Advertisement
Markets

Stock Market Today: Tech Wakes From Its Daze in Wide Wednesday Rally

Apple (AAPL) and Microsoft (MSFT) spearheaded a broader rally Wednesday that brought the S&P 500 within mere points of a new bull market.

Big Tech came out of its recent slump Wednesday as Wall Street ignored stasis on the stimulus front and bid the major indices higher, putting the S&P 500 within reaching distance of a new bull market.

House Speaker Nancy Pelosi said today that Democrats and the White House were "miles apart" on a new coronavirus rescue package, making it likely that jobless-benefit top-ups will wait at least a few weeks more.

However, the Bureau of Labor Statistics reported that the Consumer Price Index jumped 0.6% for July – its largest single-month advance since January 1991 and another sign that the U.S. economy is recovering.

Advertisement - Article continues below

"Core CPI surprised to the upside, driving a solid gain in headline inflation as well," writes Rick Rieder, BlackRock's Chief Investment Officer of Global Fixed Income. "The strength in the July report was driven by components impacted by Covid unwinding some of their previous large declines and bouncing back from depressed levels.

"We saw solid gains in transportation services components, such as airfares, motor vehicle insurance and rental cars, which reflect that bounce back."

Apple (AAPL, +3.3%) and Microsoft (MSFT, +2.9%) were among the stocks carrying the large-cap indices higher, but there were several other big moves of note:

Advertisement
Advertisement - Article continues below
  • Tesla (TSLA, +13.1%) gapped higher after Tuesday's announcement of a 5-for-1 stock split.
  • FedEx (FDX, +2.7%) gained after a UBS analyst reiterated his Buy rating and upgraded his price target from $181 to $218 on expectations for stronger margins
  • Chili's parent Brinker International (EAT, +14.6%) was jolted to life after reporting a smaller quarterly loss than expected.
Advertisement - Article continues below

The Dow Jones Industrial Average climbed 1.1% to 27,976, the Nasdaq Composite popped 2.1% to 11,012, and the small-cap Russell 2000 improved a more modest 0.5% to 1,583. Meanwhile, the S&P 500 finished 1.4% higher to 3,380, putting it a mere 6 points below its Feb. 19 all-time high. Exceeding that level would confirm a new bull market.

More Room to Run? It Depends.

So, what must happen to keep this rally intact? In truth, the answer likely revolves around what part of the market you're talking about.

For instance, signals of a weakening recovery could lift consumer staples and other recessionary plays.

And "elevated U.S. economic uncertainties also could put downward pressure on the dollar," writes Chao Ma, Global Portfolio and Investment Strategist at Wells Fargo Investment Institute. As we've previously noted, a weak dollar could benefit these 19 American multinationals.

Conversely, continued signs of health from the economy, as well as positive COVID vaccine/treatment developments, would mean good things for cyclicals like financial stocks and industrial firms, as we've seen in recent sessions.

Advertisement - Article continues below

And keep a real close eye on housing stocks, which have put up ample gains in 2020 on downright stubborn strength in the housing market. The industry is notoriously susceptible to a weak economy, but there's reason to believe the market can remain elevated.

"The extension of the Federal Reserve’s emergency lending facilities through the end of the year, announced last week, should help the economy at the margin," writes Jennifer Lacombe, Associate Editor at BCA Research. "As long as Congress extends fiscal aid, policy makers’ efforts will help sustain the demand for homes and fears of a wave of mortgage defaults and distressed home sales one would expect in a severe recession will not materialize.

"If demand remains well supported while the supply of new and existing homes remains muted, home prices do not have much room to decline."

If that does come to pass, these five housing market stocks could add to their already impressive performances this year.

Kyle Woodley was long MSFT and TSLA as of this writing.
Advertisement
Advertisement

Most Popular

18 Things You Can't Return to Amazon
Smart Buying

18 Things You Can't Return to Amazon

Before tossing these items into your virtual shopping cart, be sure to read Amazon's return policy first.
September 17, 2020
Insurance for Long-Term Care at Home
retirement

Insurance for Long-Term Care at Home

In the wake of COVID-wracked nursing homes, increasingly more people are looking at options to age in place with long-term care insurance.
September 17, 2020
Election 2020: Joe Biden's Tax Plans
taxes

Election 2020: Joe Biden's Tax Plans

With the economy in trouble, tax policy takes on added importance in the 2020 presidential election. So, let's take a look at what Joe Biden has said …
September 18, 2020

Recommended

Stock Market Today 9/18/20: Wild Friday Features More Woes for Tech
Markets

Stock Market Today 9/18/20: Wild Friday Features More Woes for Tech

Big Tech stocks Apple (AAPL), Amazon.com (AMZN) and Microsoft (MSFT) all declined on a wobbly 'quadruple witching' Friday.
September 18, 2020
Kiplinger's Weekly Earnings Calendar
stocks

Kiplinger's Weekly Earnings Calendar

Check out our earnings calendar for the upcoming week, as well as our previews of the more noteworthy reports.
September 18, 2020
Stock Market Today 9/17/20: Stocks Can't Shake Fed Hangover
Markets

Stock Market Today 9/17/20: Stocks Can't Shake Fed Hangover

Evidence of a slowing economic recuperation reinforced some of the Fed's worries, leading to a broad drawdown in Thursday's trading.
September 17, 2020
Stock Market Today 9/16/20: Fed Frazzles Stocks, But Buffett Scores Big
Markets

Stock Market Today 9/16/20: Fed Frazzles Stocks, But Buffett Scores Big

The Federal Reserve spooked stocks Wednesday by painting a gloomy picture of the economy, but the sun shined on a norm-breaking Buffett investment.
September 16, 2020