Nasdaq Resumes Record-Breaking Rally

Hi Everyone,

The stock market finished mixed for the third session in a row, with the Nasdaq’s new all-time high highlighting the choppy session. The Dow was down 80, or 0.3%, to 27,845, the Nasdaq gained 110, or 1.0%, to 11,0130, while the S&P 500 rose by 9, or 0.3%, to 3,382. Decliners outnumbered advancing issues by a 6-to-5 ratio on the NYSE, where volume remained light.

Traders said that while the S&P 500 closed below its record high again, price action remains clearly positive on Wall Street. As one trader explained, “The bullish consolidation continued today in the Dow and the S&P 500, and since volatility continued to decline as well, a major technical breakout could be ahead.”

Interestingly, the usual suspects, such as Apple (AAPL, -0.3%), Microsoft (MSFT, +0.7%), and Amazon (AMZN, +1.1%) were not the stocks behind today’s new all-time high in the Nasdaq. Tesla (TSLA, +11.2%), continued its pre-stock-split surge, hitting a new record despite the global growth worries, while NVIDIA (NVDA, +6.7%) also contributed to the tech benchmark’s rally. The chipmaker will report earnings on Wednesday, and if the quarterly numbers of its competitors are any indication, the sector could get another major boost from NVIDIA’s figures.

While the Volatility Index (VIX) closed at its lowest level in almost six months today and small-caps held up very well, not everything was rosy for bulls. The key sectors diverged substantially yet again, and the deterioration in the financial sector is an especially troubling sign for the broader market. While some of the weakness could be attributed to the lack of a stimulus deal, the global weakness among financials could be a warning sign, with the rally in Treasuries and gold also pointing to an increase in safe-haven demand.

Domestic COVID numbers continue to improve, but the global situation remains gloomy, with the severity of the Indian outbreak and the European deterioration, especially weighing on risk assets. This duality is likely behind the divergence among the key sectors, but the domestic economic numbers mean that U.S. stocks will likely emerge stronger from the current consolidation. That said, investors should continue to monitor the European developments, as another round of lockdowns could halt the global economic recovery.

I am going to conclude each commentary with a quote of the day.

“For me, Losing isn’t failure, it’s research”

Billie Jean King

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

Joe

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