Dow Jones futures fell late Thursday, along with S&P 500 futures and Nasdaq futures. The stock market rally continued to extend gains Thursday on stimulus deal buzz, with the Nasdaq taking the reins after Wednesday’s Dow Jones-led advance.
Amazon stock and Microsoft (MSFT) finally closed back above their 50-day moving averages. Several more stocks cleared buy points, extended breakouts or moved to the cusp of breakouts.
After the close, communications software leader Twilio (TWLO) gave bullish guidance. Twilio stock skyrocketed overnight, nearing a buy point. Also late Thursday, Amazon.com (AMZN) said that nearly 20,000 employees have contracted the coronavirus during the pandemic. The e-commerce giant says its Covid-19 testing has been ramping up, with 50,000 per day in November.
Meanwhile, Pool Corp. (POOL) will join the S&P 500 index, replacing E-Trade Financial (ETFC), which is being acquired by Morgan Stanley (MS). But Pool stock, which is setting up near a buy point, edged lower overnight.
Friday is set to be a big day, with the September jobs report, more coronavirus deal talks and likely Tesla (TSLA) production and delivery figures for the third quarter. Tesla stock rose strongly Thursday, heading into the key data. Shares fell a bit overnight, perhaps because Tesla stock was again passed up for the S&P 500 index.
Dow Jones Futures Today
Dow Jones futures fell 0.3% vs. fair value. S&P 500 futures sank 0.4%. Nasdaq 100 futures lost 0.3%.
While markets rallied Thursday on stimulus hopes, the overnight news was less promising. The Democrat-led House passed its $2.2 trillion coronavirus stimulus bill late Thursday. The House had postponed the vote as stimulus deal talks were underway. But with the two sides apart on the amount and key provisions, the House went ahead.
The Labor Department will release its September jobs report at 8:30 a.m. ET, likely swinging Dow Jones futures. Economists expect nonfarm payrolls to rise by 894,000, with the unemployment rate dipping to 8.2% from August’s 8.4%. This is the last jobs report before Election Day.
A Tesla deliveries report could swing Nasdaq futures, depending on the TSLA stock reaction.
Coronavirus cases worldwide reached 34.46 million. Covid-19 deaths are at 1.02 million.
Coronavirus cases in the U.S. have hit 7.49 million, with deaths above 212,000.
Stock Market Rally
U.S. Stock Market Today Overview
Last Update: 4:30 PM ET 10/1/2020
The stock market rally continued to rise, though techs took the lead Thursday.
The Dow Jones Industrial Average edged up 0.1% in Thursday’s stock market trading. The S&P 500 index climbed 0.5%. The Nasdaq composite popped 1.4%.
On Wednesday, the Dow Jones staged a follow-through day, confirming the new stock market rally. The Dow rose 1.2%, about the minimum gain looked for, with volume surging vs. the prior session. The S&P 500 index and Nasdaq composite, which had looked like they were going follow through on Wednesday, slashed intraday gains on stimulus deal concerns.
Stimulus talks also fueled and cooled the major indexes on Thursday, though this time the tech-heavy Nasdaq closed near session highs. Volume was slightly below Wednesday’s level, so Thursday wasn’t a follow-through day for the Nasdaq. But the Nasdaq did move above its Sept. 10 intraday high, a key short-term resistance area.
Growth stocks performed much better Thursday than on Wednesday. Among the best ETFs, the Innovator IBD 50 ETF (FFTY) climbed 1.3%. The iShares Expanded Tech-Software Sector ETF (IGV) rallied 1.9%. The VanEck Vectors Semiconductor ETF (SMH) popped 2.5%. On Wednesday, all three growth ETFs lagged the major indexes, with SMH fractionally lower.
Amazon stock rose 2.3% and Microsoft tacked on 1%, moving back above their 50-day lines after hitting resistance there this week. Amazon edged lower amid the coronavirus report.
Twilio Stock Jumps On Guidance
Twilio disclosed in an SEC filing that revenue for the just-ended third quarter will top its prior guidance of $401 million to $406 million. The communications software specialist didn’t give any specifics, but that was good enough for investors. Twilio stock jumped 10% late, moving close to a 283.44 double-bottom-base buy point. On Thursday, TWLO stock popped 4% to 256.96, moving back above its 50-day line.
Tesla stock rose 4.5% on Thursday and 10% so far this week. It’s now erased virtually all of its Battery Day-related losses and is nearing its Sept. 15 short-term high. The pattern remains wide and loose. While Tesla stock tends to be volatile, it has calmed down for periods, offering lower-risk buy points.
Shares fell about 1% overnight, presumably on the latest S&P 500 snub.
Early Thursday, Tesla confirmed that it’s cutting the price of its made-in-China Model 3 electric cars by 8% to 10%. Some of that may reflect lower costs from Tesla using off-the-shelf batteries from CATL, but electric vehicle competition is growing in China and set to intensify in 2021.
There’s speculation that Tesla will cut U.S. Model 3 and Model Y prices later this month, along with Model 3 prices in Europe.
Tesla deliveries and production figures for the third quarter will come out soon, with Friday morning the most likely time. Tesla will smash its old quarterly delivery record of 112,000 vehicles, the only question is by how much. The most-accurate forecaster is predicting just over 143,000.
In addition to deliveries, production data will be important. If Tesla produces substantially more than it delivers, that would be a concern, given the automaker’s huge capacity expansion over the next year. Notably, its Fremont, Calif., plant will soon be serving only North America aside from the Model S and X.
Stock Market Rally And Stimulus Deal Hopes
The stock market rally has gained momentum in part on hopes for a new coronavirus stimulus deal. The indexes have whipsawed on various comments from top lawmakers and administration officials. If there’s a stimulus deal in the coming days, it could be a big boost to the new rally.
If talks break down, the market rally could struggle. But keep in mind that despite the intraday swings and little actual stimulus deal progress, the major indexes have made notable moves, with breakouts flourishing.
So while investors should pay attention to market-moving news and upcoming events, don’t try to tell the market what it “should” do. It doesn’t care what you or I think. Instead, listen to how the stock market reacts to news.
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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