Market Soars to Set Records Despite Political Unrest

January 6, 2020 was one to remember, because the market indexes soared though there was political unrest at the US Capitol.   

Market Soars to Set Records Despite Political Unrest 

Wednesday, January 6, 2020 was a day of news. Investors particularly look out for such days as part of online stock trading. Despite the political events that rocked the US Capitol, the Dow set a record high at close on Wednesday, soaring past 31,000 at a rate that was the fastest in 2 years. The stock market, in general, experienced a rally. 

Political Unrest Did Nothing to Hamper Gains

The US Capitol was stormed by supporters of President Trump, with the intention of disrupting the joint Congress session where Joe Biden’s win over Trump was certified. With the runoff elections in Georgia, the Democratic Party won both the US Senate seats, reports MarketWatch quoting the Associated Press. 

Dow Jones closed at 30,829.40, a rise of 1.4% or 437.80 points. It had earlier recorded a 31,022.65 all-time intraday high. The S&P 500 had a gain of 0.6%, 21.28 points, closing at 3,748.14. Nasdaq Composite closed lower by 0.6%, 78.17 points to close at 12,749.79. 

What Caused the Growth?

Robertson Stephens Wealth Management chief economist Jeanette Garretty opines that the key aspect was how Biden’s policies would affect spending. Investors are hopeful of Biden’s strategies leading to more money for individuals. Garretty also points out investors’ assumption that states would get more money for getting the vaccine to the public. With the widespread use of the vaccine, investors believe the economy could reopen again.  

We also saw the 10-year Treasury yield rise 8.6 basis points and finish higher than the 1% level, setting a nine-month record. 

Not Everything Was Rosy 

The Automatic Data Processing report focusing on employment in the private sector revealed that jobs saw the first drop since April. Jobs in the private sector dropped to 123,000.   

The tech stocks index XLK fell too. 

Days like these indicate the market could grow on the basis of hopes of a brighter near future, despite adverse events of the present. A clear understanding of the market situation and getting the prediction right are important to succeed in stock trading. Reputable online stockbrokers provide free stock trading software for investors.  

What to Do If the Stock Market Soars Overnight?

The stock market could rise or fall unexpectedly due to various situations. A sudden market rally could excite you, but it’s important to make the right decisions.      

What to Do If the Stock Market Soars Overnight?

There can be many situations in stock trading when things don’t quite go to plan. While you can expect the unexpected, advanced stock market trading software can guide you through the trading process with greater certainty. 

A Stock Market on an Overnight Rise

It could well be that the stock market skyrockets to record levels unexpectedly. There isn’t room for any knee-jerk reactions. So what should you do when faced with a situation where you suddenly have a market reaching for the stars?

Is It Just a Fad or a Genuine Factor?  

First, take stock of the situation. Analyze why the market is rising: 

  • Is there a solid reason for the market rising? 
  • Or is this the result of overexcitement on the part of investors? 

Sometimes, investors look at the long-term picture, beyond any existing crisis the markets are going through. 

If the rally lasts for just a single day, it’s not worth considering since it could be some emotional reaction from investors that isn’t based on reality. The bottom-line is, you need to ensure the skyrocketing market rally is grounded on reality or a solid case for potential growth in the long term.

These stocks basically represent companies that produce consumer staples, utilities and essential services. These are products that people need even if the economy fails. 

On the other hand, if you select growth stocks when the market is on the rise, you will be paying more than its true value. 

Hartill also suggests gold as a great hedge.      

image of stock market bull

A Day of Gains on the Road to Record Highs for the Market

The major indexes pushed through for further gains, as quarterly earnings boosted investor confidence despite poor jobs data.

A Day of Gains on the Road to Record Highs for the Market

The ebb and flow of the stock market may not always concern long-term investors. But during challenging economic situations where there is a great deal of unpredictability, such as the present situation created by the coronavirus pandemic, you need to study the daily moves of the market, the stocks that matter and the various economic events and reports that could influence the performance of stocks and the movement of the market.

Quarterly Earnings Lift Stocks Despite Gloomy Jobs Report

The jobs report may have been gloomy, but the earnings from various companies have been so encouraging that it is helping push stocks higher. Wednesday, August 5 was when the Dow Jones gained around 353 points as a result of Disney ($DIS) shares soaring. There were also positive reports stating that there could be a new Covid-19 relief package. That also gave the bulls more juice for their optimism. The jobs report from ADP was disappointing though.

The S&P 500 rose by 22 points while the Nasdaq Composite gained 36 points. Reports by late Tuesday revealed that congressional Democratic leaders and the Trump administration had reached an agreement to get working on an aid bill by the week’s end. Even any differences in views would not stand in the way of a new aid deal.  

Earnings Better than Expected for Disney, Despite Loss

Quarterly results were better than expected for Walt Disney Co. despite reporting a loss of $3.5 billion. This was one of the main factors bringing about bullishness in the markets. Disney’s streaming platforms reported 100 million subscribers. This was to be expected, considering the pandemic has forced people to remain indoors. It still is remarkable because Disney faces stiff competition from other providers, particularly Netflix ($NFLX). Disney also announced that it would soon release the live-action version of its “Mulan” for $29.99 on Disney+. This is considered a novel approach to video streaming.

Shifting Between Two Sides Set to Continue

Delos Capital Advisors’ chief investment strategist Andrew Smith believes that the “choppy” action in the market we saw in the past few sessions is an indication that the market is looking to gravitate to the names associated with cyclical economic recovery. He believes that the shift between stocks benefiting from the pandemic, such as Amazon ($AMZN), and those at the opposite end of the spectrum is set to continue. It is actually a struggle between the major economic indicators and the ones that lag.

A Big Merger in the Healthcare Sector

The other big headline was from the healthcare sector. The merger between Teladoc Health ($TDOC) and Livongo Health ($LVGO) made the news on Wednesday. The $18.5 billion deal would create a company dealing with virtual care and a range of healthcare services.It would be interesting to see how the market continues on its recovery path in the days and weeks to come. The course of the pandemic would be something to closely observe. Meanwhile, direct access trading platforms and zero commission trading by experienced online broker-dealers would make it easier to get started in stock trading.

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A Reality Check of the Stock Market — Some Unexpected Results

Stocks that were expected to benefit from a lockdown situation dropped while transportation stocks benefited, indicating economic recovery.

A Reality Check of the Stock Market — Some Unexpected Results

Despite the rise in the number of Covid-19 cases in parts of the United States, the economy seems to be recovering. Stocks that benefited from the lockdown are now experiencing slight dips, while trucking companies are experiencing growth.

Slowing Down of the Market Rally

As of Thursday, July 16, the market rally – witnessed recently following the bearish trends in the wake of Covid-19 – retreated. While the major indexes were close to session highs, the growth names were dragging behind. For Nasdaq futures, it was a modest fall because Netflix ($NFLX) missed its earnings and experienced discouraging subscriber guidance. The S&P 500 and Dow Jones didn’t change much versus fair value.

Video Streaming Companies Disappoint

Netflix is one of those stocks that were expected to really benefit from the pandemic-induced lockdown, with people spending most of their time at home. The reopening economy perhaps sent more Americans outdoors. Still, the content streaming giant’s disappointing earnings weren’t expected. The gains forecasted for the present quarter were also weaker. It experienced strong growth in subscribers though.

Looking at other streaming players, Amazon ($AMZN), Walt Disney ($DIS) and Roku ($ROKU) also fell. Roku, though, is still higher than buy points. It’s important to remember that while Netflix is Amazon’s rival in video streaming, it is also a customer of the cloud computing business of Amazon. As for Walt Disney, Disney+ is one of the few divisions of the company that isn’t shut down.

Tesla Extends Losses

Electric car manufacturer Tesla ($TSLA) had to extend its overnight losses. In late trade, it fell to 1%. The factors for the stock’s losses have not yet been ascertained. Credit Suisse

did double its stock price target for Tesla to 1,400, still under the present price. The bank’s analyst cited momentum rather than fundamentals as the reason for Tesla’s price surge recently.

Tesla shares dipped to 1,794.99 from their intraday peak recorded on Monday, though Tesla’s 10-day moving average hasn’t been affected. The stock closed at 1,500.64, down 2.9%.

Growth of Trucking Stocks Indicate Economic Recovery

However, trucking companies that were among the most adversely affected by the pandemic, had encouraging results, and fueled hopes for a significant economic

image of lurking negativity for stock market

Stock Market Seems Bullish but Negative Influences Lurk

While the Covid-19 pandemic battered the American economy, the major indexes, the stock market, the small-caps and midcaps have posted impressive recoveries.

Stock Market Seems Bullish but Negative Influences Lurk

Studying the mood of the market is essential to make informed trading decisions. While
the coronavirus lockdown of the economy plunged stocks and indexes to all-time lows,
the rally from that point for the major indexes has been impressive. The market is
turning bullish, and if you have any doubts about this, analysts are quick to point out

Why the Situation Really Seems Bullish

Bullish investors are getting a lot of ammunition these days, but it seems the market is
even stronger than what was mentioned by MarketWatch’s Mark Hulbert. There seems
to be truth in that statement concerning 94% of stocks making up the S&P 500 trading
higher than their 50-day moving average. With 20% control of the total market cap of
the S&P 500 index, these American stocks (Microsoft ($MSFT), Apple ($AAPL),
Amazon ($AMZN), Alphabet ($GOOGL) and Facebook ($FB)) in terms of market
capitalization, have been firing on all cylinders. This concentration is the highest since 1980. Moreover, before the burst of the internet bubble, these stocks only made up 18%.

The Impressive Performance of Midcaps and Small-caps

The indication of the extent of stocks’ participation in the bull market comes from how
midcap and small-cap stocks perform. These stocks have indeed overtaken the large
caps and risen from there lows of March 23. The Russell 2000 index, which is made up
of small-cap and midcap stocks, has returned 43.8% from March 23. While the S&P 500
only managed 36.1% in that period.

Moreover, MarketWatch quoted FactSet data stating that 94% of the S&P 500 stocks
trade higher than their moving average of 50 days. Market Extremes’ president Hayes

Martin, reported that 90% of stocks that were listed on the NYSE trade higher than their
respective 20-day exponential moving averages.

Watching out for Divergences

These indications are considered bullish because the major turning points in the market
came with major market divergences. The high of the market in late September 2018
happened when the S&P 500 was heading for a nearly 20% drop. Though the market
was approaching a new high, less than 10% of the S&P 500 stocks traded higher than
their respective 50-day moving averages. These factors caused Martin to predict a
correction of 8% to 13%.

So, Martin reckons bulls should watch out for any divergences materializing pretty soon.
Things could deteriorate if they materialize. For the moment though, and for the near-
term, the prospects are promising and the strength of the market is pretty impressive.

Consumer Sentiment Recovering

One factor that has been depressing is the drop-in consumer sentiment. But even that
experienced a growth in May, according to a University of Michigan study. May saw
consumer sentiment rise from 71.8 in April to 72.3. In February, the consumer
sentiment reading was 101; which was around the time that the Covid-19 pandemic
started spreading.

Worsening US – China Tensions

Meanwhile, the escalating US – China tensions are casting a shadow on the market.
Trump escalated the tensions after he announced his intention to terminate the
country’s relationship with the WHO (World Health Organization), an organization he
accuses of subjecting itself to China. Donald also mentioned increasing his scrutiny on
Chinese companies on the US stock exchanges.

So, there are disturbances that could negatively impact the stock market. But judging by
the impressive rally of the major indexes and the small-cap and midcap stocks, the
situation seems to be bullish for the near future. But it is important to watch out for the
unfolding international political situation; and also, how the economy fares following
the reopening of business operations in the states.

While Covid-19, the major indexes, small-caps and the midcaps continue to affect the
American economy, get started in stock trading. Use zero commission trading offered
by reputable online broker dealers.

image of stock market rally sign

Stock Market Rally

Can You Count on the Stock Market Keeping Its Rally Going? 

Investors always look for the light at the end of the tunnel. It’s no different this time, with the lull the months of March and early April have witnessed as a result of Covid-19 coronavirus. While it is essential to look for the next big investing opportunity, even when there seems to be none around, you also need to be careful you don’t jump the gun. 

Since March, the Market Is on a Roll

After the coronavirus pandemic, the market did experience flashes of growth despite the overall bearish volatility. But since March 23, the S&P 500 has grown around 25%. There has been a continuous debate about how sustainable these gains can be, as a result of the Covid-19 fallout. Even the Nasdaq Composite is in the year-to-date (YTD) lead. Is this an indication that the bad times are past?

Not to Get Drawn Away by the Rebound 

According to prominent strategist Sophie Huynh, as quoted by MarketWatch, investors really shouldn’t be drawing too much from this since the rebound has been mainly surrounding the healthcare, staples and technology sectors. What’s characteristic about these sectors is that they benefit from an environment of low interest rates and kind monetary policies. The current work-from-home situation has also contributed to their growth. These influences aren’t exactly sustainable. 

The upside is limited now, Huynh reckons. She is waiting for a rebound concerning industrial, energy and discretionary stocks. These are stocks that really reflect economic growth recovery more than the other stocks. A total “risk off” is still some way off, she reckons. Currently she doesn’t see any sign of capitulation when compared to 2008 levels, but some of the risk-off has settled in.  

Unemployment Figures Keep Rising

As per reliable data, the total number of individuals who have filed for unemployment in the US is 25 million, when including the 4.4 million who have recently filed for unemployment. The Markit PMI services and manufacturing indexes have dropped, while sales of new homes have also sunk 15%.

Domino’s Pizza, Target and Eli Lilly 

As for the current situation, Domino’s Pizza ($DPZ) missed its same-store sales estimates. The company’s shares slumped 2% in premarket trading on last Thursday after the pizza chain reported first-quarter profit and revenue that rose above expectations but saw reduced U.S same-store sales. However, Target ($TGT) experienced an increase in online sales while pharmaceutical company Eli Lilly ($LLY) also reported earnings growth.  The shares of Eli Lilly rallied 1.5% during premarket trading Thursday – the drug maker had reported better-than-expected first-quarter profit and revenue and also provided an outlook for the full year, which was consistent with the forecasts. They witnessed revenue boost by an estimated $250 million due to increased customer buying patterns related to the COVID–19 pandemic.

Uncertainty for Target?

But there is still uncertainty for Target as it experienced big sales swings. The shift in shopping trends during the pandemic is the primary reason. In fact, the shopping trend shift has been from physical and online stores to only online. That has affected Target’s earnings, making it less profitable. So, the uncertainty continues for the period past the first quarter. 

On April 23, Target released a business update containing valuable information for investors as well as those following the broader retail sector. 

  • Their quarter-to-date comparable sales are up 7% though comps have reduced slightly in stores and digital sales have more than doubled. 
  • For the first few weeks of April, digital sales surged 275% whereas social distancing measures resulted in in-store comparable sales to fall by the mid-teens. 

The company noted that it has increased market share across all of its core merchandise categories. Nevertheless, changes in supply chain to cope with the rise in digital sales and higher wages and bonuses for staff have added up to incremental costs. Investments and expenses and the shift to lower-margin products like food and beverage as well as inventory write-downs for unsold apparel and accessories may lead to the company’s operating margin for the first quarter to fall by more than 5% points from the previous year. This is a threat to its quarterly profit caused by an operating margin of less than 1.4% compared to 6.4% the previous year. However, the company’s CEO reassures that even though the present crisis will put near-term pressure on their profitability, that pressure is far outweighed by doing right by their team and their guests. He said they were confident the actions they were taking at present will drive growth and greater guest affinity over the long term.

The market may give weight to factors such as reduced in-store sales for Target, uncertainty regarding the return of customers in full numbers to their stores, and the shift to lower margin online shopping. This could keep Target’s stock value uncertain, at least for now.

As a stock trader, you can find growth opportunities in the current situation. But it’s still too early to make any investment plan under the notion that we’re out of the woods. We still need more time to find that out for sure. Keep your eyes on the industrial and energy sectors. But with advanced direct access trading platforms offered by online broker dealers, you can easily get started in stock trading.        

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