The Nasdaq-100 has struggled for the last month, but Apple and Amazon.com could draw interest back to major tech stocks this week.
The Nasdaq-100 rose 4.2 percent between Friday, October 2, and Friday, October 9. It was the index’s third straight positive week, and its best performance since early July. Its gain was also twice the advance of the broader S&P 500 index.
The Russell 2000 rallied even harder, popping 6.4 percent as investors hoped for a stimulus package to support the economy. Industrials, energy and materials also surged.
But will the non-tech trend continue? Tomorrow could be a big test with Apple (AAPL) expected to unveil its new 5G iPhones. Amazon.com (AMZN) also holds Prime Day. Attention then turns to third-quarter earnings as Wall Street prepares for a flood of results over the next 5-6 weeks. Almost every report so far has surprised to the upside, according to Factset and Refinitiv.
|Biggest Gainers in S&P 500 Last Week|
|Martin Marietta Materials (MLM)||+14%|
|SVB Financial (SIVB)||+12%|
There are also signs of sentiment brightening after a long period of gloom. The American Association of Individual Investors’ poll last week showed its highest bullish reading (34.7 percent) since mid-April. The National Association of Active Investment Managers swung in the same direction.
Solar Keeps Shining
One of the most interesting things about last week was the continued strength in smaller companies — especially newer corners of technology. Solar-energy stocks led the market for the second straight week with another double-digit surge. Cloud-computing and data-analytics stocks like Fastly (FSLY), Alteryx (AYX) and Twilio (TWLO) also spiked.
Biotechnology rallied 9 percent gain. Semiconductor stocks surged 8 percent, partially fueled by a report that Advanced Micro Devices (AMD) may bid for Xilinx (XLNX). “Weak dollar” stocks like gold miners and Chinese technology stocks outperformed as well.
Overall, it was a very bullish week for stocks. Every major sector rose at least 1 percent, while just 46 of the S&P 500’s members declined.
There wasn’t much economic data. Most of the headlines supported the idea that the economy still struggling to rebound from the coronavirus recession.
S&P 500, daily chart, with 50-day moving average and key support line.
IPhones and Earnings
This week will be much more eventful. It marks the beginning of a busy period with lots of earnings, major elections and the start of holiday shopping.
Today is quiet but AAPL’s event starts at 1 pm ET tomorrow. It’s expected to bring the first major iPhone redesign since 2018 and new handsets with 5G technology. Analysts see millions of users upgrading their devices in response.
That, in turn, could shift the narrative on AAPL. For the last year, investors have focused on its newer services business. Now the story could turn back to hardware sales — potentially driving business at suppliers like Skyworks Solutions (SWKS) and Qualcomm (QCOM). It could be a big deal for technology and the Nasdaq.
|Biggest Decliners in S&P 500 Last Week|
|Domino’s Pizza (DPZ)||-9.9%|
|Dish Network (DISH)||-4.3%|
Events earlier on Tuesday include consumer prices, plus results from JPMorgan Chase (JPM), Citigroup (C), Johnson & Johnson (JNJ) and Delta Air Lines (DAL).
Bank of America (BAC), UnitedHealth (UNH), U.S. Bancorp (USB) and Wells Fargo (WFC) follow Wednesday morning. Producer prices are also due, along with United Airlines (UAL) after the closing bell.
Morgan Stanley (MS), Walgreen Boots (WBA) and initial jobless claims are on Thursday. Manufacturing data from the New York and Philadelphia branches of the Federal Reserve also come out, plus oil inventories.
Friday has a double-dose of consumer data: monthly retail sales for September and consumer sentiment for October. Both could be viewed as indicators of the upcoming holiday-shopping season.
This article was written by David Russell, TradeStation Securities, Inc., part of the Monex Group Inc, published on 12/10/2020.
David Russell is VP of Market Intelligence at TradeStation Group. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.