Dow Jones futures, along with S&P 500 futures and Nasdaq 100 futures, were squarely lower after the Dow Jones Industrial Average fell more than 200 points Tuesday. Tech giants Apple and Tesla advanced, while Microsoft earnings smashed estimates late. First Solar surged 10% on strong earnings.
The tech-heavy Nasdaq composite led the mixed stock market action Tuesday with a 0.6% advance. The S&P 500 moved down 0.3%, while the Dow Jones Industrial Average slid 0.8%, or 222 points.
Among the Dow Jones leaders, Apple (AAPL) climbed 1.35%, while Salesforce.com (CRM) rebounded back above its 50-day moving average line. Meanwhile, Microsoft (MSFT) briefly jumped on strong earnings after the close, rallying as much as 1.5% in extended trade before turning lower.
Late Tuesday, First Solar (FSLR) surged 10% after reporting strong earnings results. First Solar earnings soared 400% to $1.45 per share, with revenue up 70% to $928 million. That blew out analyst views for First Solar earnings of 60 cents a share and sales of $707.7 million.
JD.com, Microsoft and Tesla are all IBD Leaderboard stocks.
Dow Jones Futures Today
Late Tuesday, Dow Jones futures lost 0.6% vs. fair value, while S&P 500 futures dropped 0.6%. Nasdaq 100 futures moved down 0.5% 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.
Amid the coronavirus stock market rally, the tech-heavy Nasdaq is up 27.4% for the year through Tuesday’s close. Meanwhile, the S&P 500 is up 5%, while the Dow is down 3.8% year to date, through the Oct. 27 close.
U.S. Stock Market Today Overview
Last Update: 4:44 PM ET 10/27/2020
According to the Worldometer data tracker, the cumulative number of confirmed coronavirus cases in the U.S. neared 9 million on Tuesday. Total virus-related deaths rose past 231,000.
The cumulative total of worldwide Covid-19 cases confirmed since the start of the outbreak topped 44.0 million Tuesday, with more than 1.16 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 recent institutional selling.
Monday’s Big Picture commented that “Sellers washed over the stock market Monday, dimming last week’s hopeful signs and forcing a rethink of the market’s outlook.”
Dow Jones leader Microsoft smashed Wall Street’s targets for the September quarter. The company earned $1.82 a share on sales of $37.2 billion in its fiscal first quarter ended Sept. 30. Analysts expected Microsoft earnings of $1.54 a share on sales of $35.72 billion. Shares jumped as much as 1.5% in extended trade before turning lower.
Microsoft stock ended Tuesday just above its 50-day line amid a 1.5% gain. Shares are approaching a 225.31 buy point in a cup with handle.
Year to date, Microsoft is one of the top Dow Jones stocks, advancing 35.2% through Tuesday’s close.
AMD announced early Tuesday its deal to acquire Xilinx. The $35 billion, all-stock deal is expected to close at the end of 2021. AMD said the purchase of Xilinx will strengthen its technology portfolio and create a leader in high-performance computing.
The company also reported better-than-expected earnings and sales results Tuesday.
AMD stock tumbled 4.1%, falling further below its 50-day line. Xilinx surged more than 8.5%.
Stocks Near Buy Zones: JD.com, Shopify, Tencent
According to IBD Leaderboard commentary, “JD.com’s latest base comes after the China leader broke out powerfully during the week ended Aug. 21. The new base is third stage, so the next breakout may not be as productive as earlier breakouts.”
JD.com was featured in this week’s Stocks Near A Buy Zone column.
Shopify jumped 4.3% after the company announced a partnership with TikTok to help its clients advertise on the Chinese social media platform.
Shares are approaching a 1,130.10 buy point in a cup with handle.
According to the IBD Stock Checkup, SHOP stock boasts 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.
Tuesday’s IBD Stock Of the Day, Tencent, is just out of the 5% buy zone above a 73.05 buy point in a flat base. Shares jumped 5.7% Tuesday after the company received a favorable ruling from the 9th U.S. Circuit Court of Appeals protecting its wildly popular WeChat app from an immediate ban on downloads.
Bullishly, the stock’s relative strength line is approaching new highs, a sign of strong stock market outperformance. The RS line measures a stock’s price performance vs. the S&P 500.
Tesla stock rallied 1.05% Tuesday, snapping a two-day losing streak. Shares are about 15% off their 52-week high, as they form a new base with a 502.59 buy point. The stock is currently trying to find support at its 50-day moving average line.
According to IBD Leaderboard commentary, “Tesla is now forming an awkwardly shaped base. Shares are extended from the 50-day line. It is a half position on Leaderboard.”
Dow Jones Leaders: Apple, Salesforce
Among the top Dow Jones stocks, Apple advanced 1.35% Tuesday, adding to Monday’s slight gain. Shares are looking to regain their 50-day moving average line. Meanwhile, the stock is forming the right side of a new cup-with-handle base, showing a 125.49 buy point, according to MarketSmith chart analysis.
The blue-chip giant is the No. 1 performing Dow Jones stock for 2020, with a 58.8% advance through Tuesday’s close. Recent Dow Jones 30 addition Salesforce is the No. 2 performer with a 54.3% year-to-date advance.
Salesforce jumped 3.4% Tuesday, and are retaking the 50-day line.
Stock Market Rally: What To Do Next
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.
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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