April Webinar RegistrationApril Webinar Registration


Dow Jones, Nasdaq Hit Highs Amid Coronavirus News As Tesla, Nio, Boeing Rally; Salesforce-Slack Deal Near?

The Dow Jones and Nasdaq composite both hit record highs, as coronavirus vaccine progress from Moderna (MRNA) and AstraZeneca (AZN), and soaring coronavirus cases, dominated the headlines. But the stock market rally is broad-based, with both stay-at-home and "real economy" stocks such as Boeing (BA) faring well. Tesla (TSLA) and electric-car stocks such as Nio (NIO) continued to soar, while other IPOs also showed huge gains. Salesforce.com (CRM) reportedly is in talks to buy Slack Technologies (WORK), with both facing competition from Microsoft (MSFT).

X

Stock Market Rally Hits New Highs

The Dow Jones Industrial Average, Nasdaq composite and the small-cap Russell 2000 hit record highs, while the S&P 500 index set a record close during the holiday-shortened week. Through Friday morning, the Dow and S&P 500 rose more than 2%, while the Nasdaq rose 3% and the Russell 2000 nearly 4%. There are signs that bullishness may be getting too high, including some skyrocketing action among some electric-car stocks and recent IPOs.

Coronavirus Vaccine News

AstraZeneca (AZN) and Moderna (MRNA) went in opposite directions on coronavirus vaccine news. On Monday, AstraZeneca slid after saying its coronavirus vaccine, co-developed with the University of Oxford was, on average, 70% effective in a key study. In one dosage it was 90% effective, still below the high standard set by the Moderna coronavirus vaccine, as well as the Pfizer (PFE) and partner BioNTech (BNTX) vaccine. Two days later, Moderna jumped after signing a deal to supply the European Commission with at least 80 million doses of its coronavirus vaccine, with an option for 80 million more. On Thursday, AstraZeneca said it might conduct another coronavirus vaccine study. U.S. approval could now come weeks later than projected, though the EU and U.K. could still approve the vaccine soon. Moderna skyrocketed Friday on AstraZeneca news.

Economic Data Mixed

New jobless claims unexpectedly rose for a second straight week, up 30,000 to 778,000 in the week through Nov. 21. Even worse, that came before a new round of coronavirus restrictions took effect in California, Michigan, New Mexico, Oregon, Washington and other states. The nearly 20 million Americans who are collecting unemployment benefits lost the $600 weekly boost to benefits in late July. A $300 weekly supplement also dried up. And some 12 million Americans could lose benefits when the Cares Act turns six months old on Dec. 26, according to a Century Foundation analysis.

Still, manufacturing and housing strength have kept the economy moving, despite a third, and likely final, coronavirus wave. New home sales are holding right at 14-year highs. Durable goods orders topped October expectations with a 1.3% gain.

Salesforce-Slack Deal?

Salesforce.com (CRM) reportedly is in talks to acquire workplace collaboration software maker Slack Technologies (WORK), as both face more competition from Microsoft (MSFT). Slack stock surged Wednesday on the news while Salesforce stock fell. A growing appetite for acquisitions has been a drag on CRM stock. One analyst speculated that Salesforce could pay a "low $40 takeout price, or nearly a $25 billion market value." Growing competition with Microsoft has been an overhang on Slack earnings since its June 2019 direct listing. Microsoft Teams tools and Slack's chat software aim to replace email. Microsoft offers Teams tools for free as part of its online Office 365 product. Salesforce, meanwhile, also faces more competition from Microsoft's Dynamics unit in customer relationship management software. A Salesforce-Slack merger could pressure Google (GOOGL) to buy a business software company, one analyst said.

Tesla, Other Electric-Car Stocks Soar

Electric-car stocks continued big gains, at least to start the week, on growing optimism for a big expansion in the EV market in coming years. However, China signaled a crackdown on how EV projects get off the ground. China EV stocks BYD (BYDDF), Xpeng (XPEV) and Li Auto (LI) retreated Wednesday, though Nio (NIO) eked out a gain. Tesla (TSLA) surged for the week on another raised price target. The U.S. National Highway Traffic Safety Administration on Friday said it's begun an investigation into 114,761 Model S and Model X vehicles over front suspension safety issues, following a Beijing-ordered recall that Tesla blamed on Chinese drivers. But Tesla kept rallying Friday. Tesla also recalled a small number of Model X and Y vehicles.

Meanwhile, Nikola (NKLA) tanked Wednesday after its CEO failed to reassure investors that a $2 billion partnership with General Motors (GM) would be finalized before a Dec. 3 deadline. Morgan Stanley called GM a clear leader among other legacy automakers in pivoting to electric cars.

Dollar Tree Earnings Strong

Dollar Tree (DLTR) posted a 29% quarterly EPS increase as revenue grew 7% to $6.18 billion. Both beat views. Off-price apparel retailer Burlington Stores (BURL) also beat, with EPS down 81% and sales down 6% to $1.67 billion. Dollar Tree gapped out of a base. Burlington Stores retreated.

Autodesk Beats Q3 Targets

Autodesk (ADSK) reported a 33% EPS gain with revenue up 13% to $952 million. The design software maker's architecture, engineering and construction segment was its fastest growing in Q3, with revenue up 17%. Autodesk guided slightly higher for Q4. Shares jumped.

Boeing 737 Max Good News Continues

Delta Air Lines (DAL), the lone major U.S. carrier without the Boeing 737 Max, is considering the narrow-body jet for its fleet. The potential new customer comes as Boeing (BA) has seen 737 Max orders shrink by over 1,040 this year. The European Union Aviation Safety Agency is ready to lift the grounding on the Boeing 737 Max in January after the FAA lifted the grounding Nov. 18. Canadian regulators are continuing their process but expect 737 Max approval "soon." Boeing stock and Delta both jumped, extending their recent rebounds.

VMware, Dell Beat Views

VMware (VMW) said adjusted EPS rose 17% while revenue grew 8% to $2.86 billion, both beating. But billings missed October quarter estimates amid weakness in its on-premise business during the coronavirus pandemic. Majority owner Dell Technologies (DELL) reported revenue climbed 3% to $23.5 billion while EPS rose 16%, both beating, helped by strong PC sales amid the work-from-home trend. Analysts are focused on the likely spinoff of VMware next year, with the virtualization software maker paying a special dividend to Dell.

News In Brief

Nutanix (NTNX) reported a narrower-than-expected loss while revenue fell a fraction to $312.8 million, both topping. The maker of cloud network management software said annualized contract value, or ACV, of its billings rose 10% to $137.8 million compared with estimates of $119.7 million.

Anaplan (PLAN) unexpectedly narrowed its loss while revenue rose 28% to $114.9 million. For the quarter that ends in January, the financial management software maker guided slightly higher for revenue and billings.

Pure Storage (PSTG) earned 1 cent a share vs. lowered views for a break-even Q3. Revenue fell 4% to $410.6 million, above estimates for $406.5 million.

Medtronic (MDT) popped Tuesday after the medical products giant reported EPS fell 22% as sales dipped 0.8% to $7.65 billion.

Best Buy (BBY) topped Wall Street targets for its fiscal third quarter ended Oct. 31, but the consumer electronics retailer declined to give holiday-quarter guidance. The earlier start to holiday sales promotions this year may have pulled some fourth-quarter spending into Q3, it said. Shares tumbled.

Analog Devices (ADI) reported a 6% sales gain to $1.53 billion in its fiscal Q4, after seven straight quarters of decline. The chipmaker's EPS rose 21%.

Deere (DE) saw EPS climb 12% while sales fell 2% to $9.73 billion. Both crushed estimates. Guidance also was strong for the farm equipment giant.

Niu (NIU) earned 17 cents a share, up 31%, on revenue of $131.7 million, up 44%. Revenue missed views despite a 69% unit sales surge for Niu's sit-down electric scooters in the third quarter, building on Q2's 61% pandemic sales rebound.

General Electric (GE) warned of more job cuts to come in its flagship aviation business, hard hit by the pandemic's negative effect on commercial air travel, saying the promise of a coronavirus vaccine "brings hope but it's not coming as fast as we'd like."

YOU MIGHT ALSO LIKE:

Headed For The S&P 500, Tesla Soars, But Competition Heats Up

Why This IBD Tool Simplifies The Search For Top Stocks

Catch The Next Big Winning Stock With MarketSmith

Want To Get Quick Profits And Avoid Big Losses? Try SwingTrader

Why You Need To Watch These Four Stocks