Hi Everyone,
The stock market finished higher following a very choppy session, as the Dow led a promising afternoon rally on Wall Street. The Dow was up 165, or 0.6%, to 27,006, the Nasdaq gained 26, or 0.2%, to 10,706, while the S&P 500 rose by 19, or 0.6%, to 3,276. Advancing issues outnumbered decliners by a 5-to-1 ratio on the NYSE, where volume was still very light.
Traders said that volatility remains encouragingly low on Wall Street, and today’s quiet session reinforced the bullish outlook for stocks. As one trader explained, “The scary China-related headlines alone would have been enough for a weak market to tank, but buyers stepped in and halted each of today’s dips, and the major indices closed near their intraday highs.”
The negotiations regarding the next round of stimulus are in full swing in Washington, and the initial rumors concerning the structure of the new package have already surfaced. The $600 per week federal unemployment benefit will likely be slashed at least to $200 according to the GOP’s plans, with a new “back-to-work” benefit still in the cards. The dollar continued to drop amid the rumors, while gold hit yet another nine-year high as investors continue to prepare for the effects of the largest monetary and fiscal intervention in history.
Microsoft (MSFT) and Tesla (TSLA) both reported earnings after the bell, and the two companies both beat expectations across the board. Microsoft and Tesla have been among the leaders of the recovery, and both of them managed to improve their competitive positions despite the COVID-crisis. (Tesla is up big, and Microsoft is down a bit in after-hours trading.) They could continue to make new all-time highs in the coming quarters. Intel (INTC), AT&T (T), Danaher (DHR), Union Pacific (UNP), and Blackstone (BK) will report earnings tomorrow, and the chipmaker’s and railway giant’s numbers should have the most significant impact on the broader market.
U.S.-Chinese relations hit a new low today in the wake of the State Department’s decision to order the closure of the Chinese consulate in Houston. Shares of the companies most exposed to the Chinese market struggled today, although it seems that the Chinese side is wary of any major countermeasures due to its fragile economy. China flooded its economy with credit to tackle the COVID crisis, but many analysts believe that since the country’s growth has been based on debt for almost a decade, it will face strong headwinds even without counting the effects of the pandemic. This means that China likely cannot allow another tit-for-tat trade war, so the U.S. might even increase the diplomatic pressure.
As always, have a great evening and stay tuned!!!
Joe
