The Nasdaq Composite, fresh off its quickest 10% correction in history (just three sessions!), energetically bounced back Wednesday despite little in the way of fresh drivers.
AstraZeneca (AZN, -1.9%) said late Tuesday that it had to put its COVID-19 vaccine trial on hold when an "adverse reaction" triggered an automatic pause in the study – a common occurrence, but one that raised plenty of eyebrows given the heavy scrutiny on coronavirus-related trials.
Also, the Labor Department reported that new hires fell from 7 million in June to 5.8 million in July, though job openings rose to a higher-than-expected 6.62 million.
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The major indices powered ahead nonetheless. Big moves in Apple (AAPL, +4.0%), Microsoft (MSFT, +4.3%) and other tech stocks pushed the Nasdaq 2.7% higher to 11,141.
Other action in the stock market today:
- The Dow Jones Industrial Average finished 1.6% higher to 27,940.
- The S&P 500 gained 2.0% to close at 3,398.
- The Russell 2000 climbed 1.5% to 1,528.
- Lululemon Athletica (LULU, -7.4%) plunged despite a big earnings beat of 74 cents per share (versus 55 cents per share expected) and 2% revenue growth that surprised analysts, who were looking for quarterly sales to decline.
- Slack Technologies (WORK, -13.9%) suffered one of its worst single-day losses since its June 2019 initial public offering despite beating both official top- and bottom-line expectations for the quarter. Wedbush’s Daniel Ives, who rates WORK at Underperform, says, “The main focus of investors this morning will be Slack's billings miss with the company surprisingly missing expectations which will be a shock to the bulls anticipating a clean beat.”
Beware a Dead-Cat Bounce?
So what sent stocks soaring on Wednesday? You could argue that any setbacks on the vaccine front are a boon for tech stocks, as cloud companies, e-commerce firms and other work-from-home picks directly benefit from Americans continuing to have to do more digitally.
But the rally was more than just tech – every sector was in the black today.
As we pointed out in our free A Step Ahead email newsletter, the market might have just sold off too far too fast.
"The continuation of last week's sell off into the new week has pushed U.S. equities into oversold territory on a short-term basis," writes Dan Wantrobski, technical strategist at Janney Montgomery Scott. "While short-term conditions indicate a potential bounce/oversold rally ahead, we believe there may be more to this corrective cycle ahead.
"This is because recent leadership areas remain very overbought on the longer-term charts – even after the last few days. This implies we could see further consolidation efforts in the weeks ahead as we make our way through September and toward elections."
As we said to start September, this month could be a wild one. For some, that means playing defense, but keep your wish list handy, too – you never know when a quick market dip can provide better values on some of Wall Street's top stocks. That could include these 20 income-rich retirement plays, which are built to last for decades.
Kyle Woodley was long MSFT as of this writing.
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