The rally that began towards the end of the day on Friday looks set to continue this morning as investors feel more confident that the market found a bottom. But has it?
Yes, S&P 500 futures are pointing to a 1% gain at 8:53 a.m. this morning, while the Dow Jones Industrial Average looks set to open up 235.10 points, or 1%. Nasdaq Composite futures point to a 1% gain at the open today.
MKM technical analyst Jonathan Krinsky warns that the recovery from the first correction since 2016 might not be "v-shaped." He compares the drop to 2010's Flash Crash, when the S&P 500 remained above its 200-day moving average even as fewer than 3% of its components were trading above their 20-day moving averages. "In that scenario, we would expect to see a rally to a lower high (2700-2750), and then an undercut low below 2530 that coincides with more meaningful positive divergences," he writes.
Don't get too excited yet. -Ben Levisohn
21st Century Fox (FOXA) has gained 2% to $36.45 on reports that Comcast (CMSA) could be interested in acquiring some of its assets. Shares of Comcast are unchanged at $38.57.
Broadcom (AVGO) has advanced 1.3% to $238.50 on reports it has obtained financing for a purchase of Qualcomm (QCOM). Shares of Qualcomm have gained 2.4% to $65.55.
CSRA (CSRA) has soared 32% to $40.65 after agreeing to be bought for $40.75 a share by General Dynamics (GD). Shares of General Dynamics have risen 1.8% to $216.
Dycom Industries (DY) has slumped 4.6% to $106 after offering below-consensus guidance for second-quarter and full-year guidance.
Newell Brands (NWL) had climbed 4.3% to $28.80 after activist investor Starboard Value released a letter explaining why it wants to replace the company's board of directors.
Restaurant Brands International (QSR) has jumped 4.4% to $59 after reporting better-than-expected earnings.
Walt Disney (DIS) has risen 1.7% to $104.84 after reaching a deal with Alibaba Group Holding (BABA) to stream animated videos in China. Shares of Alibaba have gained 1.8% to $179.91.
American Express (AXP) has gained 2.5% to $93.97 after getting upgraded to Buy from Neutral at Instinet.
BP (BP) has risen 1.9% to $39.85 after getting raised to Buy from Hold at Societe Generale.
Cisco Systems (CSCO) has rallied 2.5% to $40.53 after getting upgraded to Buy from Neutral at Instinet.
Lumber Liquidators Holdings (LL) has fallen 2.6% to $26.16 after getting cut to Neutral from Outperform at Wedbush.
Prudential Financial (PRU) has risen 2.1% to $108.23 after getting upgraded to Outperform from Sector Perform at RBC.
Whiting Petroleum (WLL) has jumped 4.5% to $23.50 after getting raised to Hold from Trim at Tudor Pickering.
World Wrestling Entertainment (WWE) has climbed 3.3% to $36 after getting upgraded to Overweight from Sector Weight at KeyBanc.
If inflation fears helped spur the recent market correction, then Wednesday's inflation reading could help determine whether Friday's rally can be sustained--and that appears to be what everyone on Wall Street is looking ahead to. But what if there's a better way to get a sense of where inflation may be headed?
Rafiki Capital's Steven Englander thinks there is: The small business NFIB survey, which is set to be released on Tuesday. Unlike the CPI reading, the NFIB survey is "up to date in terms of expectations on prices and output and can look past unseasonably bad weather to a better underlying trend." Englander notes that if the survey comes in at 105 or better but selling prices come in below 10, the market should react positively. "This would translate into stable inflationary pressures and confidence on growth," Englander says. "The worst outcome is higher prices above 10 -- you have to go back to 2014 before oil prices started dropping to find as high a level."
Let's hope it doesn't come to that. - Ben Levisohn
The economic engine that is Silicon Valley is pumping jobs, venture capital and commercial construction into the San Francisco Bay Area. At a cost.
Workers continue to struggle to find affordable housing while enduring hellacious traffic and escalating costs in one of the most expensive regions in the world. Those are the ominous, but unsurprising, conclusions of the 2018 Silicon Valley Index released Friday by Joint Venture Silicon Valley's Institute for Regional Studies.
More than 47,000 new jobs were created in the region between the second quarters of 2016 and 2017, reducing the unemployment rate to its lowest since 2000: 2.5%. VC funding, meanwhile, approached $25 billion, and 5.4 million square feet of new office space was built.
"Without question, Silicon Valley is still a hotbed," said Russell Hancock, Chief Executive Officer of Joint Venture. "But our spectacular success has created a harsh environment for families. Housing is out of reach for all but a very few. Those who can't afford it are living challenging lives, or commuting from far-flung places, spending ghastly amounts of time in traffic."
While average annual pay of $131,000 was impressive, it had to be. Employers are forced to pay more to keep up with housing costs. Median home prices, adjusted for inflation, increased 7.4%, or nearly $67,000, last year. Median apartment rents have soared 37% since 2011.
As a native and longtime resident of Silicon Valley, let me put this in day-to-day terms. Telecommuting has become a necessity because highways badly in need of repair are choked with cars most of the work week, even weekends. San Francisco's South of Market skyline, dominated by the Salesforce's (CRM) Salesforce Tower, a new 1,070-foot skyscraper, is a maze of construction zones and cordoned-off sidewalks. The nearby Moscone Center, home to many an Apple (AAPL) or Google (GOOGL) event over the years, is getting a major facelift.
Lest you think reports of local housing costs and income disparity are overblown, look no further than the streets, where the homeless are visible on nearly every block. Construction has forced many of the indigent to shuffle from one makeshift encampment to another. It isn't unusual to see the destitute in the shadow of the very buildings creating hundreds of billions of dollars in market value.
There is tangible proof of trouble in paradise. -Jon Swartz