Hi Everyone,
The major indices finished mixed following a choppy session on Wall Street, as stocks fell sharply in the last hour of trading for the second day in a row. The Dow was down 218 or 0.9%, to 23,665, the Nasdaq gained 45, or 0.5%, to 8,854, while the S&P 500 fell by 20, or 0.7%, to 2,848. Decliners outnumbered advancing issues by a 7-to-3 ratio on the NYSE, where volume was relatively light.
Traders said that the divide between the tech sector and the rest of the market widened even more today, as global stocks fell sharply, and the ADP payrolls number confirmed the job market’s weakness. As one trader explained, “It’s very rare to see such a divergence between cyclical issues and tech stocks and with the government jobs report coming out on Friday, we will likely soon know whether bulls or bears will be caught cold footed.”
The tech sector was buoyed by Shopify’s (SHOP, +6.9%) positive earnings surprise and its relatively upbeat guidance, as bulls pushed the stock to a new all-time high. Amazon (AMZN, +1.4%), Netflix (NFLX, +2.3%), and PayPal (PYPL, +2.3%) were among the strongest issues thanks to Shopify’s report, but the latter company reported slightly disappointing earnings after the closing bell, and its stock gave back its gains in after-hours trading. Whether or not the COVID-related shift toward online vendors will have a permanent impact remains to be seen, but investors are definitely rewarding the giants of the sector.
While the global reopening efforts are gaining momentum, a lot of analysts are questioning the V-shaped recovery, especially in the hardest-hit countries in Europe, and in the financially unstable emerging economies. The EU’s negative growth report added to the fears of a major crisis among the weaker nations today, and the fact that the dollar is once again showing persistent strength could be the sign of a global flight-to-safety. While, on one hand, the dollar is boosted by the relative strength of the U.S. economy, the strength of the reserve currency could be the sign of a broad risk-off shift too, so it’s something to keep an eye on in the coming weeks.
As always, have a great evening and stay tuned!!!
Joe
