Hi Everyone,
The stock market finished higher for the second day in a row, as more and more U.S. states and nations are in the process of reopening their economies amid the easing COVID-pressure. The Dow was up 359 or 1.5%, to 24,134, the Nasdaq gained 96, or 1.1%, to 8,730, while the S&P 500 rose by 42, or 1.5%, to 2,878. Advancing issues outnumbered decliners by a 9-to-1 ratio on the NYSE, where volume was moderate.
Traders said that today’s rally on Wall Street was the broadest in almost three weeks, as small-caps finally joined the party. As one trader explained, “While mega-cap tech stocks, the leaders of the past few weeks pulled back today, small-caps and lockdown-sensitive issues shined, as investors ignored the warnings that the early reopening could lead to secondary outbreaks in Europe and the U.S.”
Even though the Nasdaq slightly lagged the other large-cap benchmarks today, it cleared a crucial technical hurdle, hitting its highest level since the first days of March. The Volatility Index (VIX) fell below 35 for the first time in seven weeks as well, taking out its low from last week, as market conditions continue to normalize. Treasuries and gold lost ground, pointing to a shift away from the traditional safe-haven assets. And even though there are plenty of significant risk factors that could mute the recovery, it’s hard to deny the improvements across asset classes.
Although there are controversies surrounding the expanded small business loan program, with several large public companies tapping the fund targeted at the smallest companies, its positive effects still seem to be showing. Small-caps surged higher by almost 5% today thanks to the program and the reopening efforts, even though several companies were forced to repay the loans because of public outrage. The fact that more than 26 million people filed unemployment claims in five weeks still warrants caution for the sector, but the relatively short lockdown period could mean that a lot of jobs will come back quickly.
The healthcare and industrial sectors will be in focus tomorrow morning, in terms of earnings, with Pfizer (PFE, +2.5%), Merck (MRK, +3.1%), 3M (MMM, +4.5%), and Caterpillar (CAT, +1%) all reporting before the bell. The latter company’s numbers will likely have the most significant impact on the broader market due to its global exposure. The healthcare giants could also provide valuable COVID-related information. PepsiCo (PEP, +0.1) and UPS (UPS, +2.4%) will report in pre-market trading as well, while Google parent Alphabet’s (GOOG, +0.3), AMD’s (AMD, +0.6%), and Starbucks’ (SBUX, +2.9%) reports will highlight the after-hours session.
As always, have a great evening, stay calm, stay home, stay healthy, do your part to flatten the curve and stay tuned!!!
Joe
