Tech Boosts Markets to Record Territory
NASDAQ Composite +0.49% Dow +0.09% S&P 500 +0.22% Russell 2000 +0.19%
NASDAQ Advancers: 1298 Decliners: 1205
WTI Crude -2.65%, Gold -0.2%, 10yr Treasury 1.79%, VIX 12.82 -0.03
Market Volume (vs Yesterday): -6.65%
Market Movers
- MBA Mortgage Applications Index Fell 1.2% last week
- December Existing Home Sales +5435K vs +5350K in November
- December Pending Home Sales +0.5% vs +1.1% in November
- Reaction to earnings: COF +4%, IBM +3.5%, ABT +2.5%, NTRS -6%, ZION -4%, NFLX -2%, JNJ -1%
- Midday note format will change on Friday
Chris’ Commentary
U.S. stocks closed in the red Tuesday, despite the Nasdaq Composite and Nasdaq 100 making new intra-day highs. Concerns about the coronavirus outbreak was one of the main drivers of yesterday’s sell-off. Cyclical sectors were the worst performers including Energy, Industrials and Materials. Tech was one of the bright spots yesterday, making a new intra-day high. Tech is up over 6.7% in January after rising over 48% last year.
Today, markets are in the green to start the day as fears of the coronavirus becoming a global epidemic declines. Tech continues to help drive the markets higher. IBM reported Q4’19 earnings last night that were better than expected and also boosted their FY20 EPS guidance. Bloomberg also reported that Apple (AAPL) asked Taiwan Semi (TSM) to increase its supply of chips to meet strong demand for the iPhone. All three stocks are helping give the Tech sector and thus the broader market a boost to record territory.
Currently, eight of the 11 of the S&P 500 sectors are trading higher with Tech, Consumer Discretionary and Utilities the best performing sectors. Energy, Industrials and Materials continue to lag the market. Crude oil and gold again trade lower. The dollar is higher while the yield on the 10-yr slips to 1.78%.
President Trump spoke with CNBC this morning, returning to one of his favorite whipping posts, the FED. The president said U.S. economic growth would be closer to +4% if it weren’t for the lingering effect of Federal Reserve rate hikes. Mr. Trump also stated that he believes the stock market would be even higher than it is currently if the FED hadn’t raised interest rates at the end of 2018 before reversing course saying, “I could see 5,000 to 10,000 points more on the Dow. But that was a killer when they (FED) raised the rate. It was just a big mistake.”
Sector Recap
Brian’s Technical Take
As equities melt higher with the S&P 500 up 14 of the prior 16 weeks, it is worth noting the resiliency of the bond market. The long UST 10YR yield is currently a few bps below 1.76% and is on pace to close at four week lows. Over the last two weeks, it has struggled to hold above its 50-day moving average which had been a support line throughout the Q4 uptrend. Strength in safe haven treasuries is alone not enough to dial back risk exposure, but combined with the extreme bullish sentiment readings (i.e. put/call measures) and long streak of continuous stock price gains, it may suggest some of the smart money is already protecting their gains and pairing risk.
Nasdaq's Market Intelligence Desk (MID) Team includes:
Charles Brown is Associate Vice President on The Market Intelligence Desk with over 20 years of equity capital markets experience. Charlie has extensive knowledge of equity trading on both floor and screen-based marketplaces. Charlie assists with the management of The Market Intelligence Desk and works with Nasdaq listed companies providing them with insightful objective trading analysis.
Steven Brown is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over twenty years of experience in equities. With a focus on client retention he currently covers the Financial, Energy and Media sectors.
Christopher Dearborn is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq. Chris has over two decades of equity market experience including floor and screen-based trading, corporate access, IPOs and asset allocation. Chris is responsible for providing timely, accurate and objective market and trading-related information to Nasdaq-listed companies.
Brian Joyce, CMT is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq. Before joining Nasdaq, Brian spent 16 years as an institutional trader executing equity and options orders for both the buy side and sell side. He also provided trading ideas and wrote technical analysis commentary for an institutional research offering. Brian focuses on helping Nasdaq’s Financial, Healthcare and Transportation companies, among others, understand the trading in their stock. Brian is a Chartered Market Technician (CMT).
Michael Sokoll, CFA is Associate Vice President on the Market Intelligence Desk (MID) at Nasdaq with over 25 years of equity market experience. In this role, he manages a team of professionals responsible for providing NASDAQ-listed companies with real-time trading analysis and objective market information.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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