Hi Everyone,
The major indices finished mixed following a hectic session on Wall Street, with tech stocks staging an impressive afternoon rally in the face of the mounting economic worries. The Dow was down 329 or 1.4%, to 23,391, the Nasdaq gained 39, or 0.5%, to 8,192, while the S&P 500 fell by 28, or 1.0%, to 2,762. Decliners outnumbered advancing issues decliners by a 3-to-2 ratio on the NYSE, where volume was well below the average of the past few weeks.
Traders said that today’s price action was nothing short of chaotic, and the divergence between the key sectors was striking. As one trader explained, “It’s rare to see the Nasdaq closing a day in the green while the Russell 2000 drops by more than 2%, and these divergences rarely last for long, so investors could be in for another crazy day tomorrow, as Europe reopens following the Easter break.”
While last week, we saw two bearish intraday reversals on Wall Street, today, stocks, at least in the tech sector surged higher in the latter half of the day. The Nasdaq finished near its intraday high, as investors flocked into the shares of the companies benefiting from the lockdown-induced trends. Amazon (AMZN, +6.2%) got close to its all-time high after announcing that it intends to hire 75,000 employees to satisfy the increased demand it’s facing, while Netflix (NFLX, +7.5%) hit its highest level since mid-2018 thanks to today’s rally.
Trading activity was relatively light today compared to the levels we became accustomed to in the past few weeks, as investors had a lot to digest following the long weekend. While the COVID-19 pandemic seems to have reached its peak, the pressure on the European and U.S. healthcare systems is still immense, and the short-term economic outlook remains gloomy. The leaders of the European Union (EU) agreed on a slightly half-baked stimulus bill, and so far, the market’s reaction has been far from convincing. The U.S. financial sector struggled throughout the day, and all eyes will be on the battered European banks tomorrow, so the pre-market session could already be heated.
The OPEC+ countries finalized their highly anticipated crude oil supply cut over the weekend following several days of heated negotiations. While most analysts agree that the 9.7 million barrels/day cut wiil not be enough to stabilize the critically oversupplied market, the price of the commodity is higher than it was at Thursday’s close. President Trump contributed to the agreement, convincing Mexico to enter the deal, even using an accounting trick to include the declining U.S output in Mexico’s quota. Although the price of oil remains very low, should the lockdowns ease, the production cut could give a boost to the struggling U. S. shale industry.
As always, have a great evening, stay calm, stay home, stay healthy, do your part to flatten the curve and stay tuned!!!
Joe
Marketing Research Commentary