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Home / Business / Down 250 points at midday, Nasdaq is under pressure as investors expand their rotation into cyclical stocks

Down 250 points at midday, Nasdaq is under pressure as investors expand their rotation into cyclical stocks



Stock market benchmarks were mostly higher on Monday as investors watched for signs that a long-awaited Wall Street turn to bull-sensitive cyclical stocks. More growth can be generated, at the expense of their high growth partners.

Investors also focused on the signing of executive orders over the weekend by President Donald Trump aimed at expanding some of the coronavirus relief factors. However, the measures may face regulatory hurdles and questions about their effectiveness, while US-China tensions could continue to affect markets, analysts said.

What are the key benchmarks doing?

Dow Jones DJIA industrial average,
+ 0.99%
trading 253 points, or 0.9%, to 27,687. S&P 500 SPX,
+ 0.17%
The country went around 3,360, after trading about 1% from the February 19 closing record of 3,386.15. Nasdaq Composite COMP,
-0.40%
down 91 points, or 0.8%, to 10,920.

Stocks recorded gains last week, with the Dow rising 3.8% to 27,433.48 and the S&P 500 rising 2.5% weekly to 3,351.28, Nasdaq rising 2.5% to 11,010.98 . The Nasdaq fell on Friday after hitting a streak of closing records that propelled it above the 11,000 mark. The Dow closed 7.2% lower than the end of the record set on Feb. 12.

Read: The stock market bull, who called the March rally, is now saying the S&P 500 is overvalued by 5% to 10%.

What leads the market?

Monday’s trading session showed signs of a shift from high-growth stocks in the tech sector to more economically sensitive cyclical firms, a trend that began last week.

“As the COVID-19 spike in the summer decreases, investors tend to see the economic recovery as real. That means the recent move towards cyclical stocks is real and sustainable for the first time since the pandemic started, ”said James Meyer, chief investment officer at Tower Bridge Advisors.

However, investors say it is still unclear how far any primitive protests in cyclical companies can run, with the coronavirus still a major hurdle weighing on the menstrual recovery. US economy and the feasibility of new financial stimulus measures announced by the Trump administration.

Read: A ‘sharper cycle rally’ could lie in the cards, the analyst said

After the White House and Democratic lawmakers last week failed to reach an agreement on a new round of coronavirus aid, Trump on Saturday signed executive orders aimed at halting the collection of salary taxes, providing benefits. help with rent, support to pay student loans. and partial extension of additional unemployment benefits that expired at the end of last month. The measures almost inevitably face legal challenges and logistical hurdles.

Specifically, an order allows states to pay $ 400 a week in additional unemployment benefits, with 75% of all federal funding coming from the federal government, compared with $ 600 in additional benefits. expired at the end of July, has been credited to help borrowers and lenders, thus, avoiding the wave of consumer defaults.

See:Countries will collect billions of dollars under Trump’s unemployment benefit plan

“Obviously this is less stimulus than it used to be, which probably wasn’t enough to stop the economy from slowing down – despite the good news about US jobs on Thursday and Friday – and yes the best possibility. Mathematically, however, is better than nothing, ”Michael Every, global strategist at Rabobank, said in a note.

Meanwhile, US-China tensions have risen, with Beijing on Monday announcing unspecified sanctions against 11 US politicians and heads of organizations promoting democracy, including The additional measures targeted Senators Marco Rubio and Ted Cruz, who have been banned from travel.

In addition, Chinese jet fighters quickly crossed the middle line of the Taiwan Strait on Monday, reports said, as US Secretary of Health and Human Services Alex Azar visit the island. Azar will be the most senior US official to visit Taiwan in about four decades.

Income season also continued to decline this week. On Friday, companies that represent 89% of the S&P 500’s market cap reported second-quarter results, according to Jonathan Golub, chief US equity strategist at Credit Suisse Securities. In total, 81% of companies reported beating forecasts.

View income:Hot rookies and less popular companies jumped into this week’s slowing income training

Total earnings exceeded estimates by 23.2%, with 81% of companies reportedly beating down forecast for a pandemic. Golub also noted that while second quarter earnings per share surpassed the forecast by more than 23%, the third quarter consensus estimate was raised only 3% and the fourth quarter estimate remained unchanged.

In economic data, the number of jobs in the US rose 518,000 to 5.8 million, up for the second month in a row. But the number of jobs available was about 7 million before the pandemic.

Which companies to focus on?
  • Share of social media platform Twitter Inc.
    TWTR,
    + 2.07%
    1.9% increase after The Wall Street Journal reported it held preliminary talks on a potential association with TikTok, a video-sharing app that the Trump administration has declared a security threat country owned by China. Microsoft Corporation
    MSFT,
    -2.11%,
    however, is still considered to be a frontrunner in any deal with TikTok after weeks of negotiations between it and TikTok’s owner, ByteDance Ltd. based in Beijing, the report said.

  • Coupon of Berkshire Hathaway Inc.
    BRK.A,
    + 0.52%
    BRK.B,
    + 0.52%
    up 0.5% after the conglomerate run by billionaire investor Warren Buffett on Saturday reported a 87% spike in second-quarter profits thanks to increased portfolio value, though it also recorded a decline around 10 billion dollars on the value of its aircraft parts manufacturing business.

  • Marriott International Inc.
    MAR,
    + 3.34%
    shares rose 4.1% even though the hotel operator reported a larger-than-expected second-quarter loss and revenue below Wall Street estimates.

  • Coupon of Royal Caribbean Travel Company Limited
    RCL,
    + 10.03%
    up 11% on Monday even after the travel operator announced a larger-than-expected second-quarter loss. However, sales fell less than expected due to the delays in tourism.

  • Eastman Kodak Co. KODK,
    -27.48%
    Coupon of
    plummeted almost 26% after it was reported that the US International Development Finance Corporation was withholding a planned $ 765 million loan after the deal was closely watched.

How do other markets trade?

10-year Treasury Bond yield TMUBMUSD10Y,
0.572%
increased 1.4 bps to 0.574%. Bond prices move against interest rates.

The greenback was up 0.1%, with the ICE DXY US Dollar Index,
+ 0.11%,
a measure of copper against a half-dozen currencies, at 93.52 early Monday.

In Europe, the Stoxx Europe 600 SXXP,
+ 0.30%
finished 0.3% higher, after rising 2% last week and FTSE 100 UKX,
+ 0.75%
also increased by 0.3%, following a 2.3% weekly gain.

In Asia, China’s CSI 300 index 000300,
+ 0.36%
ended trading up 0.4%, while the Hong Kong’s Hang Seng Index,
-0.62%
closed down 0.6%.

American standard oil CL.1,
+ 2.11%
trading 91 cents or 2.2% higher, around $ 42.13 a barrel on the New York Mercantile Exchange. Gold futures for December GCZ20,
+ 0.62%
added $ 11.80, or 0.6%, to trade at $ 2,039.60 / ounce.


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