The Dow Jones futures rose solidly late Wednesday, as did the S&P 500 futures and the Nasdaq futures. The stock market rally came under increasing pressure on Wednesday as stocks were sold on mixed earnings reports, coronavirus cases that led to lockdowns across much of Europe and the upcoming election.
Pinterest (PINS) and ServiceNow earnings brought hope overnight and boosted several colleagues. But given the volatile stock market rally, all eyes are on Thursday’s tsunami, including Apple stock. Amazon.com (AMZN), Facebook (FB) and Google Parents alphabet (TogetL).
The Nasdaq composite fell through its 50-day line, joining the Dow Jones and the S&P 500. Megacap technicians who backed Nasdaq on Tuesday sold out on Wednesday. Microsoft (MSFT) fell on mixed gains. Apple stock fell to a monthly low, while the FANG trio Amazon.com, Facebook, and the Google parenting alphabet fell back below their 50-day average. Tesla shares and Nvidia (NVDA) closed below their 50-day limit. ServiceNow stock fell but bounced back from its 50 days. Shopify (BUSINESS) rushed to this key level Adobe (ADBE) is approaching the low of its base.
Perhaps the most positive news from Wednesday’s meeting was the surge in anxiety. After the CBOE Volatility Index (CBOE) barely moved during the stock market decline at the end of September, it reached its highest level since mid-June, albeit well behind the March peak. The put / call ratio rose to 0.9 which is high but not extreme.
Excessive bear markets are often associated with short-term lows. But it doesn’t have to happen immediately and every jump doesn’t have to be permanent.
Result after hours
ServiceNow rose modestly and Pinterest stock soared. ServiceNow earnings have seen some enterprise software vendors rise slightly after several peers made poor forecasts. Pinterest earnings soon spiked on Facebook and Twitter stocks, both of which surfaced in the blowout recently Snap (SNAP) Results.
Visa increased slightly after poor Mastercard results. Etsy stock fell slightly after falling just below a buy point on Wednesday. Teladoc stock and merger partner Livongo pulled back when Teladoc forecast a larger loss in the fourth quarter. SunPower fell slightly after rebounding on sunny First Solar gains.
Tesla (TSLA), Microsoft, Nvidia and ServiceNow are active IBD ranking. Microsoft Stock, Adobe, ServiceNow and Idexx Labs are IBD long-term guide. Nvidia, Amazon, Adobe, Microsoft and ServiceNow are on the IBD 50.
Dow Jones Futures today
Dow Jones futures were up 0.9% from fair value. The S&P 500 futures were up 0.9%. The Nasdaq 100 futures were up 0.9%. Remember that action is in overnight Dow futures and elsewhere this does not necessarily mean that the next regular trade will actually be traded Stock market Session.
Coronavirus cases reached 44.74 million worldwide. Covid-19 deaths topped 1.17 million.
Coronavirus cases in the US have hit 9.11 million people, with deaths over 233,000.
France will impose a new lockdown starting Friday, asking people to stay home except to buy essential goods, seek medical care, play sports or go to work if their employer says work cannot be done at home. But the schools remain open. Germany will close bars and restaurants from Monday. Several other European nations have partially imposed coronavirus bans or other restrictions. This will have a negative impact on travel, consumer spending and the global economy.
So far, U.S. cities and states haven’t harshly hiked coronavirus restrictions, but Americans could stay home more and step up social distancing measures if the pandemic flares up.
Meanwhile, Pfizer (PFE) announced Tuesday that preliminary data on coronavirus vaccines from end-stage studies would not be available until after the November 3 elections, having previously signaled that these data could be released before the end of October.
A coronavirus vaccine won’t be available until January, said Dr. Anthony Fauci, the nation’s leading infectious disease official, advance on Wednesday.
Stock market rally
The stock market rally suffered heavy losses and essentially closed on session lows. The Dow Jones Industrial Average fell 3.4% on Wednesday Stock exchange tradingand undercut its late September low to its worst level since late July. The S&P 500 index lost 3.5% and hit its worst level since September 25th. The Nasdaq Composite fell 3.7% above its 50-day line and also hit its lowest level since September 25.
Microsoft was the youngest software maker to give poor forecasts, falling 5% on Wednesday. The shares of Dow Jones as well as the S&P 500 and the Nasdaq component Apple fell 4.6%. Amazon fell 3.8% while Facebook and Google stocks fell 5.5%. Tesla reversed 4.4%. All of these tech giants fell through their 50-day moving averages.
Shopify stock fell 5.5% on Tuesday after a promising move.
Given these losses, it is not surprising that the Nasdaq broke its 50-day line.
Under the best ETFs, the innovator IBD 50 ETF (FFTY) fell by 3.1%. The iShares Expanded Tech-Software Sector ETF (IGV) declined 3.5%, with Microsoft and ServiceNow stocks being notable members. The VanEck Vectors Semiconductor ETF (SMH) fell 3.2%. Nvidia stock is a key component.
The ServiceNow result increased by 22% compared to the previous year. Revenue grew 30% to $ 1.15 billion. Analysts had a ServiceNow profit of $ 1.03 per share of revenue of $ 1.11 billion.
The company software manufacturer also achieved slightly higher sales with subscriptions in the fourth quarter.
The ServiceNow results report and guidelines follow warnings or weak guidelines from multiple software vendors. German software giant JUICE (JUICE) issued a big warning on Sunday. Microsoft, Twilio (TWLO) and Dynatrace (DT) gave mixed instructions this week that everyone obeyed the warning Fast (FSLY), which missed lowered views late Wednesday.
ServiceNow shares rose 2.3% overnight. NOW the stock fell 3.15% on Wednesday but found support on its 50-day line for now.
Adobe and Salesforce.com (CRM) rose after falling more than 4% on Wednesday.
Pinterest’s earnings rose to 13 cents per share from 1 cent last year. Revenue increased 58% to $ 443 million. Analysts were expecting Pinterest profits of four cents per share of revenue of $ 383.5 million.
The PINS share gained 32% in overnight trading. Shares fell 6.2% to 49.25 on Wednesday but have already expanded sharply.
Facebook stock rose 2.7% and Twitter nearly 6% after both lost more than 5% on Wednesday before making their gains on Thursday night.
Stock market analysis
On Monday, IBD changed the market direction classification to “uptrend under pressure”. Suffice it to say that the stock market rally is now under even more pressure.
With growing concerns about the coronavirus and such crucial events as Thursday’s tsunami and election day next Tuesday, it’s difficult to increase exposure. Apple and Amazon’s profits could be great and investors are thrilled with the election results, but that’s just a guess. At the moment the stock market rally is fluctuating.
Dow Jones futures are up, but only a fraction of what major indices lost on Wednesday.
Trying to stay one step ahead of the market rally in recent weeks meant jumping in as the tide fell.
Recent breakouts and early buy points have largely failed. Many leaders have collapsed. Investors should reduce their holdings and wait for the stock markets to pick up again before making any new purchases. That could come in a few days, weeks, or months.
Read The big picture every day to stay in sync with market direction and leading stocks and sectors.
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