Dow Jones futures tilted lower Monday night, along with S&P 500 futures and Nasdaq futures, with banks in focus overnight. The Nasdaq hit a new high in Monday’s stock market rally, fueled by Facebook (FB) and coronavirus plays. But the Dow Jones lagged as energy, mining, financial and travel stocks slumped as Delta coronavirus cases
Dow Jones futures tilted lower Monday night, along with S&P 500 futures and Nasdaq futures, with banks in focus overnight. The Nasdaq hit a new high in Monday’s stock market rally, fueled by Facebook (FB) and coronavirus plays. But the Dow Jones lagged as energy, mining, financial and travel stocks slumped as Delta coronavirus cases increase.
Key Market Rally Movers
In Monday’s session, Zebra Technologies (ZBRA) broke out of a base, while Etsy (ETSY), Applied Materials (AMAT) and Progyny (PGNY) cleared early buy points. Nio (NIO) moved above a very aggressive entry.
The stock market rally was split Monday. The Nasdaq rallied on a Facebook antitrust win, positive chip industry news, surging gene-editing stocks such as Intellia Therapeutics (NTLA) as well as a sharp drop in the 10-year Treasury yield. Covid fears and restrictions may have boost coronavirus stocks such as Zoom Video (ZM), Peloton (PTON) and Etsy stock.
EV makers such as Nio stock and China peers Xpeng (XPEV) and Li Auto (LI) were big winners, while startups such as Fisker (FSR) and Workhorse Group (WKHS) also popped. Tesla (TSLA) also rose, but TSLA stock lagged its smaller rivals.
Meanwhile, the Dow Jones retreated. Travel and vacation stocks, including airline, cruise lines, hotels and casinos such United Airlines (UAL), Norwegian Cruise Line (NCLH) and Marriott (MAR), sold off hard as nations ramped up Covid restrictions amid a rise in Delta variant cases. That also likely put a damper on crude oil and other commodity prices, while casting a chill on Treasury yields.
Energy stocks fell harder than crude oil prices — Chevron (CVX) fell 3% and red-hot Denbury (DEN) 6.5% — perhaps reflecting profit taking ahead of an OPEC+ meeting this week. Banks retreated with Treasury yields, while Mastercard (MA) slumped 3.2% as Covid fears are bad news for economic activity but especially cross-border transactions.
Facebook Stock Tops $1 Trillion
A federal district judge dismissed two Facebook antitrust claims from the FTC and and 48 state attorneys general. The judge ruled that “the FTC has failed to plead enough facts to plausibly establish … that Facebook has monopoly power in the market for Personal Social Networking (PSN) Services.”
House legislation that recently cleared the Judiciary Committee would make it easier for antitrust regulators to crack down on Facebook and other tech giants.
FB stock popped 4.2% to 355.64 to a fresh high. Facebook stock now has a market cap of $1.009 trillion, joining Apple (AAPL), Microsoft (MSFT) and fellow FANG stocks Amazon.com (AMZN) and Google parent Alphabet (GOOGL).
Bank Dividend Hikes
Morgan Stanley doubled its quarterly dividend to 70 cents a share and announced a $12 billion buyback. The Federal Reserve last week said all 23 big lenders passed annual stress tests, setting the stage for big banks to hike shareholder returns. MS stock rose nearly 3% overnight, signaling a possible buy from its 10-week line.
Goldman Sachs will hike its dividend to $2 a share from $1.25, while Bank of America (BAC) is upping its dividend by 17%. GS stock climbed 1% late while BofA edged lower after both closed just above their 50-day lines.
Wells Fargo (WFC) plans an $18 billion buyback and will double its quarterly dividend to 20 cents a share. Shares edged higher.
Citigroup (C) said it would keep per-share dividend levels “at least 51 cents.” Citi shares edged lower.
Meanwhile, Jefferies stock popped 4% in extended trade, moving up toward a 34.96 buy point after the investment bank reported stronger-than-expected fiscal second-quarter earnings. It also raised its Jefferies stock dividend by 25%. JEF stock closed down 0.8% to 31.96, right on its 50-day line.
Dow Jones Futures Today
Dow Jones futures dipped 0.1% vs. fair value, even with Goldman stock offering a slim boost. S&P 500 futures sank 0.2%. Nasdaq 100 futures fell 0.2%.
Coronavirus cases worldwide reached 182.16 million. Covid-19 deaths topped 3.94 million.
Coronavirus cases in the U.S. have hit 34.51 million, with deaths above 619,000.
U.S. Covid cases continue to drift lower, but global new infections have edged higher over the past several days as the more-infectious Delta variant spreads rapidly. U.K. new cases have ramped up sharply from early May, despite a fairly high percentage of people being vaccinated. Some vaccinated people are getting the Delta variant, but typically only mild cases.
A growing number of countries are imposing tougher Covid restrictions, with Hong Kong banning U.K. flights starting July 1.
Stock Market Rally
The stock market rally had a mixed session, as Covid fears fueled gains in tech stocks while weighing on real-economy names.
The Dow Jones Industrial Average fell 0.4% in Monday’s stock market trading, with Boeing (BA) a notable loser. The S&P 500 index rose 0.2%. The Nasdaq composite popped 1%. The Russell 2000 slumped 0.5%.
The 10-year Treasury yield slumped six basis points to 1.48%, after breaking a losing streak last week.
U.S. crude oil futures fell 1.5% to $72.91 a barrel.
The iShares Expanded Tech-Software Sector ETF (IGV) climbed 1.2% to a new high.
The VanEck Vectors Semiconductor ETF (SMH) gained 2.4%, also setting a record level. The planned Nvidia (NVDA) takeover of ARM Holdings got support from some rival chipmakers, while Marvell Technology (MRVL) released a new chip. AMAT stock is also is a notable SMH component.
SPDR S&P Metals & Mining ETF (XME) retreated 1.8% and Global X U.S. Infrastructure Development ETF (PAVE) 0.8%. U.S. Global Jets ETF (JETS) tumbled nearly 3%. SPDR S&P Homebuilders ETF (XHB) climbed 0.7%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) jumped 3.8% and ARK Genomics ETF (ARKG) 3.25% both getting boosts from gene-editing holdings. Both closed right below their April short-term peaks.
Tesla stock is the biggest holding across the ARK Invest ETFs. However, ARKK and ARKG have risen much more in June than TSLA stock, which is still off its April short-term highs.
Cathie Wood’s ARK Invest filed late Monday to create a Bitcoin ETF. The SEC has yet to approve any Bitcoin ETF.
Stocks In Buy Zones
Zebra stock rose 3.2% to 527.13, clearing a consolidation area going back to early March, with multiple resistance areas around 517-519. ZBRA stock rose in xx xxxx volume.
Etsy stock popped 7.4% to 198.41, Monday’s second-best performer on the S&P 500 index. Shares cleared a downward-sloping trend line starting from the early March all-time high. Last week, Etsy stock reclaimed its 50-day line. On Monday, Etsy bought Elo7, known as the “Etsy of Brazil,” for $217 million.
AMAT stock climbed 3.5% to 140.99, moving from its 21-day exponential moving average after bouncing slightly from its 50-day/10-week lines last week. Applied Materials stock is below a 142.22 handle buy point but is above a not-so-steep trend line starting from the top of the base.
PGNY stock gained 4% to 61.93. Progyny rebounded from its 10-week line and peeked above its 21-day line and a short trend line. A recent move past a three-weeks tight fizzled recently, likely triggering some sell signals. But PGNY stock is offering a new buying opportunity now.
Nio stock shot up 9.6% to 49.40, clearing a short “handle” that still below the midpoint in what is the makings of a very deep base. This is an aggressive entry for sure, with the official buy point 67.09. Meanwhile, Li Auto stock gained 6.4% and XPEV stock 7.5%, with the latter almost clearing its own early, early entry. Nio will likely report June sales late this week, along with Xpeng and Li Auto.
Tesla stock, for its part, should release Q2 global production and delivery figures on Thursday or Friday. Tesla stock rose 2.5% on Monday. But, as with the ARKK ETF, TSLA stock lagged Nio stock and other China EVs on Monday and for the month.
Market Rally Analysis
The Nasdaq continues to take the lead in the stock market rally, hitting a record high. The S&P 500 nudged up to fresh peaks. The Dow Jones held above its 50-day line.
Tech titans powered higher. In addition to FB stock more than 4%, Apple, Microsoft and Amazon all climbed over 1%. With Tesla and Nvidia and several other tech giants up solidly or sharply, it’s no surprise that the Nasdaq had a strong session.
More-speculative growth names also helped, as EV stocks and ARK ETFs and EV stocks showed.
If coronavirus cases ramp up around the world, travel-related groups and a variety of economically sensitive and interest rate-sensitive groups may struggle. Covid plays, including e-commerce names such as Etsy stock, could get an extra boost.
The market has to decide how to price in the latest coronavirus risks. That depends on how much Covid infections pick up, and how much governments, businesses and individuals react in response.
What To Do Now
For individual investors, you can simply follow the major indexes and leading stocks.
Take a look at your portfolio. Which stocks are working and which are lagging? And by “lagging,” that doesn’t mean a stock that’s run up 25% in four days now retreating 2.5% just 15 minutes after the open.
Updating and following your watchlists also should help you spot leading stocks and sector shifts.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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