Stock Market Today: Market Pendulum Swings Hard, And Into the Green
Apple and IBM helped the Dow stage a big bounce on Tuesday.
Global COVID concerns ran just as hot today as they did 24 hours ago, but investors shrugged them off Tuesday to send the major indexes considerably higher in an across-the-board rebound from yesterday's plunge.
"Today's rally seems to be mostly driven by a buy-the-dip wave, along with oversold conditions in some sectors, as economic data and earnings commentary continue to drive market reaction for the time being," says Stefanos Bazinas, execution strategist at the New York Stock Exchange.
Chief among the data likely driving the action were housing starts, which rose 6.3% month-over-month in June to 1.64 million, easily beating expectations.
The Dow Jones Industrial Average (+1.6% to 34,511), S&P 500 Index (+1.5% to 4,323) and Nasdaq Composite (+1.6% to 14,498) finished mostly in lockstep.
Notable gainers included Apple (AAPL, +2.6%), which popped after UBS raised its 12-month price target to $166 per share from $155, and International Business Machines (IBM, +1.5%), which rose after it reported 3% revenue growth in Q2 – its briskest quarterly top-line pace in three years.
Other action in the stock market today:
- The small-cap Russell 2000 roared ahead 3% to 2,194.
- AMC Entertainment Holdings (AMC) was a big mover, surging after the movie theater chain said it was reopening two theaters in Los Angeles. The meme stock closed up 24.5% at $43.09, but remains well below its June close at $59.02.
- In earnings news, tobacco firm Philip Morris International (PM) reported higher-than-anticipated second-quarter adjusted earnings of $1.57 per share, but the $7.59 billion in revenues it took in fell short of the consensus estimate. Quarterly results from The Travelers Companies (TRV) were also in focus, with the insurance giant reporting Q2 profit of $3.45 per share on $8.6 billion in revenues. Both figures were higher than what Wall Street was expecting. PM finished the day down 3.1%, while TRV slipped 0.1%.
- U.S. crude oil futures bounced 1.3% to end at $67.20 per barrel.
- Gold futures managed a marginal gain to settle at $1,811.40 an ounce.
- The CBOE Volatility Index (VIX) slumped 11.9% to 19.83.
- Bitcoin continued to decline, falling 3.1% to $29,793.38. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)
All's Well That Ends Well, Right?
We jest, of course – Tuesday's bounce-back, while welcome, is unlikely to mark the end of the market's near-term tantrums.
Lauren Goodwin, economist and portfolio strategist at New York Life Investments, notes that we could see pauses in the "reflation trade" this summer thanks in part to concerns that COVID could slow some countries' reopening measures. Also, "investors are wondering whether, despite substantial policy support, post-pandemic trend growth may not be different than the 'lower for longer' environment we experienced before," she says.
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