Dow Jones futures and S&P 500 futures signaled modest gains on strong U.S. GDP data, while Nasdaq 100 futures advanced early Thursday, following Wednesday’s stock market sell-off. Apple earnings are due late, while Alphabet, Amazon and Facebook will also report earnings after the close. Tesla looked to rebound, while Pinterest skyrocketed as much as 34% on earnings.
JD.com, Microsoft and Tesla are all IBD Leaderboard stocks.
Dow Jones Futures Today: GDP Beats Estimates
Early Thursday, Dow Jones futures rose 0.1% vs. fair value, while S&P 500 futures moved up 0.3%. Nasdaq 100 futures rallied 0.7% vs. fair value. Remember that overnight action in Dow Jones futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
The Commerce Department released its GDP report at 8:30 a.m. ET, reporting that GDP rose 33.1% in the third quarter, better than estimates, after a record decline of 31.4% in Q2 as the economy rebounds from coronavirus lockdowns.
Amid the coronavirus stock market rally, the tech-heavy Nasdaq is up 22.6% for the year through Wednesday’s close. Meanwhile, the S&P 500 is up 1.2%, while the Dow is down 7.1% year to date, through the Oct. 28 close.
According to the Worldometer data tracker, the cumulative number of confirmed coronavirus cases in the U.S. topped 9.1 million on Thursday. Total virus-related deaths rose past 233,000.
The cumulative total of worldwide Covid-19 cases confirmed since the start of the outbreak topped 44.8 million Thursday, with more than 1.18 million virus-related deaths.
Coronavirus Stock Market Rally
According to IBD’s The Big Picture, the coronavirus stock market rally is starting to falter amid heavy institutional selling.
Wednesday’s Big Picture warned that “The stock market faced a harsh round of selling Wednesday, one day after the Dow Jones Industrial Average closed below the low of its Sept. 30 follow-through day. That, in and of itself, was another bad sign for a stock market that has seen an increasing amount of them lately. Selling really picked up the pace late in the session.”
An uptrend under pressure means investors need to be much more cautious, but not go entirely to cash. Watch sell signals closely. Be sure to sell any stock that falls 7% or 8% from your purchase price, and maybe even 3% or 4% if you want to raise cash.
Avoid buying stocks for now, unless the breakout is exceptionally good. The best candidates are those that proved most resilient during the recent stock market weakness. Keep a close eye on stocks with strong relative strength lines. These ideas could become stock market leaders.
Use MarketSmith features like the RS Line Blue Dot to easily spot such stock candidates. The RS Line Blue Dot is assigned to stocks whose RS lines are making new highs while the stock is basing or breaking out.
Stocks to watch include IBD Long-Term Leaders, companies with stable earnings growth and price performance.
Dow Jones Earnings: Visa
Visa reported better-than-expected fiscal fourth-quarter results late Wednesday. The company earned $1.12 a share, as revenue fell 17% to $5.1 billion. Payments volume rose 4%.
Shares of the payment processor moved up less than 1% in morning trade, but remain about 17% off their 52-week high.
Dow Jones leader Apple gained more than 1% ahead of the company’s earnings results after the close. Wall Street is forecasting EPS of 69 cents, down 9% vs. the same quarter a year ago, on sales of $63.39 billion, down 1%, in its fiscal Q4.
Apple declined 4.6% Wednesday, snapping a two-day win streak. Shares fell further below their 50-day moving average line, according to MarketSmith chart analysis.
The blue-chip giant is the No. 1 performing Dow Jones stock for 2020, with a 51.5% advance through Wednesday’s close. Recent Dow Jones 30 addition Salesforce.com (CRM) is the No. 2 performer with a 46.6% year-to-date advance.
Wall Street expects Amazon earnings to jump 72.6% to $7.30 a share as revenue climbs 32.8% to $92.92 billion. Amazon has seen strong growth this year as the pandemic fueled a rush to online buying.
Amazon stock is tracing a cup with handle with a 3,496.34 buy point.
Alphabet, Facebook Set To Report
Alphabet and Facebook are set to report after the close Thursday, according to IBD’s Investing Action Plan.
The search giant is expected to see EPS rising 12.7% to $11.40 as revenue grows 7% to $35.36 billion. Shares are close to forming a cup with handle with a 1,634.22 buy point, but are below their 50-day line.
Social media giant Facebook is expected to earn $1.93 a share, down 9%, on revenue of $19.87 billion, up 12.6%. Wall Street expects Facebook will benefit from an improved digital ad spending environment, recovering from pandemic related headwinds.
Facebook stock is battling for support around its 50-day line after Wednesday’s sharp drop.
Stock Market Earnings: Pinterest
Pinterest skyrocketed as much as 34% after the company reported third-quarter results late Wednesday that blew past Wall Street estimates, fueled partly by strong user growth. The company reported adjusted earnings of 13 cents share on revenue of $443 million.
Shares are set to hit record highs Thursday.
Stocks Near Buy Zones: Chewy, JD.com
Chewy is in the 5% buy zone above a 70.82 buy point in a cup with handle after Wednesday’s strong breakout move. The buy zone goes up to 74.36.
According to the IBD Stock Checkup, CHWY stock has an 86 out of a best-possible 99 IBD Composite Rating. The Composite Rating — an easy way to identify top growth stocks — is a blend of key fundamental and technical metrics to help investors gauge a stock’s strengths.
Chewy was Wednesday’s IBD Stock Of The Day.
According to IBD Leaderboard commentary, “JD.com’s base has morphed into a cup with handle. It is a half position on Leaderboard. The relative strength line made new highs already, a bullish sign for the next breakout.”
JD.com was featured in this week’s Stocks Near A Buy Zone column.
Tesla stock gave up support around its 50-day line amid Wednesday’s 4.4% drop. Shares are nearly 20% off their 52-week high, as they form a new base with a 466 buy point.
According to IBD Leaderboard commentary, “The new base is later stage, following advances from cup-with-handle bases and a high, tight flag that also counted as a base. So, the latest pattern has higher risk.”
Dow Jones Leaders: Microsoft
Among the top Dow Jones stocks, software giant Microsoft looked to rebound from Wednesday’s 5% drop. Shares rebounded about 1% in premarket trade, but remain squarely below their 50-day line.
Year to date, Microsoft is one of the top Dow Jones stocks, advancing 35.2% through Tuesday’s close.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones futures.
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