 159, signaling a breakout. CRWD stock has a 154 buy point from a cup base. CrowdStrike hit 155 on Monday morning but then pulled back. Shares fell 3.8% to 141.84 on Wednesday, but found support at the 50-day line.
Zscaler Earnings
Zscaler earnings jumped 367% to 14 cents a share, with sales up 52% to $142.58 million. Analysts expected Zscaler earnings per share of 6 cents on sales of $132.3 million.
The work-from-home play also generally guided up for the current fiscal Q2.
Zscaler stock ran up 11% to over 163 in extended trade. Shares slid 3.2% on Wednesday to 146.79, but also found support at the 50-day line. ZS stock has a 158.84 double-bottom buy point.
Okta Earnings
Okta earnings came in at 5 cents a share vs. a 7-cent loss a year earlier. Revenue shot up 42% to $217.38 million. Analysts expected a 1-cent loss on revenue of $202.8 million.
Okta stock climbed 6% to 245 before the open. Shares fell 2.9% to 230.21 on Wednesday, nearing the 50-day. Okta stock has a 251.28 buy point, according to MarketSmith analysis. But a move above Monday's high of 246.64 could offer an early entry.
Elastic Earnings
Elastic lost just 3 cents a share with revenue up 43% to $144.89 million. Analysts expected a 20-cent loss on $130.5 million in revenue.
The search software firm also guided higher.
Elastic stock rallied 7% to 128.22 in extended action. Shares dipped 0.75% on Wednesday to 119.90. ESTC stock has a 128 buy point.
Stock Market Rally Analysis
The stock market rally had a quiet session for the major indexes, all holding near record highs. The recent pullbacks in some EV stocks and hot IPOs suggest some of the froth is coming off the market. That's good, with the bulls vs. bears reading setting fresh multiyear highs in territory often associated with at least short-term market tops. The stock market rallies on a wall of worry, not a "no worries, mate" mentality.
Still, the primary market indicators — the major indexes and leading stocks — still look strong.
It's a time to be invested in the stock market. But it's also a time to be disciplined about taking profits and paring losses, especially with hot stocks.
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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