Hi Everyone,
The main sectors all finished the day in the green, without notable negative outliers, with only consumer discretionaries, real estate stocks, and utilities lagging. Materials, tech stocks, communication services, and the healthcare sector led the way throughout the day, but industrials, financials, energy stocks also fared well thanks to improving investor sentiment. On another bullish note, small-caps continue to show strength, as the Russell was the first benchmark to top its late-September high today.
Traders said that today’s broad-based surge healed many technical wounds, but bulls still have to prove their dominance. As one trader explained, “The major indices rallied back up to their 50-day moving averages with healthy momentum, but the benchmarks need to leave their short-term indicators behind for good before bulls can declare victory.”
Despite the Delta variant’s impact, price pressures, supply chain strains, and labor shortages, today’s bank earnings painted a positive picture of the post-lockdown economy. Bank of America (BAC, +4.3%) and Morgan Stanley (MS, +2.4%) had especially strong quarters. The Taiwanese chipmaker giant TSM also reported great numbers while upgrading its guidance as well, but its updated demand outlook could mean that shortages will be long-lasting in the industry.
Despite the severe supply chain issues and the historic chip shortages, the three largest U.S. automakers by market cap, Tesla (TSLA, +0.8%), GM (GM,-0.3%) , and F (F, – 0.3%) have been showing relative strength ever since the beginning of the market-wide pullback in stocks. The ongoing electric shift could kick off a massive new product cycle, and while Tesla is clearly ahead of its peers, all three companies are putting a lot of capital to work in the area. The “EV mega-cycle” could fuel a memorable bull run in the sector, and with all three stocks trading near their multi-month highs, investors should continue to keep an eye on the major players.
“Success is doing ordinary things extraordinarily well.”
Jim Rohn
As always, have a great evening and stay tuned!!
