Dow Jones futures changed little on Thursday night, along with S&P 500 and Nasdaq futures, with Nike earnings and overnight bank stress tests. The recovery in the coronavirus stock market showed resistance against negative Covid-19 headlines, recovering from initial losses to move forward.
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Early in the day, Tesla (TSLA) Dexcom (DXCM), Salesforce.com (CRM), Okta (Okta) Wingstop (TO), Atlassian (TEAM) and Inphi (IPHI) rebounded bullish from key support levels on Thursday.
Nike (NKE) reported a surprise quarterly loss and loss of revenue Thursday night. The Federal Reserve banned JPMorgan Chase (JPM) Bank of America (BAC), Goldman Sachs (GS) and other big banks for share buybacks or dividend increases in the third quarter, saying several financial giants could get too close to minimum capital levels amid the coronavirus pandemic.
Nike shares fell sharply, after sportswear giant DJIA moved toward a point of purchase. JPMorgan shares, Bank of America shares and Goldman Sachs shares withdrew in extended trading after strong gains on Thursday in regulatory relief.
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Stock market rally, tough leaders
While coronavirus cases are re-emerging, the stock market recovery remains resilient. The S&P 500 Index found key support, and the DJIA and Nasdaq also rose after heavy losses on Wednesday. The main stocks, which generally held up well on Wednesday, showed bullish action on Thursday.
Dexcom shares, Atlassian shares and Inphi shares found support around their 10-week moving averages. Tesla and Okta shares recovered from their 21-day lines. Shares of Wingstop and Salesforce found support around the purchase points of the latest outbreaks.
TSLA shares, DXCM shares, and TEAM shares are all on the IBD leaderboard. Okta, IPHI and WING shares have been added to SwingTrader.
Dow Jones Futures Today
Dow Jones futures fell 0.4% against fair value as components from DJIA Nike, JPMorgan and Goldman fell. S&P 500 futures fell 0.1%. Nasdaq 100 futures rose higher. Remember that overnight action on Dow futures and elsewhere does not necessarily translate into real trading in the next regular stock market session.
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Coronavirus news
Coronavirus cases worldwide have exceeded 9.71 million. Covid-19 deaths are above 491,000.
Coronavirus cases in the US are 2.50 million and deaths reach 124,000. The new Covid-19 cases hit a record of more than 40,000 on Thursday.
Texas and Florida will not continue with the later stages of reopening, amid high coronavirus cases and hospitalizations in the states. Intensive care units in the Houston area have reached maximum capacity.
Coronavirus Stock Market Rally
The recovery in the coronavirus stock market fell modestly shortly after the open, extending losses on Wednesday. But the main indices recovered, closing at Thursday’s highs.
The Dow Jones Industrial Average rose 1.2% in the stock market on Thursday, boosted by JPMorgan and Goldman stocks. The DJIA today is trading between its 50-day and 200-day moving averages. The S&P 500 Index rose after testing its 200-day intraday line. The Nasdaq compound also advanced 1.1%.
Growth stocks outperformed in the recovery from the coronavirus market on Thursday. Among the best ETFs, the Innovator IBD 50 ETF (FFTY) appeared 1.45%. IShares Tech-Software Sector’s expanded ETF (IGV) was up 1.4%. The VanEck Vectors Semiconductor (SMH) ETF was up 0.7% as major chipmakers came together and struggled with laggards and laggards as well.
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Nike Earnings
Nike reported a surprise loss of 51 cents a share, with sales falling 38% to $ 6.31 billion. Analysts had expected Nike earnings of 2 cents a share on sales of $ 7.26 billion. Digital sales increased 75% as many Nike stores and retail channels closed due to the coronavirus pandemic. Greater China sales increased 8%, or 11% in constant currency.
Nike shares fell 3.9% overnight. NKE shares rose 1.3% to 101.40 on Thursday. Nike shares have been working at a 104.79 buy point from a cup-to-handle base, according to MarketSmith analysis.
The relative line of force for NKE stocks is near a 52-week high. But the RS line, the blue line in the charts below, has generally moved laterally for several months and has been in range for years. The RS line tracks the performance of a stock against the S&P 500 index.
Bank stress tests
On Thursday night, the Fed said bank giants should suspend buybacks and limit dividends to current levels in the third quarter, saying that several banks could approach minimum capital levels in coronavirus-related scenarios. Stress tests have been relatively stress-free in recent years, but are more significant given the current sharp recession and uncertain economic prospects.
Banks had already voluntarily stopped buying back shares in March, and analysts were expecting steady dividends for now. Meanwhile, all banks undergoing stress testing must resubmit capital plans this year, the first time this has happened since stress tests were created after the 2008 crisis.
In overnight trading, JPMorgan and Bank of America shares fell about 2%, while Goldman Sachs shares sank 3.4%.
JPM, BAC and other bank stocks rebounded on Thursday after financial regulators relaxed the so-called Volcker rule to allow for some more risky investments. However, JPM shares and their peers have lagged behind in the recovery from the coronavirus market, although GS shares are working to get a point of purchase. And bank stocks, apart from short periods of superior performance, have only held or lagged the overall market for decades.
JPMorgan shares closed 3.5%, Bank of America shares rose 3.8% and Goldman Sachs shares added 4.6%.
Tesla Stock
Tesla shares fell during the day to 937.15, only undermining its 21-day moving average after sinking 4.1% on Wednesday. TSLA shares recovered, closing 2.6% at 985.98. For existing holders, this was an opportunity to add a few more shares. Not a good place to start a new position in Tesla stock, which is well spread from a buy point of 869.92.
Okta Stock
Okta shares also recovered from their 21-day line, rising 4.3% to 204.22. Cybersecurity stock also rebounded this week’s high of 201.94. Both offered an opportunity to add some stock or perhaps nibble on a new position. The Okta stock, which had found 10-week line support in the previous two weeks, has been consolidating for a few weeks.
Okta CrowdStrike (CRWD), Netskope and Test (PFPT) announced a cybersecurity alliance on Thursday.
Dexcom Stock
Dexcom shares fell to 380.19 intraday, testing its 10-week line once again. DXCM shares were recovered for a 1% gain on 398.09.
Atlassian Stock
Atlassian shares fell back to 173.80 intraday, again finding support in the 10 weeks. TEAM shares rebounded with a 2% pop at 180.36.
Salesforce stock
Salesforce shares rose 1.5% to 188.34. CRM shares fell to 184.44 intraday, falling below a purchase point of 184.90. It does not undermine Wednesday’s low.
Wingstop Stock
Wingstop’s shares soared 4% to 138.71. Intraday, WING shares fell to 129.72. That was right between their recent purchase points of 126.74 or 131.09.
Inphi Stock
Inphi shares rose 3.6% to 133.07. Intraday, shares fell to 107.20, back to its 10-week line. One of the first bursts in the recovery of the coronavirus stock market, Inphi has consolidated for a few weeks after a hot streak.
Dexcom shares will have a new base at the end of the week. Atlassian shares technically won’t have a base after Friday, but investors could treat it as such. Inphi stock needs a couple of weeks to set up.
Follow Ed Carson on Twitter at @IBD_ECarson for updates on the stock market and more.
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