Dow Jones futures fell late Thursday, along with S&P 500 futures and Nasdaq futures, following mixed Intel (INTC) guidance and Google (GOOGL) spending curbs. The coronavirus stock market rally erased big gains on negative news about the Gilead Sciences (GILD) drug remdesivir in treating Covid-19 patients.
XIntel earnings and sales growth accelerated in Q1, but the Dow Jones chip giant guided low on Q2 EPS. Intel stock sold off in extended trade. Meanwhile, the Intel earnings report also put some pressure on IBD Leaderboard members AMD stock, Nvidia stock and Microsoft stock.
Intel competes against Advanced Micro Devices (AMD) in PC chips and against AMD and Nvidia (NVDA) in chips for data centers. Intel's comments about PC demand are important for Microsoft (MSFT), even though cloud-related offerings have fueled revenue growth and MSFT stock in recent months.
Microsoft stock, AMD stock and Nvidia stock also are IBD 50 components.
Meanwhile, Google reportedly plans to slash its marketing budget in half for the second of 2020 and is instituting a hiring freeze, reflecting the coroanvirus recession worldwide. That's according to CNBC, citing internal Google documents. Google parent Alphabet fell 2.45% overnight. Facebook stock dipped 1.4%. Google and Facebook (FB) earnings are due next week.
Dow Jones Futures Today
Dow Jones futures fell 0.4% vs. fair value. S&P 500 futures lost 0.6%. Nasdaq 100 futures retreated 0.8%. Both Intel stock and Microsoft stock are Dow Jones, S&P 500 and Nasdaq composite components. AMD stock, Nvidia stock, Facebook stock and Google stock are S&P 500 and Nasdaq members.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze top stocks in the coronavirus stock market rally on IBD Live.
Coronavirus Cases
Coronavirus cases worldwide are above 2.715 million. Covid-19 deaths are at least 190,000.
Coronavirus cases in the U.S. have topped 879,000, with deaths closing in on 50,000. Confirmed covid-19 cases have picked up in the past couple of days, but that's partly due to a new increase in coronavirus testing.
Gilead Remdesivir Flops Covid-19 Study
Gilead Sciences' coronavirus treatment remdesivir reportedly flopped in its first randomized study. Researchers in China found the experimental drug didn't help patients, according to the Financial Times. The FT cited a draft World Health Organization report published by accident. Gilead said the data was inconclusive and the study was halted early. It said remdesivir still shows some promise for patients early in the disease. But Gilead stock fell 4.3%. While GILD stock has trended higher during the coronavirus crisis on hopes for remdesivir as a Covid-19 treatment, it's been extremely volatile.
Coronavirus Shutdowns
President Donald Trump said he might extend coronavirus social distancing guidelines into early summer.
Vice President Mike Pence said late Thursday that some 16 states have released formal plans for reopening businesses. Minnesota said it will let many office and manufacturing workplaces reopen, with proper social distancing and cleaning measures.
The House approved a $484 billion coronvirus stimulus measure, adding new small business loan funding as well as aid to hospitals. It'll now go to President Trump for his signature.
Coronavirus Stock Market Rally
The coronavirus stock market rally was on track for another strong session when the Gilead remdesivir news hit. After that point, the major indexes whipsawed up and down, selling off again to close little changed.
The Dow Jones Industrial Average rose 0.2% while the S&P 500 index and Nasdaq composite dipped less than 0.1%. The S&P 500 index reclaimed its 50-day line for most of the session but closed below it.
While it may seem surprising the Gilead news had such a big impact on the coronavirus stock market rally, it's not the first time. Some positive early news on Gildead's remdesivir late last week helped push the major indexes higher on April 17, essentially their short-term peak.
That highlights how much the coronavirus stock market rally is betting on Gilead's drug and other potential Covid-19 treatments to let economies reopen in the coming weeks and months. Those antivirals and antibody treatments may bridge the gap until a coronavirus vaccine is available.
Growth stocks saw a good day turn mixed. Among the best ETFs, the Innovator IBD 50 ETF (FFTY) eked out a 0.45% gain. The iShares Expanded Tech-Software Sector ETF (IGV) fell 0.85%, with Microsoft stock its top member. The VanEck Vectors Semiconductor ETF (SMH) retreated 0.9%, with Intel stock, AMD stock and Nvidia stock all key weights.
Why This IBD Tool Simplifies The Search For Top Growth Stocks
Intel Earnings
Intel earnings rose 63% to $1.45 a share as sales grew 23% to $19.8 billion. That was the second straight quarter of accelerating earnings growth and the third straight quarter of faster revenue gains. Analysts expected Intel earnings of $1.28 a share on sales of $18.7 billion.
Data-center-related revenue surged 43% to $7 billion. Revenue tied to cloud service providers spiked 53%. PC chip sales leapt 14% to $9.8 billion.
The Dow Jones chip giant guided higher for Q2 revenue but lower on earnings. That follows weak guidance from other chipmakers this week.
Intel stock tumbled 6% overnight. Shares closed down 1.8% to 59.04. Intel stock briefly cleared a 61.59 cup-with-handle buy point last week, but quickly reversed lower and soon fell below its 50-day line. INTC stock looks set to test its 50-day once again.
AMD Stock, Nvidia Stock Fall
Intel stock has done OK vs. the broader market rally in recent weeks, but hasn't been a leader in the chip sector like AMD stock and Nvidia stock.
But Intel's results and guidance are pressuring those two chip stars slightly overnight.
AMD stock fell 3.3% overnight after closing down 2 cents to 55.90. The graphics chipmaker has a 59.37 buy point from a cup base. But AMD stock may soon have a handle that would slightly lower the entry price.
AMD earnings are next week.
Nvidia stock sank 1.5% in extended trade after pulling back 0.75% to 284.01. NVDA stock is above a 275.50 cup-with-handle entry, according to Marketsmith analysis. But it has formed another handle with an alternate buy point of 279.10.
Microsoft Stock
Microsoft and Intel, once dubbed the Wintel duopoly, are no longer joined at the hip. Still, Intel's PC demand is relevant for Microsoft's still-mammoth legacy Windows/Office business.
MSFT stock edged lower in overnight trade. During Thursday's session, Microsoft stock reversed lower to trade down 1.1% at 171.42.
Microsoft stock is above a 170.10 early entry but this week has retreated back below its 175.10 double-bottom buy point. MSFT stock looks set to form a handle with a 180.10 entry as of Friday's close.
Microsoft earnings are next week.
Coronavirus Stock Market Rally Still Tested
While Wednesday's strong gains were a positive sign for the coronavirus stock market rally, it's still a key time. The S&P 500 index is hitting resistance at its 50-day moving average. Both the Nasdaq and S&P 500 need to clear their April 17 peaks at some point.
Still, the coronavirus market rally is still in decent shape, with growth stocks leading the upside The action of the past few weeks show the importance of staying engaged and nimble. 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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