Dow Hits Six-Month High As Cyclicals Jump

Hi Everyone,

The stock market had a relatively quiet and bullish day, with the Nasdaq and the S&P 500 hitting new all-time highs again and the relatively strong Dow also closed at its highest level since late-February. The Dow was up 378, or 1.4%, to 28,308, the Nasdaq gained 68, or 0.6%, to 11,380, while the S&P 500 rose by 34, or 1.0%, to 3,431. Decliners outnumbered advancing issues by a 3-to-1 ratio on the NYSE, where volume was quite light.

Traders said that today’s broad rally was just what the doctor ordered for bulls following Friday’s weakness in most key sectors. As one trader explained, “Even though today’s rally didn’t make the ‘internal’ weakness disappear despite the healthy bounce among small-caps, it was definitely a step in the right direction, with the Dow’s new six-month high also making bulls smile.”

Treasury yields rose across the curve thanks to improving economic sentiment, and interestingly, the dollar also managed to edge higher amid the risk rally. Recently, the dollar declined when stocks advanced, so today’s shift could mean that U.S. assets will see another wave of inflows. With the current wave of U.S. outbreaks easing and the situation in parts of Europe and Asia still being serious, domestic assets are starting to look more attractive, relatively speaking. That said, European stocks also gained ground today, but the major U.S. indices are still much stronger from a technical perspective.

The hardest-hit industries had a great day, together with the key cyclical sectors, with the likes of United Airlines (UAL, +10%), Boeing (BA, +6.4%), Booking (BKNG, +3.1%) all registering solid gains. Financials also joined the party, while industrials and energy stocks pushed higher as well. The energy sector was also supported by the fears of two hurricanes, Marco and Laura, threatening the Gulf coast. The rare event could cause major supply disruptions in the area, but the price of crude oil remained remarkably stable today, as investors focused on the COVID-related developments.

“Stay away from negative people, they have a problem for every solution”

Albert Einstein

As always, have a great evening and stay tuned!!!

Joe

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