Dow Jones futures fell modestly Thursday morning, along with S&P 500 futures while Nasdaq futures rose modestly, amid strong growth from hot Chinese stocks Pinduoduo, Xpeng Motors and Tencent.
The stock market rally had another mixed session on Wednesday but the market rotation out of techs has halted, at least for now. The Nasdaq led the way after falling in the two prior sessions as the coronavirus vaccine news hit stay-at-home stocks and many other growth plays. Chip stocks, which held up better than many techs on Monday and Tuesday, rebounded Wednesday, including Taiwan Semiconductor (TSM).
Moderna (MRNA) broke out Wednesday as Dr. Anthony Fauci said its coronavirus vaccine will be as effective as the Pfizer (PFE) and BioNTech (BNTX) vaccine candidate. MRNA stock kept rising overnight after the biotech said it has enough Covid cases to review early vaccine data.
China stocks are in focus Thursday morning, with Pinduoduo (PDD) reporting a first-ever profit and internet giant Tencent (TCEHY) also beating views. Both come on the heels of the huge 11.11 Singles Day shopping event. Those headlines also have key implications for Alibaba (BABA) and JD.com (JD), which are facing greater scrutiny by Chinese regulators along with other internet giants such as Tencent. All three China e-commerce giants rose early Thursday, while Tencent stock was not yet active.
Meanwhile, Xpeng Motors (XPEV) reported mixed results, but jumped in the premarket on strong revenue and a bullish outlook. Alibaba is a major investor in the Chinese electric-car startup, which held its U.S. IPO in August and broke out last week.
The Xpeng P7 is a rival to the Tesla Model 3. Tesla (TSLA) is exporting made-in-China Model 3 electric cars to Europe amid stalling Chinese demand despite several price cuts.
Tesla stock, Taiwan Semiconductor, JD.com and Pinduoduo are on IBD Leaderboard. Alibaba stock is on IBD Long-Term Leaders and the IBD 50.
Dow Jones Futures Today
Dow Jones futures fell 0.45% vs. fair value. S&P 500 futures dipped 0.1%. Nasdaq 100 futures rose 0.4%.
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.
Coronavirus cases worldwide reached 52.56 million. Covid-19 deaths topped 1.29 million.
Coronavirus cases in the U.S. have hit 10.70 million, with deaths above 247,000.
New U.S. coronavirus cases topped 100,000 for an eighth straight day, hitting a fresh high of 142,808 on Wednesday. Hospitalizations are soaring.
Italy topped 1 million total coronavirus cases, joining France, Spain and the U.K. as Western European nations hitting that threshold. All of these countries and others in Europe have been imposing tougher restrictions as daily Covid cases explode.
IBD Stock Of The Day Nears Buy Point On ‘Especially Encouraging’ Outlook
Coronavirus Vaccine News
But coronavirus vaccine could continue to get better. Pfizer (PFE) and partner BioNTech (BTNX) said Monday that their coronavirus vaccine candidate was more than 90% effective in interim data from their late-stage trial. They could submit the coronavirus vaccine for emergency FDA approval later this month.
Moderna (MRNA) “will begin assessing data from its Phase 3 vaccine trials within a week, according to Anthony Fauci, the nation’s top infectious disease expert. Fauci added that he’d “‘be surprised if we didn’t see a similar degree of efficacy’ to the positive results released by Pfizer.”
The Pfizer/BioNTech Covid-19 vaccine relies on mRNA technology. Moderna, as its MRNA ticker implies, also uses mRNA technology.
Moderna stock rallied 8.4% to 82.44 on Wednesday, clearing an 81.49 buy point.
The biotech said late Wednesday that it has enough Covid-19 cases in its coronavirus vaccine trial to look at the data. That suggests early results could come soon.
Moderna stock rose 5% early Thursday.
Meanwhile, CureVac (CVAC) said a phase three trial for its coronavirus vaccine will start as soon as possible. CVAC stock rose before the open.
BioNTech fell 2.9% to 109.45 on Wednesday, another inside day after gapping out of a base on Monday’s vaccine news. Pfizer stock also broke out Monday, but has slipped back into its base, down 0.5% to 38.50 on Wednesday.
Stock Market Rally
U.S. Stock Market Today Overview
Last Update: 4:02 PM ET 11/11/2020
The stock market rally signaled at least a pause in this week’s nascent stock market rotation. This time, the Nasdaq led and the Dow Jones lagged.
The Dow Jones Industrial Average dipped 0.1% in Wednesday’s stock market trading. The S&P 500 index rose 0.8%. The Nasdaq composite jumped 2%. Still, for the week, the Dow Jones is up 3.8%, the S&P 500 1.8%. The Nasdaq is off 0.9%.
Growth stocks fared well on Wednesday. Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rebounded 3.25%. The iShares Expanded Tech-Software Sector ETF (IGV) rose 2.8%.
The VanEck Vectors Semiconductor ETF (SMH) popped 3.5%. Taiwan Semiconductor, a major holding, rose 3.65% after rebounding from its 21-day exponential moving average, while many techs struggled with their 50-day line. TSM stock is down just 0.6% for the week now.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Pinduoduo earnings came in at 5 cents per American depositary shares, a first-ever non-GAAP profit and defying views for a 22 cent loss. Revenue spiked 99% to $2.09 billion. Pinduoduo is the No. 3 e-commerce player in China behind Alibaba and JD.com.
Average monthly active users shot up 50% vs. a year earlier to 643.4 million.
PDD stock spiked 24% in the premarket. On Wednesday, shares jumped 8.1% to 111.46 on Wednesday, surging back out of the buy zone from a 98.30 entry. Shares sold off Monday and Tuesday morning, briefly undercutting the buy point before rallying well off lows Tuesday.
Pinduoduo could give insight on the earnings conference call later into its performance during the 11.11 shopping event, the world’s largest e-commerce day.
Alibaba reported $74.1 billion in gross merchandise volume from the 11.11 event, which ran from Nov. 1-11.d JD.com announced just over $40 billion.
Beijing has issued draft rules to prevent monopolistic actions by big e-commerce and payment platforms, notably those owned by Alibaba and Tencent.
JD.com stock rose 6% early Thursday, signaling a retaking of its 85.49 buy point. Shares triggered the 7%-8% sell rule intraday on Wednesday and Thursday, but never closed below the 50-day line. On Wednesday, JD.com stock rose 3.45% to 82.84. JD.com earnings are due Nov. 16.
Alibaba stock rose 2% early Thursday as the e-commerce giant has suddenly become the laggard. On Wednesday, Alibaba stock edged down 0.3% to 265.65. That follows BABA stock declines on Monday and Tuesday, with Alibaba likely most at risk from China regulators. The Alibaba stock chart already suffered damage last week after China unexpectedly suspended the Ant Group IPO. Shares are far below the now-invalid 299.10 buy point and have been testing the prior 268.10 entry.
Tencent earnings came in at 38.5 billion yuan ($5.8 billion), up 89% in local currency terms. That easily beat views for 30.81 billion. Revenue rose 29% to 125.4 billion yuan ($18.93 billion), also beating. It expects slower revenue growth to be “temporary” as cloud computing and other business services ramp up again.
Tencent stock, which trades over the counter in the U.S., is not yet active Thursday. Shares dipped 0.5% to 73.44 on Wednesday, finding support at its 50-day line and closing just above the 73.05 buy point, according to MarketSmith chart analysis. Shares sold off hard Monday and Tuesday.
Tencent is a messaging, gaming and payments giant, with a big stake in JD.com.
Xpeng Earnings Report
Xpeng reported an adjusted third-quarter loss of 32 cents per ADS. Revenue hit $293.1 million, up 342.5% in local currency terms. Analysts expected a loss of 18 cents per ADS on revenue of $284.6 million.
Gross margin was 4.6% vs. -10.1% a year earlier.
Vehicle deliveries, already reported, hit 8,578 in the September-ending quarter, up 266% vs. a year earlier and 166% vs. Q2 2020. The P7 electric car deliveries jumped to 6,210 vs. 325 in Q2. The Tesla rival’s deliveries began at the very end of Q2.
For Q4, Xpeng sees deliveries of 10,000 electric vehicles, up 211% vs. a year earlier. Revenue should hit 2.2 billion renminbi, equal to about $332 million.
The China EV IPO already said October deliveries hit 3,040, including 2,104 P7s.
Xpeng stock surged 9% before the open, signaling a new all-time high. Shares rose 1.9% to 33.53 on Wednesday, consolidating since spiking to a record 39.50 intraday on Nov. 6. Shares exploded out of a base last week and are greatly extended.
Other China EV stocks rose early Thursday, including Nio (NIO) and Li Auto (LI). Li Auto reports early Friday and Nio next week.
Tesla’s Shanghai factory produced 22,292 Model 3 electric cars, according to China Association of Automobile Manufacturers data. That’s a big jump, as Tesla began exporting made-in-China Model 3 sedans to Europe, partially replacing the Fremont, Calif.-based plant. Tesla sold 12,143 electric cars in China in October, as yet another price cut helped buoy demand. But, along with the estimated 7,000 Model 3s exported to Europe, that suggests that Tesla’s China inventory continues to grow.
Tesla stock rose 1.7% to 417.13, still below the 50-day line after Monday’s reversal and Tuesday’s slide. But, TSLA stock is only down 3% this week, not great but also far better than many growth stocks. Tesla stock has a 466 handle buy point. Aggressive investors could use 452.60, just above Monday’s intraday high, as an early entry.
Stock Market Rotation Over?
From the perspective of the major indexes, the stock market rally looks OK. The Dow Jones, S&P 500 index and Russell 2000 are at record highs. The Nasdaq composite reversed from Monday’s all-time intraday high, but isn’t far from that.
Leading stocks are little less appealing, with many big 2020 winners suffering major losses on Monday and Tuesday. Some show significant chart damage, while others held up better and made decent recoveries on Wednesday, such as Taiwan Semi.
Is the stock market rotation out of stay-at-home and tech growth stocks over? There have been many instances where the market rally holds up well or even advances on a day when many growth names are hit hard. That doesn’t mean that those leaders are finished. Dow Jones futures also suggest a pause to the rotation.
Then again, Wednesday’s action doesn’t mean that it’s clear sailing for stay-at-home stocks. Or, that Dow Jones giants such as Caterpillar (CAT), JPMorgan Chase (JPM) and Boeing (BA) were just one-hit wonders.
Why This IBD Tool Simplifies The Search For Top Stocks
The coronavirus vaccine news fueled a rush into “real economy” stocks while triggering sell-offs in stay at home plays. But with coronavirus cases skyrocketing in the U.S., Europe and much of the world outside East Asia, the here-and-now is not great for “real economy” plays. So it’s hard to know how the stock market rally will deal with these fierce coronavirus crosswinds, and which stocks will hold up.
So, as always, investors need to stay flexible and not prejudge whether a stock market rotation will gain momentum or fizzle out. The big 2020 winners may continue to lead, or they may not. While you want to know the “story” of growth names, just remember that it’s not a neverending story.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
YOU MAY ALSO LIKE:
Want To Get Quick Profits And Avoid Big Losses? Try SwingTrader
Best Growth Stocks To Buy And Watch
IBD Digital: Unlock IBD’s Premium Stock Lists, Tools And Analysis Today