Hi Everyone,
The stock market finished mixed following a two-faced session on Wall Street, as despite a steep morning selloff, stocks staged a strong rebound fueled by a batch of better-than-expected earnings reports. The Dow was down 223, or 0.8%, to 26,316, the Nasdaq gained 45, or 0.4%, to 10,588, while the S&P 500 fell by 12, or 0.4%, to 3,246. Decliners outnumbered advancing issues by an almost 3-to-1 ratio on the NYSE, where volume remained relatively light.
Traders said that while the strong divergence between the key sectors was a bearish sign today, especially given the weakness among cyclical issues, the afternoon rally was still impressive. As one trader explained, “The strong bounce was fueled by relentless buying in the tech sector, and although a lot of sectors remained under pressure throughout the day, domestic stocks proved their relative strength once again.”
The shares of Amazon (AMZN), Facebook (FB), Apple (AAPL), and Google parent Alphabet (GOOG) all surged higher in after-hours trading, as all four companies beat expectations on their top and bottom lines. Facebook and Amazon posted especially encouraging numbers, with their revenues growing despite, or in Amazon’s case, because of the pandemic. Alphabet’s revenues dropped slightly on a year-over-year basis, but its on-line ad business proved more resilient than what most analysts predicted, and all-in-all, the tech sector looks poised to remain very strong in the coming quarters.
The first reading of the second-quarter GDP was the worst in history by a wide margin, with an annualized drop of almost 33%. The release was still slightly better-than-expected, which likely helped the afternoon rally in stocks. Interestingly, the weak German GDP data had a much more significant impact on risk assets, as it caused a sharp and broad selloff in European equities. On a bearish note, the price of crude oil hit a three-week low following the weak growth number, which could mean the relatively strong U.S. equities will face even stronger international headwinds.
As always, have a great evening and stay tuned!!!
Joe
