Dow Jones futures rose modestly early Wednesday, along with S&P 500 futures and Nasdaq futures, after the current stock market rally powered higher in Tuesday’s session. Meanwhile, five hot stocks from 2019’s top sector, software, reported late: Twilio (TWLO), Qualys (QLYS), HubSpot (HUBS), Cornerstone OnDemand (CSOD) and SPS Commerce (SPSC). Twilio stock, HubSpot stock and Cornerstone stock and Qualys stock fell overnight on in-line or disappointing guidance. SPS Commerce stock was indicated higher.
Twilio stock and Qualys stock boast best-possible IBD Composite Ratings of 99. Cornerstone stock has a 98 IBD Composite Rating. HubSpot stock and SPS Commerce stock have 97 CRs. The Composite Rating combines several key IBD ratings, including earnings. All-time top stocks often have Composite Ratings of at least 95 near the start of their runs.
Software is the top-performing IBD sector so far in 2019, rising 19.85% through Tuesday. A large number of software stocks have broken out past buy points during the current stock market rally, with several others near buy points.
Dow Jones Futures Today
Dow Jones futures rose 0.3% vs. fair value. S&P 500 futures climbed 0.3%. Nasdaq 100 futures were up 0.5%. Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular session.
Current Stock Market Rally
After consolidating for a few days, the major stock market averages soared on a tentative deal to avert another government shutdown as well as hopes for a China trade deal. The Dow Jones and Nasdaq composite rose 1.5% while the S&P 500 advanced 1.3%, all moving to their best levels since Dec. 4. The S&P 500 index also moved above its 200-day moving average. The Dec. 3 short-term peak is the next obvious resistance area for the current stock market rally.
Twilio earnings were 4 cents a share vs. a 3-cent loss a year earlier. Revenue rose 77% to $204.3 million, the fourth straight quarter of accelerating growth. Analysts had expected Twilio earnings of 4 cents, though sales zipped past the consensus for $185 million. The communications software maker gave 2019 profit guidance, including its recent SendGrid acquisition, that was short of estimates.
Twilio stock fell 3.7% early Wednesday, off overnight lows. In Tuesday’s stock market, shares dipped 0.4% to 115.29 after hitting a record high on Friday.
Qualys earnings rose 59% vs. a year earlier to 51 cents a share, with revenue up 18% to $74.2 million. Analysts expected Qualys earnings of 40 cents on sales of $74.1 million. The cybersecurity firm gave weak revenue guidance for Q1 and 2019.
Qualys stock tumbled 16% before Wednesday’s open. Shares rose 1.8% to 96.41 Tuesday. Qualys had been closing in on a 98.40 buy point from a cup base.
HubSpot earnings soared 208% to 37 cents a share. Q4 revenue swelled 35% to $144 million. Analysts expected HubSpot earnings at 30 cents on sales of $137.3 million. HubSpot gave in-line Q1 guidance.
HubSpot stock fell 1.2% to 170 in late trade, paring prior losses. Shares climbed 2.6% Tuesday to 172. The marketing software stock is extended from a 158.76 cup-with-handle buy point.
Cornerstone earnings were 24 cents a share, up 26% vs. a year earlier. Revenue rose 5% to $138.2 million, the fourth straight quarter of slowing top-line growth. But the Q4 figures topped analyst views for Cornerstone earnings of 23 cents and sales of $138 million. The human capital management software maker gave somewhat cautious Q1 revenue guidance.
Cornerstone stock sank 5.2% late, signaling a move back below a 59.28 entry point. Shares rose 1.25% to 60.11 on Tuesday, in buy range.
SPS Commerce Earnings
SPS Commerce reported earnings of 53 cents a share, up 89% vs. a year earlier. Analysts expected SPS Commerce earnings of 46 cents. Revenue climbed 12% to $65.19 million, narrowly beating. The supply-chain-management software maker sees Q1 EPS of 50-52 cents. Analysts saw SPS Commerce earnings of 47 cents a share.
SPS Commerce stock was indicated modestly higher in late trading, but volume was light. Shares rose 2.8% to 94.66 Tuesday. SPS Commerce stock is working on a 98.30 double-bottom base that’s somewhat stretched out.
Four of these five software stocks were trading lower in late trading. That underscores the risk of buying before earnings, even when the current stock market rally is acting bullishly, without an earnings options strategy. Of course, as with Dow Jones futures, the overnight action of these hot stocks may not reflect how they trade in Wednesday’s session.
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