Dow Jones futures today rose modestly vs. fair value, along with S&P 500 futures and Nasdaq futures. President Donald Trump tweeted that it “will all work out” on U.S.-China trade. He also tweeted that he wants to help China’s ZTE “get back into business, less than a month after the U.S. banned domestic companies from selling components to the telecom gear giant. That could be good news for U.S. optical stocks such as Oclaro (OCLR), Finisar (FNSR), Acacia Communications (ACIA) and Lumentum Holdings (LITE), which also is an Apple (AAPL) iPhone supplier. It may not be good news for U.S. telecom gear maker Ciena (CIEN).
Stock Market Uptrend Strong
The Dow Jones industrial average, S&P 500 index and Nasdaq composite all rose more than 2% last week, with the Dow Jones and S&P 500 reclaiming their 50-day moving averages. A number of top stocks from several sectors broke out into buy zones as the stock market uptrend is no longer under pressure.
Dow Jones Futures Today
Dow Jones futures rose 0.4% vs. fair value. S&P 500 futures climbed nearly 0.4%. Nasdaq futures advanced 0.4%. President Trump’s tweet eases fears of a U.S.-China trade war, though that those concerns have cooled in recent weeks.
Keep in mind that stock market futures and other overnight moves don’t necessarily translate into actual trading in the regular session.
Optical Stocks
Fiber-optics stocks plunged April 16 after Commerce Department barred U.S. firms from selling components to China’s ZTE after finding the company illegally sold equipment to Iran and North Korea, violating a 2017 settlement. Acacia Communications fell 36%, Oclaro 15%, Lumentum 9% and Finisar more than 4% that day.
Some of these optical stocks have recovered somewhat: Lumentum has rallied on its own earnings and those of key customer Apple. But they are generally below their pre-ZTE ban levels.
As for ZTE, the Chinese firm has essentially halted operations. The U.S. government, or at least President Trump, may not have realized the impact the ZTE ban would have. Trump tweeted Sunday that he’s ordered the Commerce Department to find a way to help ZTE.
One U.S. fiber-optic stock that may not benefit is Ciena, a ZTE rival. Ciena stock rose a fraction on April 16 and 3.2% the next session.
IBD’s Telecom-Fiber Optics group was a market leader from January 2016 until July 2017, but since then has struggled.
Trump also sought to ease fears of a U.S.-China trade war in a later tweet Sunday.
