Markets

Stock Market Today: Tech Puts In Another Day of Heavy Lifting

A 26% gain Wednesday from soon-to-be Dow component Salesforce.com (CRM) helped tech lead yet another market rally.

The looming landfall of Hurricane Laura, a Category 4 storm expected to hit Louisiana and Texas, weighed on various parts of the market Wednesday, including energy, which was the day's worst sector with a 2.1% loss.

But – yet again – enthusiasm in large-cap technology and tech-esque stocks continued to bail out the larger indices.

Customer relationship management firm Salesforce.com (CRM, +26.0%), which will be added to the Dow Jones Industrial Average next week, spiked after it announced it had more than doubled its quarterly adjusted profits and raised its annual revenue outlook.

"As the data points around accelerating digital transformation continue to pile up, there are few better positioned to help with customer facing efforts than Salesforce," writes Canaccord Genuity analyst David Hynes Jr., (Buy), who raised his price target from $200 per share to $270. "We take comfort in the business' diversity – in terms of both customers (across vertical and size) and product (sales, marketing, service, commerce, analytics, etc.) – and from an investment standpoint, even at all-time highs, we find CRM's valuation comparatively attractive in an expensive space.

Netflix (NFLX, +11.6%), Facebook (FB, +8.2%) and Tesla (TSLA, +6.4%) were among other technology-facing companies exploding higher on Wednesday.

Dick's Sporting Goods (DKS, +15.7%) was one of the strongest non-tech stocks of the day; shares jumped on news of a 194% surge in online sales last quarter, as well as profits of $3.20 per share that eclipsed expectations of $1.30 per share.

"Similar to (Best Buy) in computers & electronics, DKS is the ‘last man standing’ in sporting goods following the bankruptcies of Sports Authority, Modell's, etc.," writes CFRA analyst Camilla Yanushevsky, who reiterated her Buy rating and raised her price target on shares from $45 to $60. "(Dick's) robust omni solutions (curbside; most orders two business days) with further enhancements are set to rival AMZN. Also, DKS has margin-enhancing traffic drivers like experiences, private labels, and removal of hunt."

The Nasdaq Composite led the major indices with a 1.7% leap to a record 11,665, while the S&P 500 (+1.0% to 3,478) also set new highs. The Dow closed up 0.3% to 28,332. And the small-cap Russell 2000 declined 0.7% to 1,560.

Tech Stocks: Too Hot to Handle?

Technology companies have been the month's top performers, with 10.5% gains in August, and they're easily the best group of 2020 at a nearly 33% climb. They've helped carry the broader market, and even Warren Buffett, whose Apple (AAPL) allocation has swollen to more than 44% of his equity portfolio.

However, further improvements in the economy could begin to weigh on technology.

"Tech companies that have benefited from the pandemic could face headwinds," writes BCA Research, which sees a definite short-term threat to e-commerce stocks. "It is likely that the dismantling of lockdown measures – hopefully facilitated by the release of a vaccine later this year – will bring back some spending to brick-and-mortar stores. This could produce a temporary air pocket in sales for online sellers, a risk that does not seem to be fully discounted."

Does that mean the sector's best days will soon be behind it? Given the longer-term trends fueling their rises, that seems unlikely; even BCA acknowledges "there is little doubt that we are still in the midst of a secular transition towards e-commerce."

But it might mean building a wish list of tech plays to buy on the sector's next pullback rather than dive in head-first right now. One area in particular to target is cloud computing stocks, which have run up big as America digitized work, school and play in the face of the pandemic. They could be ripe for short-term profit-taking whenever Wall Street starts to chase recovery picks.

Kyle Woodley was long FB as of this writing.

Most Popular

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
The 12 Best Tech Stocks to Buy for 2022
tech stocks

The 12 Best Tech Stocks to Buy for 2022

The best tech-sector picks for the year to come include plays on some of the most exciting emergent technologies, as well as several old-guard mega-ca…
January 3, 2022
How to Know When You Can Retire
retirement

How to Know When You Can Retire

You’ve scrimped and saved, but are you really ready to retire? Here are some helpful calculations that could help you decide whether you can actually …
January 5, 2022

Recommended

Stock Market Today (1/18/22): Bond Yields, Goldman a One-Two Punch for the Bears
Stock Market Today

Stock Market Today (1/18/22): Bond Yields, Goldman a One-Two Punch for the Bears

The 10-year Treasury yield hit a two-year high and Goldman whiffed on its Q4 earnings report, sending 10 of 11 sectors into the red Tuesday.
January 18, 2022
Netflix Stock: Q4 Subscriber Growth Expected to Stall
stocks

Netflix Stock: Q4 Subscriber Growth Expected to Stall

Our preview of the upcoming week's earnings reports includes Goldman Sachs (GS), UnitedHealth Group (UNH) and Netflix (NFLX).
January 17, 2022
Is the Stock Market Closed on MLK Day?
Markets

Is the Stock Market Closed on MLK Day?

Both the stock markets and bond markets will have Monday off as the nation honors civil rights leader Martin Luther King Jr.
January 15, 2022
Stock Market Today (1/14/22): Financials Hold Back Dow in Mixed Friday Session
Stock Market Today

Stock Market Today (1/14/22): Financials Hold Back Dow in Mixed Friday Session

Negative post-earnings reactions in some bank stocks, as well as a lousy December retail sales report, weighed on the industrial average.
January 14, 2022