Where is the stock market rally going? Dow Jones futures won’t reopen until Sunday. But in the near term the answer may be another question: How is President Donald Trump doing?
Trump Condition Improving, Doctor Says
President Trump has been “fever free” for the past 24 hours, according to his doctor, Dr. Sean Conley. Conley, giving a Saturday morning update at Walter Reed Medical Center, said he’s “extremely happy” by the president’s improvement. He said Trump is having no trouble breathing and is not on oxygen. But the doctor would not say if the president had been on oxygen, how high his fever got and whether he has suffered lung damage.
Other Reports Differ
The AP and New York Times reported that Trump was having trouble breathing and received supplemental oxygen on Friday, and that was part of the reason why he went to Walter Reed Medical Center Friday evening.
Soon after the upbeat official comments, a source familiar with Trump’s health told White House pool reporters that “The president’s vitals over the last 24 hours were very concerning and the next 48 hours will be critical in terms of his care,” The person added, “We’re still not on a clear path to a full recovery.”
There were several reports naming or indicating that White House chief of staff Mark Meadows was the source.
One of the doctors also said Trump was doing well “72 hours” after diagnosis, but that would imply the president tested positive by Wednesday midday at the latest, significantly earlier than the White House had previously indicated. The White House said the doctor misspoke.
President Trump tweeted early Friday morning that he and first lady Melania Trump tested positive for the coronavirus.
Saturday afternoon, Trump tweeted his appreciation for the “amazing” medical staff at Walter Reed, adding that “I am feeling well.”
President Trump is assuredly getting the best possible care. He is now taking the antiviral remdesivir from Gilead Sciences (GILD). On Friday, he took an experimental antibody cocktail from Regeneron Pharmaceuticals (REGN).
Still, Trump is 74 and overweight, putting him at higher risk from the coronavirus. It is one month from Election Day in the middle of a fragile economic recovery and negotiations over a new coronavirus stimulus bill.
Trump also tweeted Saturday that America needs a new stimulus deal, urging Congress to reach an agreement soon: “Work together and get it done.”
Stock Market Reaction To Trump Coronavirus News
ETFs tracking the major indexes fell modestly Friday evening on word that President Trump was heading to Walter Reed. How Trump’s condition changes over the weekend will likely drive Dow Jones futures and stock market trading on Monday. Dow Jones futures will begin trading on Sunday evening, along with S&P 500 futures and Nasdaq futures.
On Friday, the stock market rally suffered losses, especially on the Nasdaq, after the president tweeted that he and first lady Melania Trump had contracted the coronavirus.
The market hates uncertainty, especially when headlines can send the major indexes sharply in either direction. So it’s not a surprise that the stock market rally is flashing healthy and sickly indicators.
The Dow Jones staged a follow-through day on Wednesday to confirm the new stock market rally amid stimulus deal hopes. The S&P 500 index and Nasdaq composite also had solid gains but not enough for their own follow-through days. On Friday, stocks sold off on the Trump coronavirus bombshell. The Nasdaq was the big laggard, falling back below its 50-day moving average along with the S&P 500 index. But the Dow limited its losses.
Meanwhile, many leading stocks broke out or were setting up last week, even on Monday. Twilio (TWLO) and LGI Homes (LGIH) cleared buy points Friday, reflecting strength in many software and housing stocks.
Big-Cap Techs Struggle
But some megacap stocks had a tough time. Apple stock, Amazon.com (AMZN) and Microsoft (MSFT) all fell back below their 50-day lines. Adobe (ADBE) and Nvidia were big tech losers, but held their 50-day lines. Tesla (TSLA) tumbled following its Q3 delivery figures, though it held its 21-day exponential moving average.
Apple, Amazon, Microsoft, Adobe, Nvidia and Tesla stock all fell slightly late Friday.
Dow Jones Futures Today
ETFs tracking the Dow Jones, S&P 500 and Nasdaq 100 fell 0.4% late Friday as President Trump went to Walter Reed Medical Center.
Dow Jones futures opened for trading at 6 p.m. ET, along with S&P 500 futures and Nasdaq 100 futures.
Coronavirus cases worldwide reached 35.03 million. Covid-19 deaths topped 1.03 million.
Coronavirus cases in the U.S. have hit 7.57 million, with deaths above 213,000.
President Trump and his wife tested positive for the coronavirus after White House aide Hope Hicks did. Trump campaign manager Bill Stepien has the coronavirus. Also, former White House counselor Kellyanne Conway confirmed Friday night that she has Covid-19. GOP Sens. Mike Lee, Ron Johnson and Thom Tillis also recently tested positive for the coronavirus. So did former New Jersey Gov. Chris Christie.
Nearly all of these people were connected to the White House announcement for the Supreme Court nomination or Tuesday’s presidential debate. Joe Biden has tested negative for Covid-19.
Regeneron stock rose 3% late Friday on news that Trump had taken its coronavirus antibody cocktail, which has not yet had late-stage trials. Gilead stock was unchanged, as the Trump remdesivir news came later.
Stock Market Rally Last Week
The coronavirus stock market rally ended last week with solid advances, but finished poorly.
The Dow Jones Industrial Average closed up 1.9% in last week’s stock market trading, not giving up much ground on Friday. The S&P 500 index and Nasdaq composite rose 1.5%. But they slashed weekly gains on Friday and closed back below their 50-day lines.
Among the trillion-dollar stocks, Apple rose 0.7% last week, but fell 3.2% to drop back below its 50-day line. Microsoft shed 0.8% on Friday and nearly 3% for the week. Amazon stock gained 1% for the week, but lost 3% on Friday.
Adobe stock and Nvidia both sank 4.1% on Friday, with the former losing 0.2% for the week while the latter clung to a 1.5% gain.
Twilio, LGI Homes Soar
Meanwhile, Twilio stock surged 18% last week, including a 13% pop to 290.36, clearing a 283.43 buy point from a double-bottom base. The communications software maker said late Thursday it would top its third-quarter sales target. At Thursday’s investor day event, Twilio said it expects sales growth to exceed 30% in each of the next four years. Wall Street had forecast 25% growth in 2021 and 23% in 2022.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 2.1% last week. The iShares Expanded Tech-Software Sector ETF (IGV) advanced 0.9%. While some software stocks did well on Friday, Microsoft and Adobe stock are IGV’s top two holdings. The VanEck Vectors Semiconductor ETF (SMH) climbed 2.3%.
Tesla stock was up strongly through Thursday, but tumbled 7.4% on Friday. Still, it held its 21-day line and closed the week 1.9% higher. Tesla deliveries came in at a record 139,300, officially beating lowered views. But there were widespread expectations of more than 140,000.
In recent months, Tesla stock rose in part on expectations of bullish catalysts. But S&P 500 inclusion so far hasn’t happened, Battery Day failed to wow (or at least justify certain analysts’ visions) and now Q3 deliveries were at best in line. Shares fell in all three cases. On the other hand, TSLA stock, despite wild volatility, has held up better than many big-cap techs.
Stock Market Analysis
A confirmed stock market rally is still valid until it undercuts its low. For the Dow Jones, that is its Sept. 24 low. It’s a bad sign for a newly confirmed stock market rally to close below the low of its follow-through day. The Dow fell below its Sept. 30 low on Friday, but closed well above it. The Nasdaq did close below its Sept. 30 low, but that index hasn’t had a FTD.
As for leading stocks, there have been plenty of quality names breaking out and setting up, even if the likes of Apple and Microsoft are more sluggish.
It’s hard to analyze a stock market that’s so headline-driven. Stimulus deal talk fueled the rally, and now President Trump’s coronavirus diagnosis triggered selling.
If Trump’s condition worsens over the weekend and coming days, the stock market rally could come under pressure. If he’s on the mend, the market may quickly rebound.
Investors would still face of gantlet of uncertainty, including the election, stimulus deal talks and coronavirus wave fears vs. Covid-19 vaccine hopes.
For now, it’s a confirmed stock market rally and a number of leaders are actionable, so investors can make buys. But the mixed signals and heightened uncertainty suggest this is a time for moderate exposure. Don’t go heavily into margin.
Let the stock market draw you in or out.
If the stock market rally improves, you can be more aggressive by filling out positions or new initial stakes. If the indexes reverse toward lows and new buys sour, you can pull out.
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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