Hi Everyone,
The stock market finished significantly higher following yesterday’s mixed session, as the improving COVID-outlook boosted consumer-related and tech stocks for the second day in a row. The Dow was up 559 or 2.4%, to 23,950, the Nasdaq gained 323, or 4.0%, to 8,516, while the S&P 500 rose by 84, or 3.1%, to 2,846. Advancing issues outnumbered decliners by a more than 2-to-1 ratio on the NYSE, where volume was moderately heavy.
Traders said the fact that the pandemic likely reached its peak in the U.S. boosted investor confidence today, even though, under-the-hood there are major cracks in the rally. As one trader explained, “Small-caps lagged the broader market throughout the day, together with financials, and while the short squeeze in the tech sector was impressive, bulls are still not out of the woods.”
The global COVID situation improved yet again today, but the bulk of the global lockdowns are still in place, and it is still unclear how the global economy will function in the coming months. What looks certain is that testing will be crucial to avoid another wave of lockdowns should the COVID-19 cause a second wave of epidemics. We received positive news with regard to the size of the future global testing capacities. Since the G7 countries proposed a debt jubilee for the poorest countries, the global community might be much more prepared in a few months.
The first batch of crucial earnings reports were mixed today. Even though Wells Fargo (WFC, -4%), JP Morgan (JPM, -2.7%), and Johnson & Johnson (JNJ, +4.5%) all beat the consensus estimates, the outlook for the financial sector looks shaky. JP Morgan warned of a likely wave of defaults that could weigh on banks’ balance sheets, and the global recession will also hurt the financial sector. While Johnson & Johnson also cut its earnings estimates for the rest of the year, the consumer staples giant’s stock got close to hitting an all-time high today.
The quarterly earnings of Goldman Sachs (GS, -0.5%) Citigroup (C,-2.7%), and Bank of America (BAC, -0.8%) will highlight the pre-market session tomorrow, and bulls hope that the financial sector will finally begin to show strength. UnitedHealth Group (UNH, +2.65%) will also report tomorrow morning so the Dow could be very active in early trading. The healthcare behemoth is in a much better position compared to the large-cap banks, both technically and fundamentally, but its first-quarter earnings could still come in weak due to the pandemic.
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