Hi Everyone,
The stock market finished higher thanks to a strong intraday rally on Wall Street, as the hopes regarding the EU’s stimulus package and the positive vaccine results boosted risk assets. The Dow was up 9, or 0.03%, to 26,681, the Nasdaq gained 264, or 2.5%, to 10,767, while the S&P 500 rose by 27, or 0.8%, to 3,522. Decliners outnumbered advancing issues by a 3-to-2 ratio on the NYSE, where volume was very light.
Traders said that while tech stocks were impressive today, small-caps were weak again, casting a shadow on the rally. As one trader explained, “Not everything was rosy for bulls today despite the rally in the major indices, and while the Nasdaq proved its strength again, the Russell 2000’s weakness is something to keep an eye on this week.”
Amazon (AMZN,+8.0%) dominated today’s bullish session in the tech sector, almost erasing last week’s relatively deep pullback, but the other tech giants also pulled their weight. Microsoft (MSFT, +4.3%), Google parent Alphabet (GOOG, +3.3%), and Apple (AAPL, +2.1%) all contributed to the rally, and the fact that semiconductors also enjoyed inflows is a plus for bulls. Last week’s correction could already be over in the market-leading sector, and the Nasdaq could be ready to hit a new all-time high again this week.
IBM (IBM, +1%) reported earnings just after the bell, and it beat expectations both on its top and bottom lines sending its shares soaring (up another 5%) in after-hours trading. IBM has been lagging behind its peers in the past months amid the increasing competition in the crucial cloud segment, but the fact that the company managed to improve its margins is excellent news for the entire sector. Today’s stars, Amazon and Microsoft, could get another boost tomorrow, as the largest cloud providers could report blowout earnings in light of IBM’s numbers.
After four days of fierce negotiations, the leaders of the EU still have not struck a final deal regarding the EU’s highly anticipated recovery fund, but we know more and more about the possible agreement. Compared to the ambitious original proposal, which was backed by Germany and France, the final version of the stimulus package will be notably smaller, with more than $100 billion less in grants handed out to the most fragile countries of the EU. The rumors regarding a deal were enough to lift risk assets today. A lot of analysts feared that a significant delay could have hampered the European recovery, and an agreement might be the catalyst that sends stocks to a new recovery high.
As always, have a great evening and stay tuned!!!
Joe
