Sicilianthing

Dow Jones Futures: C****av***s Cases Swell With China Markets Crashing; Google Earnings Due
ED CARSON10:19 PM ET 02/02/2020

Dow Jones futures rose Sunday night, along with S&P 500 futures and Nasdaq futures, even after Chinese markets tumbled and China c****av***s cases and deaths continue to swell. More airlines and countries are cutting off China travel. Apple (AAPL) has closed all its stores in the country. Apple stock and the stock market rally suffered sharp losses Friday due to the c****av***s crisis, with the Dow Jones and S&P 500 breaking key support. Google parent Alphabet (GOOGL) reports earnings Monday.

Chinese markets plunged Monday after an extended Lunar New Year holiday shutdown due to the c****av***s outbreak. U.S.-listed Alibaba (BABA) broke below key levels last week. So did 2019 IPO stock, New Oriental Education & Technology (EDU) and Starbucks (SBUX) rival Luckin Coffee (LK).

Apple stock is on IBD Leaderboard. Google stock is on the Big Cap 20.

Join IBD experts as they analyze winning stocks on IBD Live every morning. Take a free trial!

Dow Jones Futures Today

Dow Jones futures rose 0.6% vs. fair value. S&P 500 futures climbed 0.6%. Nasdaq 100 futures were up 0.8%. Remember that overnight action in Dow futures and elsewhere doesn't necessarily t***slate into actual trading in the next regular stock market session.

China's central bank injected $174 billion into markets Monday, as regulators announced measures to stabilize the country's financial system during the c****av***s outbreak. The Shanghai composite fell 8.1%, hitting a 1-year low, though that was actually off opening lows. Hong Kong's Hang Seng, which reopened on Jan. 29, fell slightly.

Alibaba stock, Luckin Coffee stock and New Oriental Education stock all closed significantly below their 10-week lines last week.

C****av***s Crisis Latest

The Philippines reported the first c****av***s death outside of China, a 44-year-old man from W***n, the v***s epicenter. A total of 362 people have died, nearly all in Hubei province and its capital W***n. There are less than 200 c****av***s cases outside of mainland China, mostly in Asia. The U.S. has eight confirmed c****av***s cases.

The number of China conorav***s cases were at least 17,205 as of Feb. 2. While the increase in the number of China's v***s cases continue to climb — 2,829 on Sunday — but the daily percentage gain in c****av***s cases is slowing. It was 16.4% on Sunday, vs. 18%, 17.9%, 20.4%, 22.5%, 24.2% and 39.2% in the prior several days.

There are concerns that the true number of c****av***s cases and deaths is far higher. On the upside, there are reports that various antiv***l medications are helping treat c****av***s patients.

Apple on Saturday shut all its China stores and offices for a week. The c****av***s could curb Chinese demand for the Apple iPhone, along with iPhone production.

The U.S. on Friday banned entry to noncitizens who recently traveled to China, with Australia, Vietnam, New Zealand and the Philippines issuing similar controls. On Friday, American Airlines (AAL), United Airlines (UAL) and Delta Air Lines (DAL) said they would halt U.S.-China flights. All of this is an effort to stop the spread of the c****av***s. But travel restrictions, along with tens of millions of Chinese in quasi-lockdown and extended shutdowns in the country, signal a significant impact on economic growth and global supply chains.

Current Stock Market Rally

SPDR Sector ETFs: Intraday % Chg
Consumer DiscretionaryXLY0.26%
UtilitiesXLU-0.45%
Consumer StaplesXLP-1.13%
Real EstateXLRE-1.43%
Communication ServicesXLC-1.62%
Health CareXLV-2%
FinancialsXLF-2.09%
MaterialsXLB-2.21%
IndustrialsXLI-2.31%
Information TechnologyXLK-2.74%
EnergyXLE-3.12%
Sponsored by
Provided by Nasdaq Last Sale.

Real-time quote and/or trade prices are not sourced from all markets.
The current stock market rally suffered big losses last week, mostly on Friday. The Dow Jones Industrial Average plunged 2.5%, the S&P 500 index 2.1% and the Nasdaq composite 1.8%.

The Dow Jones sank below its 50-day and 10-week lines. The S&P 500 index held above its 50-day but closed just below its 10-week. The Nasdaq composite is still within its c****av***s trading range over the last several sessions.

Apple stock fell 2.8% last week, tumbling 4.4% Friday. It was the first weekly decline above 0.5% in five months for Apple stock, a Dow Jones, S&P 500 and Nasdaq component.

With investors wary of a weekend of c****av***s news and returning to a plunging Shanghai composite, Friday's stock market rally sell-off was understandable.

This is a good time to read The Big Picture.

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) slid 1.8%. The iShares Expanded Tech-Software Sector ETF (IGV) fell just 0.6%. Software stocks got a boost from Microsoft (MSFT) and ServiceNow (NOW) earnings while the sector is far less exposed to the c****av***s than, say, the chip sector.

Several top software stocks are near buy points. Many top software makers report earnings this week.

The VanEck Vectors Semiconductor ETF (SMH) plunged 6.8%, falling through its 50-day and 10-week lines. The sector is sensitive to c****av***s supply chain disruptions and weakened Chinese demand. Weak guidance from the likes of AMD (AMD) and Xilinx (XLNX) raised concerns about 5G strength. Strong results and guidance from Apple stock, as well as Cirrus Logic (CRUS) and Qorvo (QRVO) didn't help.

Alibaba Stock, Other China Stocks Pressured

In addition to China-exposed U.S. companies such as Apple stock, AMD stock and Starbucks stock, U.S.-listed China stocks are under pressure. Alibaba stock fell 3.35% last week, undercutting its 50-day line. Alibaba stock is 2.7% below the 10-week line. A weekly close of at least 2% below the 10-week is a strong sell signal. New Oriental Education stock, which closed just below its 50-day and 10-week lines in the prior week, briefly reclaimed them last week. But EDU stock ultimately fell 2.5%. New Oriental stock is now 2.9% below its 10-week. Luckin Coffee stock plunged 20% last week, crashing well past its 10-week line. Part of that was due to short-seller claims, but Luckin stock was already tumbling from its mid-January peak.

Google Earnings

Analysts expect Google earnings of $12.76 a share, virtually flat vs. $12.77 a year earlier. Core revenue should climb 21% to $38.441 billion. That's according to Zacks Investment Research. (Google earnings and revenue estimates tend to vary.)

Google earnings fell slightly in Q2 and Q3. Analysts expect Google earnings growth to pick up to 18% in 2020.

Google stock fell 2.3% last week. Shares hit a record 1,500.58 on Jan. 22. The relative strength line for Google stock has been rising for nearly eight months, finally matching its July 2018 peak. Even with Google stock's recent retreat, the RS line is holding at highs.

Stock Market Rally: What's Next

The Dow Jones today is leading a long-expected pullback. While the c****av***s is the catalyst, the stock market rally was due for a pause or retreat. With the China c****av***s and Boeing (BA) 737 Max production halt, the global economy isn't getting the hoped-for bounce following the China trade deal.

If the number of new China c****av***s cases begins to slow, the stock market rally could regain momentum. But if the c****av***s crisis intensifies, with a sharp economic impact, a deeper market pullback is likely.

Meanwhile, the Iowa caucuses are Monday night. Earnings season is in full swing. So the stock market rally, not to mention Dow Jones futures, could be whipsawed in the coming days.

Also, when the stock market rally powers higher, that doesn't mean your stocks will. The chip sector and other 5G plays may need a longer pause, which may even affect tech titan Apple stock. Perhaps software will lead, along with some medicals and megacaps like Amazon (AMZN) and Google stock.