Dow Jones futures were higher, along with S&P 500 and Nasdaq 100 futures, late Tuesday, as the stock market rally hits the coronavirus stimulus deadline. Tech giants Apple, Nvidia, PayPal, Shopify and Tesla are approaching new buy points. Netflix dived 7% on weak earnings results, while Snap rocketed 24% on earnings after the close.
The tech-heavy Nasdaq composite rallied 0.3% Tuesday. The S&P 500 moved up 0.5%, while the Dow Jones Industrial Average advanced 0.4%, or 113 points.
Chipotle, Microsoft, Nvidia, PayPal and Tesla are all IBD Leaderboard stocks.
Dow Jones Futures Today: Coronavirus Stimulus News
Late Tuesday, Dow Jones futures rose 0.35% vs. fair value, while S&P 500 futures traded up 0.4%. Nasdaq 100 futures gained 0.55% 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.
Late afternoon Tuesday, White House Chief Of Staff Mark Meadows said that House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have made “good progress,” but they “still have a ways to go” before reaching an agreement.
Midday Tuesday, Pelosi told Bloomberg TV, “Hopefully by the end of the day, we’ll know where we all are. But I’m optimistic.”
On Sunday, the speaker said that Tuesday is the deadline to reach an agreement before the Nov. 3 election.
Amid the coronavirus stock market rally, the tech-heavy Nasdaq is up 27.9% for the year through Monday’s close. Meanwhile, the S&P 500 is up 6.1%, while the Dow is down 1.2% year to date, through the Oct. 19 close.
U.S. Stock Market Today Overview
Last Update: 4:32 PM ET 10/20/2020
According to the Worldometer data tracker, the cumulative number of confirmed coronavirus cases in the U.S. topped 8.45 million on Tuesday. Total virus-related deaths rose past 225,000.
The cumulative total of Covid-19 cases confirmed since the start of the outbreak worldwide topped 40.7 million Tuesday, with more than 1.1 million virus-related deaths.
Coronavirus Stock Market Rally
According to IBD’s The Big Picture, the coronavirus stock market rally continues after the recent stock market correction ended on Sept. 30.
Monday’s Big Picture cautioned investors to “watch for the Nasdaq and S&P 500 to hold at their 21-day lines. If they fail, the stock market could be in for a rough few weeks, or perhaps longer.”
Netflix missed Wall Street’s expectations for new subscribers and earnings in the third quarter after the stock market close. NFLX stock dived as much as 7.4% before trimming losses.
The company said it added 2.2 million new subscribers worldwide in the September quarter. Netflix had forecast adding 2.5 million new subscribers, but analysts were looking for 3.6 million. Netflix earned $1.74 a share on sales of $6.44 billion in the third quarter. Wall Street had predicted Netflix earnings of $2.13 a share on sales of $6.38 billion.
The video streaming leader is trying to break out above a 557.49 buy point in a double bottom after a breakout attempt on Oct. 14. Shares ended Tuesday about 5% below the new entry. Further weakness will trigger the 7%-8% loss-cutting rule.
Snap reported third-quarter results late Tuesday that smashed revenue estimates and also beat on earnings. Shares soared as much as 24% in extended trade.
The social media company reported an adjusted loss of 1-cent per share on revenue of $678 million. Wall Street expected an adjusted loss of 5 cents on revenue of $550.5 million.
The social media giant ended Tuesday about 6% above a 26.86 buy point in a cup-shaped base, according to MarketSmith chart analysis.
Stocks Near Buy Zones: JFrog, Nvidia, PayPal, Shopify
Monday’s IBD Stock Of The Day, JFrog, is approaching a 90.90 buy point in an IPO base. Shares rallied 4.65% Tuesday, but remain about 10% away from the new entry.
Nvidia added a handle to a cup base, moving the buy point to 574.04. Shares advanced 1.1% Tuesday, snapping a four-day losing streak.
PayPal is rapidly approaching a 209.12 buy point in a cup with handle. Shares rallied 1%, rebounding from Monday’s 2.15% decline.
Shopify fell 1.2% Tuesday, falling after Monday’s slight gain. Shares are tracing a cup with handle, offering a 1,130.10 buy point.
Keep in mind that Shopify’s new base is very late stage. There hasn’t been a base reset since the stock’s first breakout in July 2016. Later-stage bases have less upside potential and are more likely to fail than earlier-stage formations. However, they can still succeed.
Tesla stock slid over 2% Tuesday, extending a losing streak to four sessions. Shares are about 16% off their 52-week high, as they form a new base with a 502.59 buy point.
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.”
Tesla earnings are due out Wednesday after the close. Wall Street sees EPS jumping 49% to 55 cents as revenue grows 30% to $8.2 billion. Tesla delivered 139,300 vehicles globally in Q3, a quarterly record, surpassing expectations and driven by demand for the mass-market Model 3 sedan and new Model Y crossover.
Dow Jones Leaders: Apple, Microsoft
Among the top Dow Jones stocks, Apple advanced 1.3% Tuesday, rebounding from Monday’s 2.55% decline. Shares are again finding support around 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% advance through Monday’s close. Recent Dow Jones 30 addition Salesforce is the No. 2 performer with a 56.8% year-to-date advance.
Software leader Microsoft moved up 0.2% Tuesday. Shares are forming a new cup with handle with a 225.31 buy point.
Year to date, Microsoft is one of the top Dow Jones stocks, advancing 35.8% through Monday’s close.
Stock Market Rally: What To Do Next
After the Dow’s bullish signal on Sept. 30, investors are cleared to start buying new breakout stocks. 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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