February 27, 2018.
Stocks rose to a 3-week high on Monday, and in doing so, succeeded in recovering most of the losses it suffered in the selloff earlier this month. The decline in bond yields assuaged investor concerns about a rate hike, re-focusing attention on economic growth. The figures in financial reports continue to boast strength and investors believe in the global economy.
All 3 major indexes rose over 1% yesterday. The S&P 500 is now trading just 3.2% from the all-time high it achieved on January 26th. The VIX index has fallen slightly – to the 15.8 point level.
The next level that stands to be tested on the S&P 500 is the resistance boundary spanning 2,790 and 2,810 points. This is a resistance level that is likely to cause a pause to some degree. It’s very important to see how the market digests prices at these level in order to understand whether it can pave the way to new 2018 highs. The rally needs to expand and include additional sectors in order to reach new highs. Most of the latest bounce relied on the large tech stocks and banking stocks; energy, biotech and small-cap stocks have lagged behind.
Daily Summary: The Dow Jones rose 1.58%, the S&P 500 tacking on 1.18% and the NASDAQ advancing 1.15%.
One of the stocks that stood out yesterday was Qualcomm (QCOM), which soared 5.8% after the chipmaker, Broadcom (AVGO) prompted the company to enter into negotiations with it after having offered it $117 billion in a buyout bid earlier this month.
Berkshire Hathaway (BRK.A) surged 4% after Warren Buffett stated that his investment conglomerate which now has a $116 billion pile of cash, would be more inclined to repurchase its stock rather than fork out dividends.
On the S&P 500, 31 stocks rose to new 52-week highs, just one dipping to a new yearly low; on the NASDAQ, 105 stocks recorded new 52-week highs, 36 falling to new yearly lows.
The trading volume on U.S. exchanges came to 6.3 billion shares, significantly beneath the 8.36 billion average over the last 20 trading days.
Tuesday: Investors today will carefully follow the speech of Jerome Powell, the new Fed Chair, who will be facing a battery of questions in his first big appearance before Congress after having replaced Janet Yellen at the beginning of the month. What Powell says in the Fed Chairman’s semiannual economic address is likely to determine whether stocks will continue to rally and break up new highs. Powell is not expected to create any market shocks, but traders will parse out how he responds to questions from members of Congress and how determined he is to hike rates. His speech today will begin at 10:00 N.Y. time. Powell is expected to speak, again, to the Senate on Thursday.
Powell is not an economist and his reputation is as one who simply put, speaks to the point about Fed policy. He is likely to be an excellent rhetorician who can calm markets, and furthermore, give investors a clear understanding as to the direction he is steering the Fed in.
Investors’ concerns, though, are about what Powell has to say about inflation. In the event the Fed expects an uptick in inflation, it’s certainly possible that Powell will see in that a reason to hike rates more than the current market consensus of three 2018 hikes. The next Fed meeting will be held on March 21st, when the Fed is expected to hike rates for the first time this year.
Stocks are expected to be “well-behaved,” as long as bond yields don’t suddenly soar, a development likely to play out if Powell sounds too determined to hike rates.
After Powell’s speech this morning, two former Fed Chairpersons are expected to be in the spotlight. Former Fed Chair, Ben Bernanke will be interviewing the most recent Fed Chair, Janet Yellen, in an event taking place at 14:00.
Tuesday’s economic reports will include durable goods orders at 8:30. The Case-Shiller Home Price Index will be released at 9:00, the Consumer Confidence Index coming out at 10:00.
The key earnings reports before opening include: M, TOL, CAMP, and SEA. After closing, be primed for the numbers of ETSY, SQ, ESRX, WDAY, HTZ, and WTW.
Tuesday’s Hot Stocks: M, TOL, CAMP, SEAS. FIT, NTRI, AKRX, PANW, THC
Have a great trading day!
|Monday||10:00||New Home Sales||600 K||Medium|
|Tuesday||8:30||Durable Goods Orders||-2.0 %||Medium|
|Tuesday||8:30||Wholesale Inventories||0.3 %||Medium|
|Tuesday||9:00||S&P Corelogic Case-Shiller HPI||0.7 %||Medium|
|Tuesday||9:00||FHFA House Price Index||0.5 %||Medium|
|Tuesday||10:00||Jerome Powell Speaks||–||High|
|Wednesday||10:00||Pending Home Sales Index||0.5 %||Medium|
|Wednesday||10:30||Oil Inventories||-1.6 M barrels||Low|
|Thursday||8:30||Jobless Claims||230 K||Medium|
|Thursday||8:30||Personal Income and Outlays||0.3 %||Medium|
|Thursday||9:45||PMI Manufacturing Index||55.7||Medium|
|Thursday||10:00||ISM Mfg Index||58.6||High|
|Thursday||10:00||Construction Spending||0.3 %||Medium|
|Thursday||10:00||Jerome Powell Speaks||–||High|
|Thursday||11:00||William Dudley Speaks||–||Medium|
|PANW||Palo Alto Networks, Inc.||PM||Monday|
|SBAC||SBA Communications Corporation||PM||Monday|
|BRK-A||Berkshire Hathaway Inc.||PM||Monday|
|CLVS||Clovis Oncology, Inc.||PM||Monday|
|IONS||Ionis Pharmaceuticals, Inc.||AM||Tuesday|
|EV||Eaton Vance Corp.||AM||Tuesday|
|DISCA||Discovery Communications, Inc.||AM||Tuesday|
|LAMR||Lamar Advertising Company (REIT)||AM||Tuesday|
|TOL||Toll Brothers, Inc.||AM||Tuesday|
|SERV||ServiceMaster Global Holdings, Inc.||AM||Tuesday|
|AMT||American Tower Corporation (REIT)||AM||Tuesday|
|PRGO||Perrigo Company plc||AM||Tuesday|
|EOG||EOG Resources, Inc.||PM||Tuesday|
|ESRX||Express Scripts Holding Company||PM||Tuesday|
|PCLN||Booking Holdings Inc.||PM||Tuesday|
|BUFF||Blue Buffalo Pet Products, Inc.||PM||Tuesday|
|JAZZ||Jazz Pharmaceuticals Public Limited Company||PM||Tuesday|
|VEEV||Veeva Systems Inc.||PM||Tuesday|
|ACAD||ACADIA Pharmaceuticals Inc.||PM||Tuesday|
|EVHC||Envision Healthcare Corporation||PM||Tuesday|
|WTW||Weight Watchers International, Inc.||PM||Tuesday|
|RRC||Range Resources Corporation||PM||Tuesday|
|HZNP||Horizon Pharma Public Limited Company||AM||Wednesday|
|DY||Dycom Industries, Inc.||AM||Wednesday|
|VRX||Valeant Pharmaceuticals International, Inc.||AM||Wednesday|
|LOW||Lowe’s Companies, Inc.||AM||Wednesday|
|TJX||The TJX Companies, Inc.||AM||Wednesday|
|ADI||Analog Devices, Inc.||AM||Wednesday|
|MNST||Monster Beverage Corporation||PM||Wednesday|
|LB||L Brands, Inc.||PM||Wednesday|
|BLUE||bluebird bio, Inc.||PM||Wednesday|
|BBY||Best Buy Co., Inc.||AM||Thursday|
|GPS||The Gap, Inc.||PM||Thursday|
|SRPT||Sarepta Therapeutics, Inc.||PM||Thursday|
|PSTG||Pure Storage, Inc.||PM||Thursday|
|FL||Foot Locker, Inc.||AM||Friday|
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