Market Analysis

Beyond the Numbers

Tech Stocks May Continue To Lead The Way Higher On Wall Street
9/15/2020 8:58 AM

The major U.S. index futures are currently pointing to a higher open on Tuesday, with stocks poised to extend the rally seen in the previous session.

Technology stocks may continue to lead the markets higher, with big-name companies like Apple (AAPL), Tesla (TSLA), and Amazon (AMZN) all seeing notable strength in pre-market trading.

The advance by Amazon comes after the online retail giant announced the launch of “Luxury Stores,” a new shopping experience offering both established and emerging luxury fashion and beauty brands.

The markets may also benefit from upbeat Chinese economic data, as the country's industrial production and retail sales increased in August from a year ago and beat expectations.

Nonetheless, trading activity may be somewhat subdued ahead of the Federal Reserve’s monetary policy announcement on Wednesday.

The Fed is widely expected to leave interest rates unchanged, but traders are likely to pay close attention to any tweaks to the accompanying statement. The central bank’s latest economic projections may also attract attention.

Stocks showed a significant move to the upside during trading on Monday, regaining some ground after moving notably lower last week. The major averages all moved sharply higher, with the tech-heavy Nasdaq posting a standout gain.

The major averages all closed firmly in positive territory. The Dow jumped 327.69 points or 1.2 percent to 27,993.33, the Nasdaq soared 203.11 points or 1.9 percent to 11,056.65 and the S&P 500 surged up 42.57 points or 1.3 percent to 3,383.54.

The rally on Wall Street partly reflected a rebound by technology stocks, which recovered after leading the markets lower last week.

The significant advance by the Nasdaq comes after the tech-heavy index plunged by 4.1 percent last week in its worst week since March.

Apple has been a key driver of the markets in recent sessions and advanced by 3 percent after ending the previous session at its lowest closing level in a month.

Shares of Nvidia (NVDA) also saw considerable strength after the graphics chip maker announced a $40 billion acquisition of chip designer Arm Holdings.

Oracle (ORCL) is also posting a standout gain amid reports the business software giant has edged out rival Microsoft (MSFT) in negotiations for the U.S. operations of TikTok.

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

Gold stocks moved sharply higher on the day, resulting in a 4.3 percent spike by the NYSE Arca Gold Bugs Index. The rally by gold stocks came amid a significant increase by the price of the precious metal.

Substantial strength was also visible among biotechnology stocks, as reflected by the 4 percent gain posted by the NYSE Arca Biotechnology Index.

Shares of Immunomedics (IMMU) soared after the cancer drug maker agreed to be acquired by Gilead Sciences (GILD) is a deal valued at $21 billion.

Airline stocks also showed a strong move to the upside on the day, driving the NYSE Arca Airline Index up by 3.1 percent.

Commercial real estate, semiconductor, natural gas and computer hardware stocks also saw notable strength amid broad based buying interest.

Commodity, Currency Markets

Crude oil futures are climbing $0.48 to $37.74 a barrel after slipping $0.07 to $37.26 a barrel on Monday. Meanwhile, after surging up $15.80 to $1,963.70 an ounce in the previous session, gold futures are jumping $12.60 to $1,976.30 an ounce.

On the currency front, the U.S. dollar is trading at 105.42 yen compared to the 105.73 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1874 compared to yesterday’s $1.1866.


Asian stocks ended mixed on Tuesday despite positive cues from Wall Street and upbeat economic data from China. Investors turned cautious as they shifted focus to upcoming central bank meetings this week for further direction.

The U.S. Federal Reserve's monetary policy statement is due on Wednesday, while the Bank of Japan and the Bank of England are scheduled to announce their respective monetary policy decisions on Thursday.

Shares in China and Hong Kong extended their winning streak to a third day as upbeat economic data added to optimism about the economic recovery in China.

Data released by China showed that the country's industrial production and retail sales increased in August from a year ago and beat expectations, while fixed asset investment declined for the January-to-August period.

China's Shanghai Composite Index rose 16.87 points, or 0.5 percent, to 3,295.68, while Hong Kong's Hang Seng Index added 92.48 points, or 0.4 percent, to finish at 24,732.76.

Japanese shares closed lower on profit taking after three straight days of gains. The benchmark Nikkei 225 Index dropped 104.41 points, or 0.4 percent, to 23,454.89 and the broader Topix declined 10.26 points, or 0.6 percent, to 1,640.84.

Market heavyweight SoftBank Group added 0.3 percent, while Fast Retailing dipped 0.3 percent.

Australian stocks ended little changed, as investors digested minutes of the Reserve Bank of Australia's September 1 monetary policy meeting.

Members of the RBA's monetary policy board acknowledged that the board's unprecedented level of fiscal easing has played a key role in helping to sustain the Australian economy. The members added that they intend to maintain the board's highly accommodative stance as long as necessary.

The benchmark S&P/ASX 200 Index edged down 4.70 points, or 0.1 percent, to 5,894.80, while the broader All Ordinaries Index added 0.80 points to close at 6,079.30.

In the tech space, Afterpay gained 3.4 percent and Appen advanced 1.7 percent, while WiseTech Global dipped 0.3 percent.

In the mining sector, BHP Group rose 0.7 percent, while Rio Tinto declined 1.5 percent and Fortescue Metals ended little changed.

New Zealand shares closed modestly lower, reflecting weakness in blue-chip stocks. The benchmark NZX 50 Index dipped 19.79 points, or 0.2 percent, to settle at 11,770.75.

Among blue chip stocks, Fisher & Paykel Healthcare declined 1.7 percent and Fletcher Building lost 1.1 percent.

Meanwhile, travel booking software company Serko rallied 4.5 percent, and Heartland Group Holdings added 1.7 percent after gaining A$1 billion in Australian reverse mortgage funding.

Seoul stocks rose for the fourth consecutive day to close at a more than two-year high, led by gains in tech shares. The benchmark Kospi added 15.67 points, or 0.7 percent, to close at 2,443.58.

Market bellwether Samsung Electronics added 1 percent and chipmaker SK Hynix rose 2.4 percent, while internet portal giant Naver gained 3 percent.


European stocks are firmly in positive territory Tuesday afternoon after opening on a somewhat cautious note.

Ignoring concerns about rising coronavirus cases for now, investors are picking up stocks thanks to strong industrial production and retail sales data from China. Data showing an improvement in German economic confidence in September is helping as well.

Global cues are positive too, with Asian markets closing mostly higher and U.S. futures moving up.

On the Brexit front, British MPs passed the Internal Market Bill in the House of Commons by 340 to 263 on Monday. The bill will now go to the upper chamber, the House of Lords.

Markets are also looking ahead to monetary policy announcements from central banks. While the Federal Reserve is scheduled to announce its decision on Wednesday, the Bank of England and the Bank of Japan will be coming out with their policy statements on Thursday.

While the U.K.’s FTSE 100 Index has surged up by 1.1 percent, the French CAC 40 Index is up by 0.5 percent and the German DAX Index is up by 0.3 percent.

In the U.K. market, Ocado Group shares soared nearly 10%, lifted by strong quarterly sales. Meggitt, Royal Mail, British Land Company, Glencore, Rio Tinto, AstraZeneca, Intercontinental and BAE Systems were up 2.5 to 5%.

On the other hand, Polymetal International, Carnival, Kingfisher, Antofagasta, IAG, Rolls-Royce Holdings, Standard Chartered and TUI were down sharply.

In Germany, Bayer was moving up more than 3%. HeidelbergCement rose nearly 2.5%, while Covestro gained 1.7%. BMW, Henkel and Fresenius Medicare were also up with notable gains, while Wirecard and Lufthansa were lower by 3.2% and 1.1%, respectively.

In the French market, Peugeot gained about 4.5%. Kering, Hermes International and Sanofi were up 1.8 to 2%, and LVMH advanced 1.2%. Carrefour and Airbus were down nearly 2% and 1.8%, respectively.

In economic news, German economic confidence strengthened unexpectedly in September, survey data from the ZEW - Leibniz Centre for European Economic Research showed. The economic confidence index rose to 77.4 in September from 71.5 in the previous month. The reading was forecast to fall to 69.8.

The current conditions index advanced to -66.2 from -81.3 a month ago. The expected level was -72.0.

Sentiment concerning the economic development of the Eurozone increased by 9.9 points to 73.9 points in September. Likewise, the indicator for the current economic situation climbed 8.9 points to minus 80.9 points.

Data from the Office for National Statistics said U.K. payroll employment declined and the unemployment rate advanced in three months to July. According to the data, the jobless rate was 4.1% in the three months to July, which was 0.2 percentage point higher than the previous quarter. The rate came in line with expectations.

Further, average earnings including bonus decreased 1% in May to July, while excluding bonus, regular pay gained 0.2%.

Data also showed that claimant count rose by 73,700 in August from the previous month to 2.7 million. The expected rise was 100,000.

Meanwhile, a report from the Federal Statistical Office showed Switzerland's producer and import prices declined in August, falling 3.5% year-on-year.

The producer price index fell 2.2% annually in August and import prices decreased 6.1%. On a monthly basis, producer and import prices fell 0.4% in August.

U.S. Economic Reports

Import prices in the U.S. saw another notable increase in the month of August, according to a report released by the Labor Department on Tuesday.

The Labor Department said import prices climbed by 0.9 percent in August after jumping by an upwardly revised 1.2 percent in July.

Economists had expected import prices to rise by 0.5 percent compared to the 0.7 percent increase originally reported for the previous month.

The report said export prices also rose by 0.5 percent in August following an upwardly revised 0.9 percent advance in July.

Export prices were expected to edge up by 0.4 percent compared to the 0.8 percent growth originally reported for the previous month.

A separate report released by the Federal Reserve Bank of New York showed a significant acceleration in the pace of growth in regional manufacturing activity in the month of September.

The New York Fed said its general business conditions index jumped to 17.0 in September from 3.7 in August, with a positive reading indicating growth in regional manufacturing activity. Economists had expected the index to rise to 6.0.

Looking ahead, the New York Fed said firms remained optimistic that conditions would improve over the next six months.

At 9:15 am ET, the Federal Reserve is scheduled to release its report on industrial production in the month of August. Industrial production is expected to increase by 1.0 percent in August after jumping by 3.0 percent in July.

The Treasury Department is due to announce the results of its auction of $22 billion worth of twenty-year bonds at 1 pm ET.

Stocks In Focus

Shares of NextEra Energy (NEE) are moving sharply higher in pre-market trading after the clean energy company raised its financial expectations for 2021 and 2022 and extended its longer-term growth outlook to 2023.

Graphics chip maker Nvidia (NVDA) may extend the strong upward move seen on Monday after Needham raised its price target for the company’s stock to a Street high of $700 per share from $600 per share.

Meanwhile, share of Lennar (LEN) are likely to see initial weakness after the homebuilder reported better than expected fiscal third quarter results but said it expects a drop in the average sales price of homes in the fiscal fourth quarter.
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