Dow Jones Futures: Stock Market Rally Mulls ‘Finalized’ Stimulus Deal; Three Dow Giants Set To Jump

Dow Jones futures were little changed vs. Sunday night, along with S&P 500 and Nasdaq futures, as lawmakers reached a tentative deal on coronavirus aid with a stimulus deal vote likely Monday. Nike (NKE), JPMorgan Chase (JPM), Moderna (MRNA) and Tesla stock also are in focus

Dow Jones giants Nike, Goldman Sachs (GS) and JPMorgan stock were big winners late Friday on news. The FDA gave emergency approval to the Moderna coronavirus vaccine, with shipments starting Sunday. Meanwhile, Tesla stock remained volatile late Friday amid continued heavy trading as it enters the S&P 500 index

Stimulus Deal Vote

Now the stock market rally awaits passage of a stimulus deal. Senate Majority Leader Mitch McConnell on Sunday afternoon hailed a “bipartisan breakthrough,” announcing that “the four leaders of the Senate and the House finalized an agreement” on a $900 billion stimulus deal. McConnell said it extends extra jobless benefits, provides another round of direct checks to adult Americans, more funding for small business loans, aid to airlines and schools and more. Wind and solar tax credits will be extended, which could be good news for wind and solar stocks. Solar stocks were winners last week, perhaps in anticipation of clean energy tax breaks being extended

McConnell said a stimulus deal vote will happen “as promptly as possible,” but the vote won’t happen before Monday

On Saturday night, lawmakers resolved the last notable hurdle to the $900 billion stimulus package. Sen. Pat Toomey, R-Pa., wanted to rein in the Federal Reserve’s emergency lending powers. Democrats worried that Toomey’s proposal was overly broad and would limit the central bank’s ability to respond to future crises. A more-narrow compromise will provide some limits on the Fed

The stimulus deal is likely to be combined a $1.4 trillion spending bill

With the economic recovery stalling amid coronavirus cases and Covid restrictions and the Jan. 5 Georgia Senate runoffs looming, there have been strong reasons to reach a stimulus deal. Lawmakers also would like to get out of town for the holidays

Big Techs Aren’t Leading Market Rally

The stock market rally finished slightly lower Friday as stimulus deal talks stalled. Notably, 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.

But tech titans haven’t been leading the recent stock market rally, which arguably is a good thing. Leading stocks generally held up well Friday, 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 names. 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% late Friday. 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?

Meanwhile, on Sunday evening Lockheed Martin (LMT) agreed to buy Aerojet Rocketdyne (AJRD) for $4.4 billion, or $56 a share. That’s a 33% premium to the missile propulsion maker’s Friday close

Apple (AAPL), Microsoft, Tesla, Nike, Zscaler and CrowdStrike stock are on IBD Leaderboard. Microsoft stock is on IBD Long-Term Leaders. Amazon stock is on the IBD 50

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

Dow Jones Futures

Dow Jones futures rose 0.1% vs. fair value, even with likely sizeable gains by Nike, JPMorgan and other banking giants. S&P 500 futures edged lower while Nasdaq 100 futures tilted higher vs. fair value

While a stimulus deal is likely a positive for the stock market rally, investors may have already priced that in after months of speculation

Treasury yields and the dollar rose on stimulus deal buzz. The pound fell significantly amid U.K. coronavirus restrictions and Brexit talks with the EU resuming Monday

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session

Source(s):  Investor’s Business Daily