Dow futures rose modestly late Friday, along with S&P 500 futures and Nasdaq futures, in an an unusually busy end-of-week after-hours session. Dow Jones giants Nike and JPMorgan stock were big winners on news. The FDA gave emergency approval to the Moderna coronavirus vaccine. Meanwhile, Tesla stock remained volatile amid continued heavy trading as it enters the S&P 500 index.
The stock market rally finished slightly lower Friday as stimulus deal talks faced some objections and the trillion-dollar giants Apple stock, Amazon.com (AMZN) and Google parent Alphabet (GOOGL) all fell more than 1%, while Microsoft (MSFT) lost a fraction. Intel (INTC) tumbled on a new threat to its chip business. However, the major indexes slashed losses into the close. Leading stocks generally held up well, notably cybersecurity names such as CrowdStrike (CRWD) and Zscaler (ZS).
Overall, it was a solid week for the stock market rally, especially the Nasdaq and growth stocks. All the major indexes hit record highs.
Friday Night Highlights
Nike earnings were better than expected for the athletic apparel and shoe giant. Nike stock jumped late.
The Federal Reserve gave passing grades to major financial firms in the latest bank stress tests. More importantly, the Fed said JPMorgan Chase, Goldman Sachs (GS), Citigroup (C), Bank of America (BAC) and others could resume buybacks, but not raise dividends. JPMorgan and several others announced plans to resume share repurchases. JPMorgan stock jumped late Friday, along with Citigroup, Bank of America and other banks.
Tesla (TSLA) fell 2.6% in late trade. But during Friday’s regular session, TSLA stock rallied 6% to 695, hitting yet another record high. Volume was huge, especially in the final minutes, as index funds bought up shares ahead of Tesla stock joining the S&P 500 index before Monday’s open. After a 70% surge over the past month on the S&P 500 announcement, how will Tesla stock react?
Apple, Microsoft, Intel, Nike, JPMorgan and Goldman are all on the Dow Jones Industrial Average and S&P 500 index, with AAPL, MSFT and INTC also Nasdaq components.
Stimulus Deal Talks
President Donald Trump signed a stopgap funding bill to keep the federal government operating through the weekend while lawmakers continue to work on a coronavirus stimulus deal. The goal is to attach the roughly $900 billion stimulus package to a $1.4 trillion spending bill. With the economic recovery stalling amid coronavirus restrictions and the Jan. 5 Georgia Senate runoffs looming, there are strong reasons to reach a stimulus deal. Lawmakers also would like to get out of town for the holidays.
Dow Jones Futures
In brief Friday evening trading, Dow Jones futures climbed 0.6% vs. fair value while S&P 500 futures advanced 0.4%, buoyed by Nike, JPMorgan and other banking giants. Nasdaq 100 futures climbed 0.1%, not benefiting from banks and with Tesla stock giving up some regular session gains.
ETFs tracking the major indexes remained active until 8 p.m. ET Friday, ultimately indicating a 0.5% gain for the Dow, 0.3% for the S&P 500 and 0.4% for the Nasdaq 100.
Dow Jones futures will reopen at 6 p.m. ET on Sunday
The FDA late Friday gave emergency use approval to the Moderna coronavirus vaccine. Moderna coronavirus vaccine shipments will begin almost immediately, with vaccinations starting early next week. Pfizer coronavirus vaccine jabs began on Monday, Dec. 14. Vice President Mike Pence and congressional leaders got their first shots Friday.
Moderna (MRNA) rose 2.2% late Friday after closing down 2.6%.
Coronavirus cases worldwide reached 76.13 million. Covid-19 deaths topped 1.68 million.
Coronavirus cases in the U.S. have hit 17.88 million, with deaths above 320,000.
With two coronavirus vaccines approved, and more likely in next few months, immunizations hopefully can reach much of the country by the end of March. Just reaching the majority of senior care facilities will substantially reduce the daily Covid death toll. Heading into late spring, the economy may be able to start fully recovering from the pandemic.
Stock Market Rally
U.S. Stock Market Today Overview
Last Update: 4:10 PM ET 12/18/2020
The stock market rally had a down day according to the major indexes, but they slashed losses in the final minutes.
The Dow Jones Industrial Average lost 0.4% in Friday’s stock market trading. The S&P 500 index dipped 0.35%. The Nasdaq composite lost less than 0.1%.
For the week, the Dow Jones climbed 0.5%, the S&P 500 1.3% and the Nasdaq just over 3%.
Tech Giants Retreat
Intel tumbled 6.3% on a report that Microsoft is working on its own in-house chips for PCs and servers. That comes as Apple has already started using its own chips for Mac computers, with the prospect of more.
Apple stock fell 1.6% to 126.65, still above a 125.49 early entry. If shares can consolidate for a few days, Apple could form a handle with a proper buy point. Google stock fell 1.2% to 1,720.03, back below a 1,726.20 buy point. Shares fell 2.7% for the week, but settled just above their 10-week line. Amazon stock sank 1.1% on Friday but gained 2.7% for the week, holding its 50-day and 10-week lines. Microsoft stock pared its Friday loss to 0.4%, up 2.5% for the week.
Growth stocks overall had a strong week.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 0.7%, while the Innovator IBD Breakout Opportunities ETF (BOUT) climbed 1.3%, capping weekly gains of 5.2% and 4.1%, respectively. The iShares Expanded Tech-Software Sector ETF (IGV) rose 1.4% on Friday and 5.6% for the week. The VanEck Vectors Semiconductor ETF (SMH) dipped 0.3% on Friday with a 2.2% weekly gain.
The ETFMG Prime Cyber Security ETFHACK spiked 4% on Friday and 7.5% for the week, as the SolarWinds hacking attack compromised more government agencies and companies such as Microsoft. That’s highlighting the need for better cybersecurity, and pushing up cybersecurity stocks. CrowdStrike stock leapt 16% for the week, with Zscaler stock and Okta (OKTA) up 7.7%. SailPoint (SAIL) raced 14% higher and Palo Alto Networks (PANW) 15%.
Nike earnings per share unexpectedly rose 11% to 78 cents in its fiscal Q2. Sales advanced 9% to $11.24 billion after two down quarters. Digital sales surged 84%, up from 82% in Q1 and 75% in the quarter before that.
Nike stock popped 5.55% late Friday. Shares closed down 2.3% to 137.28 on Friday after hitting a record high intraday.
Bank Stress Tests
The Federal Reserve gave JPMorgan and other banking giants clearance to resume stock buybacks next year, but will continue to cap dividends for now. The Fed suspended buybacks and dividend hikes in June to preserve capital as the coronavirus pandemic and shutdowns slammed the economy.
With economic prospects improving, especially after coronavirus vaccinations reach the bulk of the U.S. population, the Fed is less concerned about banks’ financial health.
JPMorgan said it will buy back $30 billion in stock. Morgan Stanley (MS) expects to repurchase $10 billion, while Goldman Sachs and Citigroup say they’ll resume buybacks.
JPMorgan stock rose nearly 6% late Friday, signaling a possible breakout from a handle in a consolidation going back to the start of the year. Goldman Sachs and Citigroup stock rallied 5%, with Bank of America stock up 4%.
Positive Pause For Stock Market Rally?
The Nasdaq composite, which reversed from a record high Friday, is still 7.2% above its 50-day moving average. That’s not extended per se, but close to being so. It’s been that way for the past couple of weeks.
So Friday’s retreat in the major indexes, with growth stocks doing well, is fairly positive. Tech titans like Amazon stock can trudge along, helping to keep bullish sentiment and the major indexes in check. Meanwhile, growth stocks can power ahead.
While there are some warning signs that the stock market rally may take a pause in the near future, it hasn’t given that signal yet. This is a time to be invested. Growth stocks are doing well, while more are breaking out successfully. So keep working on your watchlists. Go through your screens to find possible candidates, then dig deeper into those that look particularly interesting.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
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