Hi Everyone,
The stock market finished higher for the second day in a row, closing one of the most extreme quarters in the history of Wall Street on a bullish note. The Dow was up 216 or 0.8%, to 25,812, the Nasdaq gained 185, or 1.9%, to 10,059, while the S&P 500 rose by 47, or 1.5%, to 3,100. Advancing issues outnumbered decliners by a 3-to-2 ratio on the NYSE, where volume remained light.
Traders said that even though today’s rally was less convincing than yesterday’s broad bounce, the resiliency that stocks are showing this week is clearly bullish. As one trader explained, “Today’s price action reflected the lingering virus-related worries, with the most-affected companies lagging, even though the session ended with a frantic short-covering surge.”
Stocks had their strongest quarter in over two decades on Wall Street, at least at the level of the major indices, as the COVID-crash bottomed out just before the start of the second quarter. Interestingly, the last time the large-cap benchmarks registered similar gains, in 1998, it was also in the aftermath of a mini-crash, which was triggered by the Russian currency crisis and the subsequent collapse of the infamous LTCM hedge fund. Should the analogy hold in the coming month, the large-cap benchmarks might follow the lead of the Nasdaq to new all-time highs, just as they did in 1999.
The late-session ramp was likely caused by quarter-ending, often forced trades, but most risk measures confirmed today’s rally. Treasury yields ticked higher despite the promise of further stimulus, the Volatility Index (VIX) hit a one-week low, as did the Russell 2000. That said, the main overseas indices were much weaker than their U.S. peers, and the issues favored by the reopening of the economy also struggled to keep up with the mighty tech sector.
Fed Chair Jerome Powell and Treasury Secretary Steven Mnuchin testified today before the House Financial Committee, and both stood behind their previous statements about the need for further monetary and fiscal stimulus. Mr. Mnuchin said that the hardest-hit companies, like hotels should get additional support, which led to a late-day rally in the most-affected sectors. He also stated that he expects China to “live up to its commitments in the ‘phase one’ trade deal,” despite rumors that suggested otherwise.
As always, have a great evening and stay tuned!!!
Joe
