Hi Everyone,
The stock market finished higher rebounding from yesterday’s selloff, with the Nasdaq leading the way higher again thanks to Apple’s (AAPL) new record high. The Dow was up 177 or 0.8%, to 26,067, the Nasdaq gained 149, or 1.4%, to 10,493, while the S&P 500 rose by 25, or 0.8%, to 3,170. Advancing issues outnumbered decliners by a 5-to-4 ratio on the NYSE, where volume remained light.
Traders said that today’s session was another confidence booster for bulls in the face of the negative COVID headlines. As one trader explained, “While today’s rally was ‘narrow,’ meaning that a lot of stocks haven’t joined the move, the fact that yesterday’s dip didn’t continue is more proof of the U.S. market’s resilience.”
We had yet another day of strong divergences on Wall Street, with the Nasdaq clearly outperforming its peers, getting close to a record high again. The Nasdaq 100 Index, which consists of the largest tech stocks, hasn’t been so expensive compared to the S&P 500 since the latter stages of the tech bubble in 2000, and the market share of the top 10 tech stocks is already at an all-time high. Analysts agree that the tech giants will remain very strong in the post-COVID world, as more and more signs are pointing to a permanent shift toward remote work.
Even though the key safe-haven sectors were relatively weak today, we saw contradicting trends in other asset classes. Treasury yields were mixed despite the late-day surge in stocks, while gold futures hit their highest levels since mid-2011. The shiny metal is inching closer to its all-time high amid the continued monetary easing and rising global economic uncertainty. And with global government bond yields trading near their record lows, gold could remain strong compared to other currencies.
The weekly number of new jobless claims will be at the center of attention again tomorrow, and following two weeks of higher-than-expected figures, analysts forecast roughly 1.37 million new filings. Continuing claims dropped below 20 million for the first time in a month last week, and bulls are hoping for another significant drop amid the reopening push. The overnight session will be highlighted by the Chinese Consumer Price Index (CPI) and Producer Price Index (PPI), while the Eurogroup meeting will be in focus in pre-market trading.
According to today’s announcement, the U.K. will follow in the footsteps of the U.S. and the E.U., as the country unveiled an almost $40 billion government spending package, on top of the over $350 billion in grants and loans already committed to tackle the COVID crisis. The U.S. is also likely to continue its spending spree in August, with up to $1 trillion of additional stimulus, and should the EU’s package be nearly as big as the initial proposal, liquidity will not be an issue in the developed world this year. China is also in the midst of an unprecedented liquidity “experiment,” and should the global economic recovery remain on track, risk assets could be on fire in the second half of the year.
As always, have a great evening and stay tuned!!!
Joe
