Hi Everyone,
The stock market finished considerably higher, as the S&P 500 and the Nasdaq both hit new recovery highs thanks to improving global sentiment. The Dow was up 369 or 1.5%, to 24,576, the Nasdaq gained 190, or 2.1%, to 9,376, while the S&P 500 rose by 49, or 1.7%, to 2,972. Advancing issues outnumbered decliners by a 4-to-1 ratio on the NYSE, where volume was moderate.
Traders said that the way stocks recovered from yesterday’s selloff was very bullish even though a few sectors continue to show technical weakness. As one trader explained, “While the Dow couldn’t surpass its high from Monday, and financials still have a lot of catching up to do, cyclical issues were very strong today, which could mean that the current rally has a long way to go.”
The escalation in U.S.-Chinese relations continues, and today Senate passed a bill that will allow for an easier delisting of Chinese companies from U.S. exchanges. Shares of several major Chinese companies fell in the wake of the news, such as Baidu (BIDU, -1.1%) and Alibaba (BABA, -0.2%), and the major indices also turned slightly lower in the latter half of the session. The Chinese yuan declined as well, and while the Chinese side still has not announced notable counter-measures, analysts fear that the tensions could hurt global trade and slow the post-COVID economic recovery.
Facebook’s (FB, +6% ) surge to a new all-time high contributed a lot to today’s rally, and the bullish reports from the retail sector also boosted investor sentiment. Interestingly, Treasury yields drifted lower across the curve, despite the broad-based rally, and the Volatility Index (VIX) did not confirm today’s new recovery highs in the major indices. While these warning signs are not too serious, investors should keep an eye on these risk measures, especially should small-caps lose their relative strength in the coming days.
Currency markets have been finally showing bullish signs this week, an the euro’s rally is particularly encouraging following weeks of worrisome weakness. The recently announced $550 billion European stimulus package helped in stabilizing sovereign bond markets, but alarmingly, the bank sector remains under pressure. Emerging markets also registered hefty gains this week, so international headwinds are weaker than in recent weeks, and that could mean that the Nasdaq will target its all-time high as early as this month.
As always, have a great evening and stay tuned!!!
Joe
