Dow Jones futures were little changed early Friday, along with S&P 500 futures and Nasdaq futures, with Nike earnings and bank stress tests in focus. The coronavirus stock market rally showed resilience in the face of negative Covid-19 headlines, rebounding from early losses to move higher.
Nike (NKE) reported a surprise quarterly loss and a revenue miss late Thursday. The Federal Reserve barred JPMorgan Chase (JPM), Bank of America (BAC), Goldman Sachs (GS) and other big banks from stock buybacks or dividend hikes in the third quarter, saying several financial giants could get too close to minimum capital levels amid the coronavirus pandemic.
Nike stock fell sharply, after the DJIA athletic apparel giant had moved toward a buy point. JPMorgan stock, Bank of America stock and Goldman Sachs stock retreated in extended trade after strong gains Thursday on regulatory relief.
Stock Market Rally, Leaders Resilient
While coronavirus cases are surging again, the stock market rally remains resilient. The S&P 500 index found key support, and the DJIA and Nasdaq also moved higher after Wednesday’s sharp losses. Leading stocks, which generally held up well on Wednesday, showed bullish action Thursday.
Dexcom stock, Atlassian stock and Inphi stock all found support around their 10-week moving averages. Tesla stock and Okta stock bounced from their 21-day lines. Wingstop stock and Salesforce stock found support around buy points from recent breakouts.
Dow Jones Futures Today
Dow Jones futures dipped 0.2% vs. fair value, as DJIA components Nike stock, JPMorgan stock and Goldman stock pulled back. S&P 500 futures climbed 0.1%. Nasdaq 100 futures rose 0.2%. Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Coronavirus cases worldwide have topped 9.73 million. Covid-19 deaths are above 492,000.
Coronavirus cases in the U.S. are at 2.50 million with deaths reaching 124,000. New Covid-19 cases hit a record high of more than 40,000 on Thursday.
Texas and Florida will not proceed with further stages of reopening, amid soaring coronavirus cases and hospitalizations in the states. Houston-area intensive-care units have reached maximum capacity.
Coronavirus Stock Market Rally
The coronavirus stock market rally fell modestly soon after the open, extending Wednesday’s losses. But the major indexes rebounded, closing at Thursday’s highs.
The Dow Jones Industrial Average rose 1.2% in Thursday’s stock market trading, fueled by JPMorgan stock and Goldman stock. The DJIA today is trading between its 50-day and 200-day moving averages. The S&P 500 index climbed after testing its 200-day line intraday. The Nasdaq composite also advanced 1.1%.
Growth stocks outperformed in Thursday’s coronavirus market rally. Among the best ETFs, the Innovator IBD 50 ETF (FFTY) popped 1.45%. The iShares Expanded Tech-Software Sector ETF (IGV) rose 1.4%. The VanEck Vectors Semiconductor ETF (SMH) climbed 0.7%, as leading chipmakers rallied and also-rans and laggards struggled.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Nike reported a surprise loss of 51 cents a share, with sales down 38% to $6.31 billion. Analysts expected Nike earnings of 2 cents a share on sales of $7.26 billion. Digital sales surged 75% as many Nike Stores and retail channels were closed due to the coronavirus pandemic. Greater China sales rose 8%, or 11% at constant currency.
The relative strength line for NKE stock is near a 52-week high. But the RS line, the blue line in the charts below, has generally moved sideways for several months and has been rangebound for years. The RS line tracks a stock’s performance vs. the S&P 500 index.
Bank Stress Tests
The Fed late Thursday said that banking giants must suspend buybacks and cap dividends at current levels in the third quarter, saying several banks could get close to minimum capital levels in coronavirus-related scenarios. Stress tests had been relatively stress-free in recent years, but are more meaningful given the current sharp recession and uncertain economic outlook.
Banks had already voluntarily halted stock buybacks in March, with analysts expecting steady dividends for now. Meanwhile, all banks undergoing stress tests must resubmit capital plans this year, the first time that’s happened since the stress tests were created after the 2008 crisis.
In premarket trade, JPMorgan stock and Bank of America stock fell 2%, while Goldman Sachs stock sank 3%.
JPM, BAC and other bank stocks rallied Thursday after financial regulators eased the so-called Volcker rule to allow some riskier investments. However, JPM stock and its peers have been laggards in the coronavirus market rally, though GS stock is working toward a buy point. And bank stocks, aside from short periods of outperformance, have only kept up or lagged the broader market for decades.
JPMorgan stock closed up 3.5%, Bank of America stock rose 3.8%, and Goldman Sachs stock added 4.6%.
Tesla stock fell intraday to 937.15, just undercutting its 21-day moving average after sinking 4.1% on Wednesday. TSLA stock then rebounded, closing up 2.6% at 985.98. For existing holders, this was an opportunity to add a few more shares. It’s not a good place to start a new position in Tesla stock, which is well-extended from an 869.92 buy point.
Okta stock also rebounded from its 21-day line, rising 4.3% to 204.22. The cybersecurity stock also cleared this week’s high of 201.94. Both offered a chance to add a few shares or perhaps nibble at a new position. Okta stock, which had found 10-week line support in the prior two weeks, has been consolidating for a few weeks.
Dexcom stock sank to 380.19 intraday, testing its 10-week line once again. DXCM stock rebounded for a 1% gain at 398.09.
Atlassian stock retreated to 173.80 intraday, again finding support at the 10-week. TEAM stock rebounded for a 2% pop at 180.36.
Salesforce stock climbed 1.5% to 188.34. CRM stock fell to 184.44 intraday, dipping below a 184.90 handle buy point. It didn’t undercut Wednesday’s low.
Wingstop stock popped 4% to 138.71. Intraday, WING stock fell to 129.72. That was right in between its recent buy points of 126.74 or 131.09.
Inphi stock climbed 3.6% to 133.07. Intraday, shares sank to 107.20, back to their 10-week line. One of the first breakouts in the coronavirus stock market rally, Inphi has been consolidating for a few weeks after a strong run.
Dexcom stock will have a new base at the end of the week. Atlassian stock technically won’t have a base after Friday, but investors could treat it like one. Inphi stock needs a couple of weeks of setting up.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
YOU MAY ALSO LIKE: