Dow Jones futures were little changed vs. fair value Friday morning, along with S&P 500 futures and Nasdaq futures, with traders awaiting a stimulus deal and a huge day for Tesla stock.
The stock market rally hit fresh highs Thursday with a stimulus deal seemingly close. Tesla (TSLA) surged to a record high amid a credit rating upgrade, with Lululemon and DraftKings among new breakouts.
The Moderna coronavirus vaccine and FedEx earnings were in the news late Thursday. Tesla stock will be in focus Friday as index funds likely load up on shares before it joins the S&P 500 index before Monday’s open.
After the close, an FDA advisory panel overwhelmingly recommended the Moderna (MRNA) coronavirus vaccine for emergency use. The FDA said it would move “rapidly” on approval, with a decision likely today. On Dec. 10, an FDA panel backed the coronavirus vaccine from Pfizer (PFE) and BioNTech (BNTX), with FDA approval coming Dec. 11. Vaccinations started on Monday.
Moderna stock edged lower Friday morning. That followed strong gains Thursday.
FedEx earnings easily beat views amid the online shopping boom. However, the shipping giant didn’t give guidance. FedEx stock fell early Friday from near a buy point. FedEx (FDX) rival UPS (UPS) also retreated in extended trade after just closing in a buy range.
Tesla stock jumped yet again Thursday to fresh all-time highs as it continues a huge run-up on the S&P 500 index news. A Standard & Poor’s credit upgrade also helped TSLA stock. Shares tilted higher in active trade before the open.
Dow Jones Futures Today
Dow Jones futures fell 0.1% vs. fair value. S&P 500 futures edged lower and Nasdaq 100 futures tilted higher.
Moderna Coronavirus Vaccine
An FDA advisory panel backed the Moderna coronavirus vaccine Thursday, with 20 yes votes and one abstention. Allergic reactions and other side effects, which seem to be a little more likely with the Moderna vaccine than the Pfizer treatment, were in focus.
Notably, Moderna is seeking coronavirus vaccine approval for adults 18 and up. The Pfizer vaccine is approved for people 16+, but several panel members had concerns about 16- and 17-year-olds getting doses without studies on that age group.
With the advisory committee backing Moderna’s Covid vaccine, the FDA will likely grant swift emergency use approval. After the FDA grants its OK, Moderna will begin rolling out its vaccine doses.
President Trump tweeted Friday morning that the Moderna vaccine had been “overwhelmingly” approved with distribution starting immediately. But there was no word yet from the FDA.
Vice President Mike Pence and his wife received the Pfizer coronavirus vaccine shot this morning on camera, in an effort to promote vaccinations. Meanwhile, several states are reporting delayed or reduced shipments of the Pfizer coronavirus vaccine. Pfizer says there are no disruptions on its end, suggesting that any issue is with the federal government.
Moderna stock fell a fraction before Friday’s open. Shares had rallied 5.1% on Thursday. Pfizer stock climbed 0.6% on Thursday. BioNTech stock advanced 0.5%.
Coronavirus cases worldwide reached 75.41 million. Covid-19 deaths topped 1.67 million.
Coronavirus cases in the U.S. have hit 17.62 million, with deaths above 317,000.
Stimulus Deal Close?
Senate Majority Leader Mitch McConnell and Democratic leaders continued to sound optimistic that a stimulus deal is close. The relief package reportedly includes extra jobless benefits, small business funds, checks to every adult American and $17 billion in airline aid. Lawmakers would like to reach a deal by Friday, when government funding runs out. But they could end up working over the weekend.
A fiscal stimulus deal could keep economic growth and many small businesses afloat for the next few months, until coronavirus vaccinations can bring down cases and allow for a full recovery.
Stock Market Rally
U.S. Stock Market Today Overview
Last Update: 4:04 PM ET 12/17/2020
The stock market rally had yet another solid session. The Dow Jones Industrial Average climbed 0.5% in Thursday’s stock market trading. The S&P 500 index advanced 0.6%. The Nasdaq composite popped 0.8%. The Russell 2000 climbed 1.3%. All hit record highs and closed near session highs.
Growth stocks generally did well, though chips once again sat out.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rallied 1.4%, while the Innovator IBD Breakout Opportunities ETF (BOUT) popped 1.6%. The iShares Expanded Tech-Software Sector ETF (IGV) also rallied 1.6%. The VanEck Vectors Semiconductor ETF (SMH) closed essentially flat.
Among the various breakouts, Lululemon stock jumped 6.3% to 386.07, clearing a 383.64 cup-with-handle buy point, according to MarketSmith analysis. DraftKings stock climbed 2.6% to 55.20, topping a 53.82 cup-with-handle entry after running up 6.5% on Wednesday.
FedEx earnings jumped 92% to $4.83 a share, with revenue up 19% to $20.6 billion. Analysts forecast FedEx earnings of $3.90 a share with revenue at $19.33 billion.
The shipping giant didn’t offer guidance, with coronavirus cases soaring even as Covid vaccines start to roll out. FedEx and UPS have been actively involved in the Pfizer coronavirus vaccine rollout, complicated by the need for ultra-cold storage.
FedEx stock fell 3% early Friday. Shares climbed 1.2% to 292.26 on Thursday. FDX stock closed above a 293.40 buy point from a short consolidation on Dec. 4, but over the past week pulled back below that entry. It has been finding support at its 21-day line. Investors also might see 305.76, just above the Dec. 9 high, as another entry for FedEx stock.
UPS stock sank 1% before the open. Shares had climbed 2.6% to 174.49 on Thursday. That just topped a 174.30 buy point for UPS stock from a cup-with-handle base.
Tesla Stock Ahead Of S&P 500 Index
Tesla stock will join the S&P 500 index before the open on Monday. The real action will be on Friday, as S&P 500 index tracking funds buy an enormous sum of TSLA shares. With a market cap of $621 billion, Tesla stock will easily be the biggest addition ever to the S&P 500 index.
The passive funds, by themselves, will be a powerful force for pushing up Tesla stock on Friday. But many investors have bought shares in the last several weeks, perhaps with the intention of unloading them to investors. So it’s unclear how TSLA stock will react on Friday, or next week when the S&P 500 addition is finally finished.
Tesla stock rose 5.3% to 655.90 on Thursday, hitting yet another record high. Shares have surged 61% since news broke a month ago that Tesla would join the S&P 500 index. Tesla stock is far extended from a 466 buy point,
In a somewhat-expected move, S&P Global Ratings raised its Tesla credit rating closer to investment grade. The Tesla rating rose to BB from BB-, with a positive outlook. S&P Global cited Tesla stock sales in 2020 as beefing up cash, substantially reducing the risk of a default.
Tesla will add volatility to Friday’s quadruple witching of expiring options and futures.
Tesla stock was active in the premarket, rising 1.5%.
Stock Market Rally Analysis
Bullish sentiment is near multiyear highs. With the major indexes all at record highs, that’s likely only increasing. After four straight gains, the Nasdaq composite is now 7.5% above the 50-day moving average. That’s starting to look a little extended. On Dec. 8, the Nasdaq finished 7.7% above its 50-day line. The next day, the Nasdaq fell 1.9%, with further losses the next morning before rebounding from near the 21-day line.
That doesn’t mean the stock market rally is set to see a pullback. On the other hand, the next pullback may not be a one-day retreat.
Be careful of getting too extended, especially in highfliers. They could suffer major losses in a relatively brief period. Have a game plan for how you’ll handle each one of your stocks. Then stay engaged and ready to act.
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