The Bear Growls - Market Recap – NASDAQ 100 Index (NDX) Powers Ahead
Week of July 6 -10, 2020
News/Flows:
Monday, July 6, 2020 – DJIA 26287.03 +1.8%, NDX 10625.1 +2.74%, SPX 3179.72 +1.59%
Equity markets bolted higher out of the opening bell in sympathy with Chinese shares moving higher 3 to 5% in the overnight session. Outsized gains from the heavyweights in the Nasdaq 100 (NDX) propelled that market index once again to another all-time high. UBER inked a deal to buy Postmates for $2.65 billion. China’s SMIC Semiconductor (SMICY) announced a $6.55 billion follow on offering of shares. The news was well received (shares absorbed the news moving higher through the week). The war on oil continued as a federal judge ordered the closing down of a pipeline in the Dakotas.
Tuesday, July 7, 2020 – DJIA 25890.18 – 1.5%, NDX 10625.1 -.75%, SPX 3145.52 -1.08%
Equity markets opened lower. UAL announced that reservations had fallen due to news of widespread increases in COVID-19 infection rates throughout southern and western states. DAL and JBLU declined in sympathy as well as other travel / leisure related shares NCLH and CCL. The Trump administration announced that it will be dropping out of the World Health Organization due to WHO’s failure to properly investigate the COVID-19 epidemic before it went worldwide.
Wednesday, July 8, 2020 – DJIA 260067 +.7%, NDX 10666.7 +1.36%, SPX 3169.94 + .78%
Equity markets moved higher but as has been the recent trend for investors and traders interest has been focused on large cap technology shares where growth in a recessionary environment has been the prize. United Airlines (UAL) said it was considering cutting workforce by 50%. The US posted a massive deficit of $863 billion for the month of June. The chattering classes were out in force as speculation on a Democratic convention coup with replacement of Biden and rumors that Trump would abdicate were discussed throughout the session. Typically voters and investors tend not to focus on election prospects until the conventions. But this year is far different than any in recent memory.
Thursday, July 9, 2020 – DJIA 25706.09 -1.4%, NDX 10625.1 +.75%, SPX 3152.05 -.56%
Equity markets closed mixed and exhibited some negative divergence. Walgreens Boots (WBA) announced layoffs of 4000 and a suspension of buybacks. In a ruling still under analysis by many, the Supreme Court has determined that a large section of Oklahoma is rightfully reserve of the Creek Indian Nation. New unemployment applications declined. Treasury secretary Mnuchin announced that his department was working with the Senate for another economic relief package due to COVID-19. Media coverage of the increase in infection rates continued to concern investors of a potential second wave and further lockdowns. The Fed “backstop” appeared to ameliorate those concerns.
Friday, July 10, 2020 – DJIA 26075.30 +.1.4%, NDX 10836.33 +.76%, SPX 3185.04 + 1.01%
Equity markets moved higher in the face of more news on COVID-19 infection rates. For the first time in the week the DJIA and SPX outperformed the big tech heavy NDX. American Airlines (AAL) warned Boeing (BA) that it might not take delivery on 737-Max unless financing was made easier. Carnival (CCL) announced that it was cutting its fleet by 13 ships. The shares closed higher on the day. An old market aphorism: “It’s not the news that is important. It’s the reaction to the news.” Bank shares were some of the best performers on the day. Earnings are expected for WFC, C, JPM before the open on Tuesday.
A look at the week ahead:
Monday, July 13, 2020
11:30 am Fed’s Williams speaks
1:00 pm Fed’s Kaplan speaks
2:00 pm Treasury budget release (monthly)
2:00 pm EIA Drilling report
Tuesday, July 14, 2020
8:30 am CPI consumer price index
8:55 am Johnson/Redbook retail sales index
2:00 pm Fed Governor Brainard speaks
2:30 pm Fed’s Bullard speaks
4:30 pm API crude, gasoline, distillate inventories
Wednesday, July 15, 2020 (taxes due for 1019)
7:00 am MBA mortgage applications
8:30 am Empire Manufacturing Index
9:15 am Industrial Production
10:30 am DOE crude, gasoline, distillates inventory
12:00 pm Fed’s Harker speaks
2:00 pm Fed Beige Book on economic activity
Thursday, July 16, 2020
8:30 Weekly jobless claims
8:30 US Retail Sales (June)
8:30 Philly Fed Business Outlook
10:00 am Business inventories
10:00 am NAHB Housing Market Index
11:00 am Both Fed’s Evans and William speak.
Friday, July 17, 2020 (monthly options expire)
8:30 am Housing Starts
10:00 am University of Michigan Sentiment Index
1:00 pm Baker Hughes (BHI) Rig Count
3:30 pm CFTC Commitment of Traders report
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