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Beyond the Numbers

U.S. Stocks May Open Higher On Tech Strength, Coronavirus Vaccine News
9/14/2020 8:57 AM

The major U.S. index futures are currently pointing to a higher opening on Monday following the mixed performance seen last Friday.

Tech stocks may help to lead the way higher after showing a significant move to the downside last week, dragging the tech-heavy Nasdaq down by 4.1 percent.

Apple (AAPL) has been a key driver of the markets in recent sessions and is currently up by 1.8 percent in pre-market trading.

Positive sentiment may also be generated in reaction to news that AstraZeneca (AZN) has resumed a late-stage clinical trial of its coronavirus vaccine.

Stocks showed a lack of direction over the course of the trading day on Friday following the sharp pullback seen on Thursday. The major averages spent the day bouncing back and forth across the unchanged line.

Eventually, the major averages ended the session mixed. While the Nasdaq fell 66.05 points or 0.6 percent to 10,853.55, the S&P 500 inched up 1.78 points or 0.1 percent to 3,340.97 and the Dow climbed 131.06 points or 0.5 percent to 27,665.64.

The major averages all posted steep losses for the holiday-shortened week. The Nasdaq plunged by 4.1 percent, the S&P 500 tumbled by 2.5 percent and the Dow slumped by 1.7 percent.

The choppy trading on Wall Street came as traders seemed reluctant to make significant moves following the substantial volatility seen over the past several sessions.

Stocks saw early strength on Thursday, extending the notable rebound from the three-day sell-off that was seen on Wednesday.

Buying interest waned over the course of the session, however, leading to another tech sector-led drop by the broader markets.

Many of the big-name tech stocks showed only modest moves in today's session, although Apple (AAPL) and Amazon (AMZN) posted notable losses.

Traders may also have been looking ahead to the Federal Reserve's latest monetary policy decision scheduled for next Wednesday.

The Fed is widely expected to leave rates at near-zero levels but could make tweaks to its accompanying statement. The central bank's latest economic projections may also attract some attention.

In U.S. economic news, the Labor Department released a report showing consumer prices increased by slightly more than anticipated in the month of August.

The Labor Department said its consumer price index climbed by 0.4 percent in August after advancing by 0.6 percent for two straight months. Economists had expected consumer prices to rise by 0.3 percent.

Excluding food and energy prices, core consumer prices still rose by 0.4 percent in August following a 0.6 percent increase in July. Core consumer prices were expected to edge up by 0.2 percent.

Despite the lackluster performance by the broader markets, steel stocks showed a significant move to the upside on the day. The NYSE Arca Steel Index surged up by 2 percent but remained stuck in a month-long trading range.

Considerable strength was also visible among housing stocks, as reflected by the 1.7 percent gain posted by the Philadelphia Housing Sector Index.

Chemical, banking and computer hardware stocks also saw notable strength on the day, while gold stocks came under pressure amid a steep drop by the price of the precious metal.

Commodity, Currency Markets

Crude oil futures are slipping $0.33 to $37 a barrel after inching up $0.03 to $37.33 a barrel last Friday. Meanwhile, after tumbling $16.40 to $1,947.90 an ounce in the previous session, gold futures are climbing $11.40 to $1,959.30 an ounce.

On the currency front, the U.S. dollar is trading at 105.94 yen versus the 106.16 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1883 compared to last Friday’s $1.1846.

Asia

Asian stocks closed higher on Monday amid renewed optimism surrounding coronavirus vaccines after drug maker AstraZeneca said that the late-stage clinical trial of its coronavirus vaccine has resumed in the UK. The trial was suspended last week over safety concerns.

Investors now look ahead to the Federal Reserve's latest monetary policy decision scheduled for Wednesday.

Shares in China and Hong Kong rose for the second straight day amid expectations about the economic recovery in China.

China's Shanghai Composite Index advanced 18.47 points, or 0.6 percent to close at 3,278.81, while Hong Kong's Hang Seng Index gained 136.97 points or 0.6 percent to close at 24,640.28.

Japanese shares advanced for the third consecutive day. Investors digested news that Japan's Chief Cabinet Secretary Yoshihide Suga was elected new president of the Liberal Democratic Party, succeeding outgoing Prime Minister Shinzo Abe. Suga is expected to continue with Abe's economic policies.

The benchmark Nikkei 225 Index climbed 152.81 points, or 0.7 percent to close at 23,559.30 and the broader Topix rose 14.46 points, or 0.9 percent, to 1,651.10.

Market heavyweight SoftBank Group gained almost 9 percent after the company said it has reached an agreement to sell UK chip designer Arm Ltd. to U.S. chipmaker Nvidia for up to $40 billion. Meanwhile, Fast Retailing gained 1.1 percent.

Australian stocks rose as investors cheered news about the gradual easing of lockdown restrictions in Melbourne as the number of new coronavirus cases continued to fall in the state of Victoria.

The benchmark S&P/ASX 200 Index added 40.10 points, or 0.7 percent, to close at 5,899.50 and the broader All Ordinaries Index advanced 39.60 points, or 0.7 percent, to 6,078.50.

Among the major miners, Rio Tinto gained 3.9 percent, Fortescue Metals added 2.1 percent and BHP Group rose 1.9 percent.

In the oil sector, Santos climbed 3.2 percent, Oil Search advanced 2.5 percent and Woodside Petroleum added 1.3 percent.

Macquarie Group said it expects a 35 percent decrease in first-half profit and said it was unable to provide "meaningful" guidance for the full year amid market conditions that are likely to remain challenging. The investment bank's shares dropped 4.7 percent.

New Zealand shares closed higher as investors shrugged off the mixed cues from Wall Street. The benchmark NZX 50 Index rose 42.51 points or 0.4 percent to settle at 11,790.54.

Tourism operator Tourism Holdings climbed 12.9 percent after raising its earnings outlook for the full year. Metlifecare Ltd. added 0.2 percent after the company's acquisition by Sweden's Asia Pacific Village was approved by the Overseas Investment Office.

Seoul stocks rose for the third consecutive day, reflecting gains in tech shares and as social distancing measures were eased in South Korea. The benchmark Kospi gained 31.22 points or 1.3 percent to finish at 2,427.91.

Market bellwether Samsung Electronics advanced 2.4 percent and chipmaker SK Hynix rose 2.0 percent.

HDC Hyundai Development Co. edged down 0.2 percent after the company's planned takeover of debt-ridden Asiana Airlines fell through last week amid the coronavirus pandemic. Shares of Asiana Airlines lost 2.5 percent.

Europe

European stocks are giving up gains in early afternoon trades on Monday after having opened on a bright note on renewed optimism about coronavirus vaccines.

The early strength came amid news that AstraZeneca has resumed its Phase III trials of a coronavirus vaccine after having halted trials early last week due to safety concerns following a patient's unexplained illness.

The company announced that it received the nod from the U.K.'s Medicines Health Regulatory Authority to resume clinical trials.

Reports that Pfizer will be ready with its coronavirus vaccine in the U.S. before the end of the year also contributed to the positive start in the European markets.

However, stocks gave up morning gains as investors looked ahead to upcoming monetary policy meeting of the Federal Reserve and crucial economic data.

The Bank of Japan and the Bank of England are also scheduled to announce their monetary policy decisions during the week. Concerns about continued uncertainty about Brexit negotiations and reports showing a surge in new coronavirus cases in several parts of the world also weighed on sentiment.

While the French CAC 40 Index is up by 0.4 percent, the U.K.’s FTSE 100 Index is up by 0.2 percent and the German DAX Index is just above the unchanged line.

In economic news, Eurozone industrial production grew at a slightly faster than expected pace in July, as the economy attempts to sustain its recovery from the slump caused by the coronavirus pandemic.

Industrial production rose 4.1% from June, when it grew 9.5%, which was revised from 9.1% reported initially, preliminary data from Eurostat showed on Monday. Production gained for a third straight month. Economists had forecast a 4% increase.

U.S. Economic Reports

No major U.S. economic data is scheduled to be released today, although reports on industrial production, retail sales, homebuilder confidence and housing starts are likely to attract attention in the comings days.

Stocks In Focus

Shares of Immunomedics (IMMU) are soaring in pre-market trading after the cancer drug maker agreed to be acquired by Gilead Sciences (GILD) is a deal valued at $21 billion.

Oracle (ORCL) is also likely to see initial strength amid reports the business software giant has edged out rival Microsoft (MSFT) in negotiations for the U.S. operations of TikTok.

Shares of Nvidia (NVDA) are also seeing notable pre-market strength after the graphics chip maker announced a $40 billion acquisition of chip designer Arm Holdings.

On the other hand, shares of MGM Resorts (MGM) may move to the downside after Goldman Sachs downgraded its rating on the casino operator to Sell from Hold.
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