Dow Jones futures climbed modestly early Wednesday, along with S&P 500 futures and Nasdaq futures, after a modest gain for the stock market rally Tuesday. The S&P 500 index is set to open at a fresh all-time high. Tesla (TSLA) soared in late trading after reporting better-than-expected second-quarter deliveries.
XMeanwhile, FANG stocks Facebook (FB) and Amazon.com (AMZN) are closing on buy points while top software stocks Zscaler (ZS) and ServiceNow (NOW) are ascending toward new entries as well.
Tesla deliveries came in at 95,200 in the second quarter, in line with the company's forecast for 90,000 to 100,000 but well above analyst views for about 91,000. Tesla stock jumped in after-hours action.
ServiceNow stock has a best-possible 99 IBD Composite Rating. Facebook stock has a 97 Composite Rating and Amazon stock a 96 CR. Zscaler stock has a 94 Composite Rating. Tesla stock has a lowly 30 Composite Rating, reflecting losses and weak stock action in recent months.
ServiceNow stock is on IBD Leaderboard. Zscaler stock is on the Leaderboard watchlist.
Dow Jones Futures Today
Dow Jones futures rose 0.3% vs. fair value. S&P 500 futures were up 0.3%. Nasdaq 100 futures climbed 0.45%. Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
In other overnight news, Broadcom is in talks to buy Symantec, according to Bloomberg News, citing sources.
Current Stock Market Rally
The stock market rally continued Tuesday, with the major indexes erasing slim losses with a solid advance into the close. The Dow Jones and S&P 500 index climbed 0.3% while the Nasdaq composite advanced 0.2%.
The S&P 500 index is just a few points from Monday's all-time high. The Dow Jones and Nasdaq composite are within 1%.
Chip stocks, among Monday's big winners on the China trade truce and eased Huawei ban, retreated Tuesday. While chip stocks are still up for the week, software stocks are doing better, at least according to key ETFs.
The VanEck Vectors Semiconductor ETF (SMH) fell 1.2%, paring its week-to-date gain to 1.6%. The iShares Expanded Tech-Software Sector ETF (IGV) rose 0.6% Tuesday and is up 2.1% this week. A broad growth stock ETF, the Innovator IBD 50 ETF (FFTY) climbed 0.4% Tuesday and has advanced 1.7% so far this week.
While it's good for chips to take part in the stock market rally, software names are less exposed to the China trade war.
Tesla Deliveries
The Tesla deliveries tally included 77,550 Tesla Model 3 sedans and 17,650 Model S/X vehicles. Production hit 87,048 vehicles.
Tesla said orders in Q2 exceeded deliveries, giving the electric-car maker a higher order backlog going into Q3.
The federal tax credit for buying a Tesla vehicle halved once again as of July 1 and is set to fall to $0 by year-end. That likely drove some second-quarter demand and some orders that will be filled in Q3, raising questions about future demand. Also, the shift to lower-priced Model 3 vehicles, already lower margin than the aging Model S and Model X options, could further pressure overall margins. Also, after slashing capital spending for several quarters, Tesla also likely will have to increase investments as it builds its China factory and gears up for the Model Y.
Still, Tesla stock soared 7.6% before the open as Elon Musk defied the skeptics once again. Tesla stock has rebounded somewhat since hitting a three-year low on June 3, and recently reclaimed its 50-day moving average.
Facebook Stock
Facebook stock rose 1% Tuesday to 195, approaching a 198.58 buy point from a deep, 11-month cup-with-handle base. Shares arguably have cleared an early entry of 194.63, but recent low-volume gains suggest that isn't a key resistance area.
The relative strength line is almost at the handle high, though still off its late July 2018 peak.
Facebook earnings are expected to fall 7% in 2019, but rebound for a 32% gain in 2020.
Amazon Stock
Amazon stock edged up 0.6% to 1,934.31, working toward a 1964.50 buy point from a 10-month cup-with-handle pattern. The handle is long enough to be its own base, and it appears to have its own handle. Investors could treat 1935.30 as an early entry for Amazon stock. The RS line for Amazon stock has been relatively flat for the past year.
Zscaler Stock
Zscaler stock popped 3.1% to 78.96 on Tuesday. Shares of the hot cybersecurity firm are close to an 82.35 buy point from an ascending base. An ascending base has three pullbacks, each ranging from 10% to 20%. Each pullback must mark a higher high and a higher low.
Zscaler rose slightly overnight on the Broadcom (AVGO)-Symantec (SYMC) deal buzz.
ServiceNow Stock
ServiceNow stock climbed 1.9% to 288.31. On a daily chart, shares are still in range from a flat base with a 281.84 entry. But on a weekly chart, ServiceNow stock has a new ascending base with a 293.08 buy point.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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