Dow Jones futures rose modestly late Tuesday, along with S&P 500 futures and Nasdaq futures. The coronavirus stock market rally on Tuesday continued to shrug off bellicose rhetoric from President Trump and continued unrest in cities across the country.
Zoom Video Communications (ZM), CrowdStrike (CRWD) and Ambarella (AMBA) reported earnings late Tuesday. Zoom Video stock fell overnight and CrowdStrike stock jumped despite both delivering strong earnings and guidance. Ambarella stock fell as it tried to hold above a buy point.
Zoom Video kicks off coronavirus software plays, with DocuSign (DOCU) and Slack Technologies (WORK) reporting later this week. A big question for coronavirus plays overall is whether the current booming demand will stick after the pandemic fades away. The blowout Zoom Video earnings and guidance suggest that it will hold up.
Meanwhile, Tesla (TSLA) is leading a wave of recovery growth stocks, along with fast-growing names such as Trade Desk (TTD), RH (RH) and Carvana (CVNA). Tesla stock, Trade Desk stock, RH stock and Carvana stock were big losers during the market crash, but have now roared back toward record highs as coronavirus shutdowns ease and hopes rise for an economic recovery.
Tesla stock dipped in Tuesday’s session after Monday’s breakout. TTD stock, RH stock and CVNA stock surged toward record highs and possible breakouts.
Dow Jones Futures Today
Dow Jones futures rose 0.5% vs. fair value. S&P 500 futures climbed 0.45% and Nasdaq 100 futures advanced 0.4%. Remember that overnight action in Dow futures, Zoom Video stock and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Coronavirus cases worldwide have topped 6.47 million. Covid-19 deaths are at least 382,000.
Coronavirus cases in the U.S. have reached 1.88 million, with deaths above 108,000.
Coronavirus Stock Market Rally
The coronavirus stock market rally had another solid outing, closing near session highs. The market rally has been incredibly resilient, shrugging off China tensions and now several days of protests and looting across the country. Dozens of cities are enforcing curfews, often starting well before dark, to try to rein in massive unrest.
The Dow Jones Industrial Average climbed 1.05%, the S&P 500 index 0.8% and the Nasdaq composite 0.6%. The Nasdaq is getting very close to record highs. Its 50-day moving average has now crossed above its 200-day line.
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Zoom Video Earnings
Zoom Video earnings shot up 566% to 20 cents a share, with revenue up 169% to $328.2 million. Analysts expected Zoom Video earnings of 9 cents on revenue of $202 million.
Zoom Video guided Q2 and full-year forecasts sharply higher, signaling that the coronavirus work-from-home trend isn’t going away any time soon.
The only issue is whether the blowout results are already priced into the ZM stock price.
Zoom Video stock fell 1.6% overnight paring losses. ZM stock hit a record high 212.69 intraday Tuesday, closing up 1.9% to 208.08. Zoom Video stock had vaulted out of a short consolidation in recent days.
CrowdStrike earnings came in 2 cents a share vs. an 11-cent loss a year earlier. Revenue grew 85% to $178.1 million. Analysts had forecast a loss of 6 cents on revenue of $165.4 million.
The cybersecurity company gave strong Q2 guidance.
CrowdStrike stock popped 6% overnight. CRWD stock fell 2.7% on Tuesday to 92.25. CrowdStrike stock has been soaring in recent weeks, rushing toward all-time highs. Shares haven’t really offered a buy point along the way, though 101.98 would be a possible entry.
The CrowdStrike IPO priced at 34 a share in early June then shot up to its August peak of 101.88. CRWD stock sold off sharply, finally bottoming at 32.12 on March 16.
Ambarella earnings came in 4 cents a share as revenue grew 16% to $54.6 million. Analysts expected a 1-cent loss on $54.3 million in revenue.
But the videoprocessing chip maker gave light revenue guidance.
Ambarella stock fell 3.5% to 59.40 overnight. AMBA stock popped 6.5% to 61.55 on Tuesday. Ambarella stock cleared a 59.09 buy point from a cup-with-handle base, though the short handle is not much above the midpoint of the base.
The RS line is at a short-term peak, but not at consolidation or all-time highs.
Tesla Leads Economic Recovery Growth Stocks
beaten-down sectors such as airlines and energy are rebounding somewhat, but many were struggling before the coronavirus pandemic. But Tesla, Trade Desk, RH and Carvana have shown rapid growth.
Notably, the relative strength lines for TSLA stock, TTD stock, RH stock and CVNA stock are all at or near record highs. The RS line, the blue line in the charts below, tracks a stock’s performance vs. the S&P 500 index. An RS line hitting new highs with or ahead of a stock’s breakout is exceptionally bullish.
Tesla stock edged down 1.8% to 881.56 on Tuesday, but after soaring 7.6% to 898.10 on Monday, blasting above a cup-with-handle buy point of 869.92. That base was 64% deep. While there are concerns about demand in the U.S. and now Europe, so far overall revenue growth has been strong and Tesla has been profitable on an adjusted basis for three straight quarters.
Trade Desk Stock Nears Buy Point
Trade Desk stock rose 2.6% to 318.26, nearing a 327.45 handle buy point. The online advertising play fell 56% during the market crash, but raced up to a new high on May 7 — just before earnings. Then it retreated. TTD shows the risk of buying a stock running straight up from the bottom.
RH Stock Surges
RH stock soared 17% to 248.26, continuing to run toward all-time highs after plunging 71% during the market crash. The upscale furnishings retailer expects margins to rise in 2020, and said it plans to move into the housing market itself. RH earnings are due Thursday night. Wealthy people could be shifting travel money into their homes.
Carvana Stock Flirts With Breakout
Carvana stock surged 19% to a 109.12 close, topping a 109.40 buy point intraday. A pair of research firms reported improving sales trends for the online used car site. Separately, car dealership Lithia Motors (LAD) reported improving sales trends. Carvana stock cratered 81% during the market crash. While the company is fast growing, deep losses are projected to continue for years to come.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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