Dow Jones Futures Signal Stock Market Rally On Stimulus Deal Buzz; Bitcoin, Roku Jump; Amazon, Shopify In Buy Range
Dow Jones futures rose modestly early Thursday, along with S&P 500 futures and Nasdaq futures, while Bitcoin continued to surge. The stock market rally had a mixed but generally positive session Wednesday amid stimulus deal buzz and a Fed meeting announcement. The Nasdaq hit a record high while several leading stocks entered buy range. Roku (ROKU) was a notable winner overnight on HBO Max news.
Chipotle Mexican Grill (CMG), Synopsys (SNPS) and Shopify stock broke out past buy points on Wednesday. Meanwhile, megacaps Amazon.com (AMZN) and Microsoft (MSFT) cleared early entries while Apple (AAPL) held in its buy range.
Roku Stock Rises On HBO Max Deal
After the close, AT&T (T) unit WarnerMedia reached a deal for Roku to carry HBO Max on its platform, nearly seven months after the new streaming service’s launch. HBO Max will be live on Roku as of Thursday. AT&T certainly wanted HBO Max on Roku before the “Wonder Woman 1984” launch.
Roku stock rose 7% early Thursday, signaling a new high. Terms weren’t disclosed, but the streaming gatekeeper has been able to hold out for a big slice of revenue from apps joining its platform. Roku stock has surged since the coronavirus crash and is greatly extended from any buy point.
Stimulus Deal Close
Reports that a government stimulus deal was in sight helped buoy the major indexes at the open, even with weak November retail sales. The $900 billion stimulus deal would reportedly include direct checks to Americans, but not include the decisive issues of state and local government aid or a liability shield for businesses. The goal is to attach a stimulus deal to a must-pass government funding bill by Friday, and letting lawmakers get out of town for the rest of 2020.
The Fed meeting ended Wednesday afternoon with policymakers reiterating pledges to continue bond buying and a goal of exceeding 2% inflation for some time. But the central bank resisted calls for easier money. Fed chief Jerome Powell said the central bank could do more but said “the case for fiscal policy is very, very strong,” signaling his strong support for a stimulus deal. He said the economy should grow fast after next June, when coronavirus vaccine immunizations reach most Americans, but fiscal stimulus could help over the next three to four months.
Dow Jones Futures Today
Dow Jones futures were up 0.4% vs. fair value. S&P 500 futures rose 0.5% and Nasdaq 100 futures climbed 0.5%.
Bitcoin prices leapt to above $22,500. That comes a day after Bitcoin ran past $20,000. That’s lift a number of related Bitcoin investments, from Grayscale Bitcoin Trust (GBTC) and Riot Blockchain (RIOT) to PayPal (PYPL).
Coronavirus cases worldwide reached 74.66 million. Covid-19 deaths topped 1.65 million.
Coronavirus cases in the U.S. have hit a cumulative 17.39 million, with deaths above 314,000. On Wednesday, U.S. Covid cases rose by nearly 247,000, just shy of a new high, including more than 61,000 in California. Coronavirus deaths set a record of 3,486.
French President Emmanuel Macron has tested positive for COVID-19.
The FDA late Wednesday said that extra doses of the Pfizer coronavirus vaccine in many vials can be used, potentially increasing the number of doses by up to 40%.
The Moderna coronavirus vaccine faces an FDA advisory panel today, with a positive recommendation expected and FDA emergency use approval soon after that.
But Moderna vaccine recipients appear to be slightly more likely to report some side effects than those who received the Pfizer coronavirus vaccine.
Stock Market Rally
U.S. Stock Market Today Overview
Last Update: 4:20 PM ET 12/16/2020
The stock market rally had a lot of big headlines: Stimulus deal close, Fed meeting announcement and Bitcoin soaring above $20,000.
The major indexes, which initially weakened on Fed meeting announcement at 2 p.m. ET, improved as Fed chief Jerome Powell began speaking at 2:30 p.m.
The Dow Jones Industrial Average still closed down 0.15% in Wednesday’s stock market trading. The S&P 500 index rose 0.2%. The Nasdaq composite climbed 0.5%, hitting a new high intraday.
Microsoft stock, as a Dow Jones, S&P 500 and Nasdaq component, helped boost the major indexes. Amazon stock gave a lift to the S&P 500 and Nasdaq. Both have market caps above $1.6 trillion. Apple stock, with a $2.17 trillion market valuation, lost 7 cents on Wednesday after a 5% pop Tuesday above another buy point. If these three megacaps can keep pace or even outperform, the stock market rally could see strong gains.
The downside is that could fuel bullish sentiment further. The latest bulls vs. bears reading showed that 63.6% of investment newsletter writers are bullish. That’s down slightly from the prior two weeks, but still near the highest levels since early 2018.
That raises the risks of a stock market rally pullback, but it hasn’t happened so far.
Growth stocks were generally higher, though some chip names lost ground. Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 0.6%. The iShares Expanded Tech-Software Sector ETF (IGV) rallied 1.5%. The VanEck Vectors Semiconductor ETF (SMH) just edged lower.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Chipotle stock rose 4% to 1,400.62, hitting an all-time high and clearing a three-month consolidation. CMG stock jumped above a 1,358.81 handle buy point.
Stifel upgraded Chipotle stock to a buy, raising its price target to 1,500 from $1,400, citing the chain’s “impressive resilience” during the pandemic and expecting strong growth in 2021.
Shopify stock jumped 7.75% to 1157.31, breaking past an 1152.51 handle buy point. Like CMG stock, the e-commerce software maker hit a record high, clearing a consolidation going back to early September.
The relative strength line, the blue line in the charts provided, has lagged since early September. SHOP stock has underperformed the S&P 500 index over that time. But the RS line has risen above at least a short-term high.
KeyBanc Capital Markets analyst Josh Beck said in a note Wednesday that Shopify could garner a new e-commerce fee from merchants, much like Amazon.com.
Synopsys stock climbed 2.2% to 248.10, rising above a 246.99 buy point from a flat base. Investors probably could have bought SNPS stock in the prior two sessions, as it cleared little resistance areas. The chip design software maker has seen strong growth, with revenue gains accelerating in the last three quarters.
Another design software maker, Cadence Design Systems (CDNS), also is nearing a buy point.
Microsoft stock rose 2.4% to 219.28, rebounding from its 10-week line and moving above short-term resistance. That could serve as an early entry, especially as a Long-Term Leader. Investors also could use 228.22 as another early entry for MSFT stock with 232.96 the official buy point.
The RS line has been lagging for the past five months. Microsoft stock has underperformed the S&P 500 index over that time. But perhaps this tech giant is waking up, along with Amazon and Apple stock.
Amazon stock advanced 2.4% to 3,240.96, rallying from its 10-week line and clearing a trend line starting with the Oct. 13 short-term peak. If AMZN stock clears that Oct. 13 high + 10 cents, or 3496.34, that would be another early entry. The official buy point is 3552.35.
On Wednesday, there was a report that Amazon is pushing into telemedicine, following the recent launch of Amazon Pharmacy. Earlier in the week, a report said Amazon executives discussed creating a Shopify rival earlier this year.
The RS line for AMZN stock has lagged for months.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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