Dow Jones futures advanced to session highs early Wednesday on Pfizer’s coronavirus vaccine news. Tesla raced higher on a Morgan Stanley upgrade, while Chinese rival Nio jumped nearly 4% on earnings. https://imasdk.googleapis.com/js/core/bridge3.425.2_en.html#goog_1574511695 Volume 0%
The Dow Jones Industrial Average led major stock indexes lower Tuesday with a 0.6% decline, or 167 points. The S&P 500 fell 0.5%, while the tech-heavy Nasdaq composite moved down 0.2%. All three major stock indexes are close to reaching record highs.
Among the Dow Jones leaders, Apple (AAPL) fell 0.8%, while Microsoft (MSFT) slid 1.3%. Meanwhile, Salesforce.com (CRM) is once again approaching a new buy point amid Tuesday’s 2.5% advance.
IBD Stock Of The Day, Tesla (TSLA), surged 8.2% on its inclusion in the S&P 500 index. Early Wednesday, Tesla rallied 3% after Morgan Stanley upgraded the stock. Chinese rival Nio (NIO) briefly dived more than 8% on earnings late Tuesday before erasing losses to turn higher. Nio advanced nearly 4% in premarket trade.
Stocks in or near buy zones in the stock market rally are Chipotle Mexican Grill (CMG) and Facebook (FB).
Chipotle, Microsoft and Tesla are all IBD Leaderboard stocks. Meanwhile, Apple is on the IBD Leaderboard Watchlist.
Dow Jones Futures Today: BioNTech-Pfizer Coronavirus Vaccine
Early Wednesday, Dow Jones futures rose 0.45% vs. fair value, while S&P 500 futures were up 0.3%. Nasdaq 100 futures rallied just 0.2% vs. fair value. Remember that trading in Dow Jones futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
On Wednesday morning, Pfizer (PFE) and BioNTech (BNTX) said a final data analysis found their coronavirus vaccine was 95% effective in preventing Covid-19. The drugmaker said that the vaccine candidate was highly effective against the virus 28 days after the first dose, and its effectiveness was consistent across all ages, races and ethnicities.
Researchers haven’t found any serious safety issues, the companies said.
Last week, the two companies said their coronavirus vaccine candidate was about 90% effective.
Pfizer stock jumped about 3% in morning trade, while BioNTech stock gained about 6%.
Among exchange traded funds, Innovator IBD 50 (FFTY) fell less than 0.1% Tuesday. The Nasdaq 100-linked Invesco QQQ Trust (QQQ) ETF traded down 0.3%. Meanwhile, the SPDR S&P 500 ETF (SPY) lost 0.5%.
Amid the coronavirus stock market rally, the tech-heavy Nasdaq is up 32.6% for the year through Tuesday’s close. Meanwhile, the S&P 500 is up 11.7%, while the Dow is up 4.3% year to date, through the Nov. 17 close.
According to the Worldometer data tracker, the cumulative number of confirmed coronavirus cases in the U.S. topped 11.5 million on Tuesday. Total virus-related deaths rose past 252,000.
The cumulative total of worldwide Covid-19 cases confirmed since the start of the outbreak topped 55.5 million Tuesday, with more than 1.33 million virus-related deaths.
Coronavirus Stock Market Rally
According to IBD’s The Big Picture, the stock market is back in a new uptrend after a bullish follow-through day on Nov. 4.
Monday’s Big Picture commented, “IBD’s enterprise software industry group exemplifies how quickly the stock market has cooled on coronavirus plays. The group ranked in the top 15 for much of October, but is now No. 87 for six-month relative performance among 197 industries tracked by IBD.”
Last week, Dow Jones leader Salesforce.com briefly broke out past a 270.26 buy point in a double bottom pattern, according to MarketSmith chart analysis, but the stock quickly tumbled below its 50-day line.
Amid recent strength, the stock is back above its 50-day line and is approaching a 271.02 buy point in a double bottom with handle. Shares advanced 2.5% Tuesday.
Salesforce.com is the No. 2 performer on the Dow Jones Industrial Average with a 57.5% year-to-date advance through Tuesday’s close.
FANG stock leader Facebook is tracing a cup with handle with a 297.48 buy point, according to MarketSmith chart analysis. Shares are about 7% away from the new entry amid Tuesday’s 1.4% fall.
According to the IBD Stock Checkup, Facebook stock has a 98 out of a perfect 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.
Burrito maker Chipotle is nearing a 1,366.76 buy point in a double bottom. Shares are about 8% away from the new entry, as they struggle to get back above their key 50-day line.
Chinese electric-car maker Nio topped third-quarter estimates and gave strong guidance late Tuesday. The company reported a loss of 12 cents a share on revenue of $666.6 million. Vehicle margin expanded to 14.5% from -6.8% a year ago and 9.7% in Q2. Available cash more than doubled from Q2 to $3.3 billion in Q3.
Wall Street expected the electric-SUV maker to lose 15 cents a share on revenue of $628 million.
On Nov. 13, Nio advanced as much as 248% past a 15.55 buy point in a cup with handle and could be in the midst of a climax run. On that day, Nio rose to a peak of 54.20, gaining as much as 77% from the close of 30.58 in the week ended Oct. 30. Eighteen weeks have passed since the all-electric SUV and sedan maker broke out past 10 a share. The parabolic rise in recent weeks mirrors what is seen during a climax run.
Tesla stock surged more than 8% Tuesday on news it would be added to the S&P 500 index on Dec. 21. The IBD Leaderboard stock is rapidly approaching a 466 buy point in an awkward cup with handle.
Early Wednesday, Tesla advanced 3% after Morgan Stanley upgraded the stock from equalweight to overweight, while raising the price target from 360 to 540.
According to IBD Leaderboard commentary, “The handle’s midpoint of 422.50 is slightly higher than the midpoint of the cup (416.19) itself. That’s good. One risk not to ignore: the new base is late stage, following advances from cup with handle bases and a high, tight flag that also counted as a base. So, the latest pattern has higher risk.”
Among the top Dow Jones stocks, Apple moved down 0.8% Tuesday, as shares continue their rebound from their 50-day line. Apple stock is tracing a new base with a 138.08 buy point. An early entry exists at 125.49.
The blue-chip giant is the No. 1-performing Dow Jones stock for 2020, with a 62.6% advance through Tuesday.
Software giant Microsoft moved down 1.3% Tuesday, snapping a two-day win streak. Shares are above their 50-day line, as they trade about 8% away from their all-time high.
Year to date, Microsoft is one of the top Dow Jones stocks, advancing 36% through the Nov. 17 close.
Stock Market Rally: What To Do Next
During the recent stock market correction, investors should have built watchlists of potential leaders. Now it’s time to put those watchlists to work.
Investors should use the current stock market strength as a go-ahead to buy new breakouts. Start slowly with new purchases and see how they perform. After raising cash during the recent correction, don’t rush to be fully invested all at once. Try some new buys. If they work, you can add to them; if not, you can back away.
In particular, focus on stocks with strong relative strength. Find them by using the relative strength line. The RS line measures a stock’s price performance vs. the S&P 500. If the stock is outperforming the broader market, then the RS line angles upward. If a stock is performing worse than the broad market, then the line will point lower.
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.