Dow Jones futures rose sharply Monday morning, along with S&P 500 futures and Nasdaq futures, signaling a strong Monday open for the coronavirus stock market rally as Chinese stock markets soared overnight on bullish local media. While coronavirus cases are soaring in the U.S., Covid-19 deaths have continued to trend lower.
XThe coronavirus stock market rally faded into Thursday's close, though the major indexes had a strong week. Tesla (TSLA) soared on second-quarter delivery figures, while Akamai Technologies (AKAM), Teladoc Health (TDOC), Taiwan Semiconductor (TSM) and Atlassian (TEAM) all cleared buy points. After the close, Regeneron Pharmaceuticals (REGN) fell on weak results for a possible coronavirus treatment.
Tesla stock held the bulk of Thursday's gains, capping a huge week for itself and other electric-vehicle plays such as Nio (NIO). Both Tesla and Nio surging Monday morning. Looking ahead, second-quarter Tesla earnings results could spur the S&P 500 index to add TSLA stock. Beyond that, Tesla faces no production constraints but questions about future demand remain.
Teladoc stock cleared two buy points Thursday, while Akamai stock blasted to a new high. Taiwan Semiconductor stock also broke out past a clear buy point. Atlassian stock cleared an early entry, just below an official buy point from a brand-new flat base.
Regeneron and partner Sanofi (SNY) rose early Monday as they began late-stage trials on a coronavirus antibody cocktail. Both REGN stock and SNY stock had closed near buy points.
Tesla stock, TEAM stock and TDOC stock are on IBD Leaderboard. TSM stock is on the IBD 50, along with many other semiconductor companies.
Separately, Warren Buffett's Berkshire Hathaway (BRKB) bought natural gas storage and transmission assets of Dominion Energy (D) for $4 billion, or nearly $10 billion including assumed debt. It's Buffett's first big acquisition since the coronavirus crisis. Dominion Energy, which is moving toward being a pure-play regulated utility, cut its 2020 EPS forecast and plans to slash its fiscal Q4 dividend to 64 cents a share from 93 cents. Dominon and Duke Energy (DUK) also canceled the Atlantic Coast natural-gas pipeline that had faced years of delays from opposition.
Uber (UBER) will buy Postmates for $2.65 billion in stock.
Dow Jones Futures Today
Dow Jones futures climbed 1.7% vs. fair value. S&P 500 futures rose 1.55%. Nasdaq 100 futures advanced 1.5%.
DJIA futures are rallying as China's Shanghai composite soared 5.7% and Hong Kong's Hang Seng 3.8%. Chinese media fueled bullish sentiment, with the Securities Times stressing the importance of a bull market. Social media highlighted opening a stock account.
U.S.-listed Chinese stocks such as Alibaba (BABA), GSX Techedu (GSX) and Nio soared early Monday, along with China-related plays such as Taiwan Semiconductor and Tesla.
Other Asian and European markets also did well.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Coronavirus News
Coronavirus cases worldwide have reached 11.58 million. Covid-19 deaths have topped 537,000.
Coronavirus cases in the U.S. have exceeded 2.98 million, with deaths above 132,000. New coronavirus cases in the U.S. hit a record 57,232 on Thursday. New U.S. Covid-19 cases nearly hit 55,000 on Friday, the third straight day above 50,000. Saturday and Sunday new cases were each around 45,000.
Testing has continued to soar, topping 700,000 on Friday. Even so, the share of positive tests is rising, especially in the South and West.
Florida reported more than 11,000 new coronavirus cases on Saturday, yet another record. California topped 9,000 on Thursday while Texas issued a statewide order requiring face coverings. Hospitalizations have increased in many Sun Belt and Southern states.
But so far coronavirus deaths are very low nationwide. They may only be starting to rise in a few states with soaring cases. Recent coronavirus cases have skewed much younger than a few months ago, while standard of care has improved.
If Covid-19 deaths remain relatively low, the U.S. economy may continue to recover. Many states have halted reopening efforts or reimposed some restrictions due to the increase in new cases.
Brazil has more than 1.5 million coronavirus cases. India has passed Russia, with more than 700,000 Covid-19 cases. Mexico, Saudi Arabia and South Africa are among the notable hot spots.
Regeneron and French drug giant Sanofi said early Monday that they will begin a Phase 3 trial for a two-antibody cocktail as a coronavirus preventative in healthy adults. They'll also start a Phase 2/3 trial for treating the virus.
Late Thursday, the two drugmakers said a phase 3 trial of Kevzara failed to meet goals in coronavirus patients requiring ventilation. That hit both stocks late Thursday.
But early Monday, Regeneron stock climbed nearly 3% and Sanofi stock rose 1%. REGN stock had closed slightly below a quasi-ascending base entry. SNY stock was just below a consolidation buy point.
Stock Market Update: The Raging Bull At New Highs
Coronavirus Stock Market Rally
The coronavirus stock market rally had a strong start Thursday, with the Nasdaq running to a record high. But the major indexes faded into the close. The Dow Jones Industrial Average closed up 0.4% in Thursday's stock market trading after hitting resistance once again at its 200-day moving average. The S&P 500 index rose 0.45% and the Nasdaq composite 0.5%.
But the Dow Jones and other indexes still had a strong week. The DJIA climbed 3.25%, the S&P 500 4% and the Nasdaq 4.6%.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) edged up 0.3% on Thursday but 3.6% for the week. The iShares Expanded Tech-Software Sector ETF (IGV) climbed 0.2% on Thursday, 3.7% for the week. The VanEck Vectors Semiconductor ETF (SMH) popped 1.5% on Thursday and 3.8% for the week. Taiwan Semiconductor stock is a top holding in SMH.
Is the coronavirus stock market rally "due" for a break? A pause or pullback over a few weeks would be normal and healthy. But the stock market rally is going to do what it's going to do. Investors need to follow the market.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Akamai Stock In A Buy Zone
Akamai stock jumped 6.4% to 113.12 on Thursday, breaking out past a 108.35 buy point, according to MarketSmith analysis. AKAM stock closed just within the 5% chase zone. But shares were up 2.5% early Monday.
The relative strength line for Akamai stock still is a little ways from its March peak. The RS line, which tracks a stock's performance vs. the S&P 500 index, is the blue line in the charts provided.
Taiwan Semiconductor Stock Breaks Out
TSM stock rose 3.2% to 58.62, clearing a 58.14 cup-with-handle buy point. However, the RS line for Taiwan Semiconductor stock is still not at highs. Taiwan Semi hasn't been a huge winner in recent years, and has lagged several other top chip stocks. But Taiwan Semiconductor stock rose 3% early Monday.
Teladoc Stock
Teladoc stock rose 5.05% to 208.89 on Thursday, just clearing a 208.73 buy point above a high-ish handle from a recent consolidation. TDOC stock also moved past a very short trend line offering an early entry around 200. The RS line for Teladoc stock is near a record high after a huge run to start the year.
TDOC stock climbed 4% in Monday's premarket.
Atlassian Stock
Atlassian stock climbed 2.4% to 190.08 on Thursday, a record close. TEAM stock is just below a 191.82 flat-base buy point. But investors could have bought Atlassian stock as it got to around 188, clearing a short-term high as well as a downward-sloping trend line. In recent weeks, TEAM stock has found support at its 10-week line.
Tesla Stock
Tesla stock surged 8.4% to 1,208.66, hitting yet another-record high. Before Thursday, Tesla reported it delivered 90,650 electric vehicles in the second quarter. That beat recent estimates of around 88,000. Model 3 and Y deliveries were 80,050, while Model S and X deliveries were 10,600. Overall production from the Fremont and Shanghai plants was 82,272.
TSLA stock had already been soaring earlier in the week as leaked Elon Musk emails to staff signaled Tesla was close to breaking even in the second quarter. If Tesla earnings are positive for Q2, that could spur TSLA stock's entry into the S&P 500 index. Musk likely can recognize sufficient emission credits and "Full Self Driving" revenue to make that happen.
With investors pricing in strong deliveries and more, Tesla stock skyrocketed 26% last week.
It was a huge week for EV-related plays. Nio stock leapt 36% to a 16-month high, including a 19% spike on Thursday. The Chinese luxury electric SUV maker reported record Q2 deliveries early Thursday. Workhorse Group (WKHS), which is developing electric vans, shot up 111% this past week after a 103% advance in the prior week. Blink Charging (BLNK) leapt 75%.
Early Monday TSLA stock spiked 6%, also helped by JMP Securities hiking its price target to 1,500 from 1,050. Nio stock exploded 14%.
What's Next For Tesla
For the next few weeks, investors will await Tesla earnings and possible S&P 500 admission news for TSLA stock.
As for the business, Tesla should be producing record amounts, with no coronavirus shutdowns affecting either the Fremont or Shanghai factories. Overall production should be well over 100,000 in the third quarter. Tesla will begin to answer key questions about ongoing demand for the Model Y, Europe and China, but short-term factors still weighed to the upside.
After the initial burst of Tesla Model Y orders, will the new EV show sustained demand, especially given widespread reports of poor build quality? If demand wanes, Tesla presumably could introduce a lower-cost variant to the Model Y, cut prices, or begin Y shipments to Europe.
Tesla's EV market share in Europe appeared to have peaked before the coronavirus crisis. There might be some pent-up demand in Q3, while European subsidies are increasing. But several more EV and hybrid rivals are rolling out.
Musk might also send more Fremont cars to Asia outside of China, notably South Korea, home to the world's juiciest EV subsidies right now.
As for China, Tesla presumably had strong June sales for its new made-in-China Model 3 LR, especially with subsidies being cut in July. What is the sustained demand for the Model 3 in China? EV competition is picking up there as well.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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