Dow Jones futures rose early Friday, along with S&P 500 futures and Nasdaq futures, as the stock market rally looks to extend Thursday’s rebound. Bitcoin tried to steady as rival cryptocurrency Dogecoin soared on Elon Musk tweets.
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The stock market rally got a much-needed win Thursday, helped by the CDC announcing new guidelines that vaccinated people no longer need to wear a mask in most situations.
Dow Jones giant Walt Disney (DIS) and newly public crypto assets sales platform Coinbase (COIN) headlined key earnings late Thursday.
The stock market rally had a positive session, even as Bitcoin tumbled. But while the major indexes strengthened, the overall weak conditions remains. Apple (AAPL) and Microsoft (MSFT) rebounded but hit resistance. Tesla (TSLA) and Square (SQ), meanwhile, fell through their 200-day lines as highly valued growth names continued to slump.
An opening bounce faded through much of the morning, with the Nasdaq briefly turning negative in the early afternoon. But stocks shored up on news that the Centers for Disease Control and Prevention recommended lifting most mask requirements and social distancing guidelines for fully vaccinated people.
Still, the uptrend remains under pressure.
Energy stocks fell as crude prices slumped. Many tested or undercut recent buy points or triggered automatic sell signals from failed breakouts.
Housing did well as Treasury yields pulled back after several up days, but recent housing-related breakouts Floor & Decor (FND) and Azek (AZEK) tumbled.
Chip gear makers bounced back but aren’t in position yet.
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Disney Earnings Mixed
Disney earnings came in after the close, along with Coinbase and recent IPOs Airbnb (ABNB), Cricut (CRCT) and DoorDash (DASH).
Disney earnings topped views but revenue fell short. Disney+ subscribers climbed to 103.6 million, below some expectations. DIS stock retreated nearly 4% before the open. Shares edged up 0.3% to 178.34 on Thursday. Disney stock is in a flat base with 203.12 buy point, according to MarketSmith analysis, but has been drifting lower since early March, trading below its 50-day line for the past month.
Coinbase Earnings Climb
Coinbase earnings and sales soared in the first quarterly report, but just missed analyst views. User growth was strong.
In overnight trade, Coinbase stock climbed 3%. COIN stock fell 6.5% to 265.10 on Thursday. COIN stock came public via a direct listing on April 14, hitting 429.54 intraday but trending lower ever since.
Beyond the ups and downs of Bitcoin, Coinbase faces concerns about competition from other crypto trading platforms from startups to Wall Street banks.
Bitcoin Steadies, Dogecoin Soars
Coinbase earnings came just after Bitcoin and other cryptocurrencies tumbled on negative news. Elon Musk said late Wednesday Tesla would no longer accept Bitcoin for vehicle purchases, citing environmental concerns. Also, the Justice Department and IRS reportedly are probing Binance, the world’s biggest cryptocurrency exchange, on money laundering and tax evasion concerns. Bitcoin price plunged late Wednesday but are now stabilizing at below $51,000.
Meanwhile, Musk returned to tout Dogecoin yet again, tweeting Thursday evening: “Working with Doge devs to improve system transaction efficiency.”
Separately, Coinbase said it will start trading Dogecoin in a few weeks.
Dogecoin shot up on the news, turning higher after erasing steep Thursday losses.
IPO Earnings
Airbnb earnings were mixed, with a wider-than-expected loss offset by a 5% revenue gain. ABNB stock edged lower early Friday. Airbnb stock fell 3.2% to 135.75 on Thursday, continuing a sharp sell-off to the lowest point since last December, days after its IPO.
DoorDash also reported a larger loss than expected while revenue topped. The food delivery app raised guidance. DASH stock jumped 9% before the open. DoorDash stock rose 2.2% to 115.49 on Thursday, rebounding from post-IPO lows. In January, shares tried to break out of an IPO base. But on Jan. 27, DASH stock skyrocketed to a record 256.09 before reversing lower. Shares have been trending lower for nearly three months.
Cricut earnings and revenue boomed in the first post-IPO report, both beating views. CRCT stock leapt 6% in premarket action. Cricut stock rose 2.7% on Thursday to 20. Shares broke out of an IPO base in late April. CRCT stock ran strongly over several sessions before round-tripping the sizable gains by Monday.
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Dow Jones Futures Today
Dow Jones futures rose 0.55% vs. fair value. S&P 500 futures climbed 0.7%. Nasdaq 100 futures jumped 1.1%. Apple, Microsoft, Tesla and Square were among the big caps lifting the major indexes.
The 10-year Treasury yield fell modestly, extending Thursday’s retreat following several days of gains.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live.
CDC Lifts Mask Mandates For Vaccinated
Fully vaccinated people don’t need to wear a mask or stay six feet apart outdoors or most indoor situations, the CDC said Thursday in new guidelines. Mask mandates still apply, even for vaccinated Americans, in health care settings, on airplanes and where businesses require them.
The CDC is issuing guidelines, not rules. Local governments and businesses can still mandate masks. But many will take their cue from the CDC. Lifting the mask mandate may help spur the economic rebound, by encouraging schools to fully reopen and people generally returning to pre-pandemic spending and work patterns. It also may spur fence-sitters to get vaccinated.
Coronavirus News
Coronavirus cases worldwide reached 161.90 million. Covid-19 deaths topped 3.36 million.
Coronavirus cases in the U.S. have hit 33.62 million, with deaths above 598,000.
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Stock Market Rally
The stock market rally had a decent rebound Thursday after several days of weakness. The Dow Jones Industrial Average rose 1.3% in Thursday’s stock market trading. The S&P 500 index climbed 1.2%. The Nasdaq composite advanced 0.7%. The Russell 2000 popped 1.8%.
The 10-year Treasury yield fell 3 basis points to 1.67%. That followed four days of gains.
Apple stock rose 1.8% and Microsoft climbed 1.7% on Thursday. Both closed below their 50-day lines, hitting resistance there. However, Apple and Microsoft stock rose just over 1% early Friday, suggesting another attempt to reclaim that key level.
Tesla stock fell 3.1% to 571.69. Square stock skidded 4.6%. Tumbling Bitcoin prices may have some impact on both, especially SQ stock, but plenty of former growth leaders struggled Thursday. Before Friday’s open, Tesla and Square rose about 3%.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 2%, while the Innovator IBD Breakout Opportunities ETF (BOUT) edged up 0.75%. The iShares Expanded Tech-Software Sector ETF (IGV) just edged lower, even with MSFT stock is its No. 1 holding. The VanEck Vectors Semiconductor ETF (SMH) gained 1.1%, with chip-gear names leading.
SPDR S&P Metals & Mining ETF (XME) advanced 0.5% and Global X U.S. Infrastructure Development ETF (PAVE) popped 2.15%. U.S. Global Jets ETF (JETS) ascended 2.1%. SPDR S&P Homebuilders ETF (XHB) jumped 3%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) retreated 2.6% and ARK Genomics ETF (ARKG) 1.8%. Tesla stock is the No. 1 holding across ARK Invest’s ETFs. Square stock also is a top-five holding while several ARK ETFs have amassed sizable COIN stock stakes since it came public.
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Market Rally Analysis
The stock market rally was on the brink of going under, so Thursday’s up day was a relief. But it was an inside day for the major indexes, not dramatically changing the overall health of the market.
The Dow Jones, after nearing its 50-day line Wednesday, rebounded to just above its 21-day exponential moving average. The S&P 500 index bounced from just above its 50-day line but stopped short of its 21-day line. The Nasdaq composite looked set to resume losses before the afternoon bounce on CDC mask guidelines.
Leading stocks were a mixed bag, with breakouts or stocks reclaiming buy points scarce. It was nice to see Apple and chip stocks bounce, but they are generally below their 50-day lines. Highly valued growth stocks continue to break down, as TSLA stock, Square, COIN stock and ARKK show.
Dow futures point to further gains, but let’s see how markets trade heading into Friday’s close.
Bottom line: The market rally remains “under pressure” and much closer to falling into a correction than “uptrend resumes.”
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What Investors Should Do Now
The stock market rally rose Thursday, but didn’t give much of a reason to add to exposure. The major indexes remain near key levels while few buying opportunities presented themselves.
Caution is still the word of the day. Tech remains weak. Keep an eye on some tech titans and chip-gear makers, but they aren’t flashing buy signals for now. Story stocks, including Tesla and Square but also many others with weaker fundamentals such as Airbnb, continue to seriously lag. This is simply not an area of the market to be messing with right now.
Breakouts generally haven’t been working over the past few months. A slew of shale company breakouts failed. And MarineMax (HZO) and Azek (AZEK) are recent breakouts that quickly fizzled.
Investors can continue to have limited exposure with winning stocks across various leading sectors, but it’s not a time to be doubling down on the market. That time will come again.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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