Dow Jones futures rose modestly late Thursday, along with S&P 500 futures and Nasdaq futures, on continued China trade deal optimism and U.K election exit polls. The stock market rally spiked to record highs on President Donald Trump's positive tweet on a China trade deal. Adobe (ADBE), Broadcom (AVGO), Costco Wholesale (COST) and Oracle (ORCL) reported earnings after the close. Recent IPO Datadog (DDOG) announced a new integration with Microsoft (MSFT) Azure.
XIn extended trading, Adobe stock jumped, signaling a breakout. Broadcom stock reversed lower after moving into a buy zone during Thursday's session. Costco stock and Oracle stock fell modestly. Datadog stock edged higher after closing right at key levels.
Adobe stock is on the IBD 50. Costco stock is on IBD Leaderboard.
Dow Jones Futures Today
Dow Jones futures rose 0.3% vs. fair value. S&P 500 futures and Nasdaq 100 futures climbed 0.2%. Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
The pound rose on exit polls pointing to a big Conservative parliamentary majority in U.K. elections. That should let Prime Minister Boris Johnson push through a Brexit deal, ending that long-running fight and uncertainty.
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Current Stock Market Rally
The current stock market rally started strong and finished well.
President Trump, shortly after the opening bell, tweeted, "Getting VERY close to a BIG DEAL with China." Other reports during the day said the U.S. and China have agreed on "phase one" trade deal terms, pending Trump's final approval. The U.S. would suspend the Dec. 15 tariffs, avoiding a China trade war escalation that would hit the Apple (AAPL) iPhone and many consumer goods for the first time. Both countries would roll back many existing tariffs under the China trade deal.
The Dow Jones Industrial Average, S&P 500 index and Nasdaq composite rose more than 1% intraday, all hitting record highs. Despite some volatile intraday action, the Dow Jones today closed up 0.8%, the S&P 500 index 0.9% and the Nasdaq 0.7%.
The Innovator IBD 50 ETF (FFTY) slid 0.8%, hit by key components such as RH (RH) and InMode (INMD). The iShares Expanded Tech-Software Sector ETF (IGV) climbed 0.4%.
The VanEck Vectors Semiconductor ETF (SMH) soared 2.9% after popping 2.1% on Wednesday.
The chip sector is the clear hot sector, while some medicals, software and IPO stocks that had been moving higher have run into trouble recently. While chip leadership is great news for a stock market rally, you don't want to see only chips — and other 5G plays — rising.
Adobe Earnings
Adobe earnings grew 25% to $2.29 a share with revenue up 21.5% to $2.99 billion. It was the second straight quarter of faster Adobe earnings growth. Wall Street expected Adobe earnings of $2.26 a share with sales at $2.976 billion.
Adobe stock rose 2.9% to 314.89 overnight, signaling a move above a 310.10 cup-with-handle buy point, according to Marketsmith. Shares rose 0.7% to 297.34 Thursday. Adobe stock hit a record 313.11 on July 19.
Not only would an Adobe stock breakout be good by itself, but it's positive for the software sector, which has lost some momentum. It's good news for the chip-heavy stock market rally as well.
Broadcom Earnings
Broadcom earnings slid 8% to $5.39 a share as fiscal Q4 revenue climbed 6% to $5.78 billion. Analysts forecast Broadcom earnings per share of $5.37 on revenue of $5.755 billion. Broadcom also hiked its dividend by 23%.
Broadcom revenue guidance was above consensus, but analysts may not have factored in the Symantec (SYMC) deal. Also, the chipmaker sees weakness in some wireless products.
Broadcom stock initially rose overnight, but reversed to trade down 1.5% at 323. Shares jumped 2.3% to 327.17 on Thursday, moving above various buy points to a new high.
However, Broadcom stock has not been leading the chip rally.
Costco Earnings
Costco earnings rose 7.5% to $1.73 a share as fiscal Q1 revenue grew nearly 6% to $37.04 billion. Core same-store sales climbed 5% Analysts expected Costco earnings of $1.70 a share on sales of $37.33 billion. Same-store sales excluding gas and foreign exchange impact were seen rising 4.8%.
Costco stock dipped 1% overnight. Shares edged up 0.7% to 297.34, staying just below its 50-day line. If Costco stock can move above its 50-day line and perhaps the 300 level in strong volume, investors could use that as an entry point. A more conventional buy point would be 307.20.
The relative strength line for Costco stock is at four-month lows. The RS line, the blue line in the charts provided, track a stock's performance vs. the S&P 500 index.
Oracle Earnings
Oracle earnings per share rose 13% to 90 cents a share as revenue edged up 0.5% to $9.61 billion. Analysts expected fiscal Q2 Oracle earnings of 88 cents a share on revenue of $9.882 billion.
Oracle stock fell 2.6% overnight, signaling a move back below its 50-day line. Shares climbed 0.3% to 56.47 on Thursday. Oracle stock has a 60.60 buy point from a cup base, though the area just above 57 appears to be a resistance area.
Datadog Teams Up With Microsoft Azure
Datadog announced a new partnership with Microsoft's cloud-computing business. Users will now be able to troubleshoot Azure DevOps processes.
Datadog stock rose 2.85% overnight. Shares edged up 0.5% on Thursday to 35.73, just above their 50-day line but slightly below the 10-week. Datadog stock soared after it reported earnings last month, ultimately hitting 44.09 on Nov. 25 before pulling back. Datadog stock is well off weekly lows.
Meanwhile, Microsoft stock edged higher in extended trade. Microsoft stock climbed 1% on Thursday to 153.24, clearing a three-weeks-tight entry for the Dow Jones giant.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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