Before The Bell
The U.S. stock market moved nicely higher last week, pushing most of the broader indexes to record high territory. Looking to the day ahead, further gains seem likely in the early going. On point, overnight the international markets put in a constructive session. In Asia, the Nikkei moved nicely higher; in Europe, the FTSE 100 also made progress. Meanwhile, on our shores, the S&P 500 futures are signaling a strong opening, led by additional increases in shares of Apple (AAPL).
Notably, investors seem quite committed to the stock market, despite a challenging landscape. Clearly, the coronavirus remains a major obstacle. However, Wall Street remains optimistic that a medical solution will present itself. Just recently, the FDA approved the emergency use of blood plasma taken from recovered coronavirus patients. That development seems to be sitting well with investors. Elsewhere, numerous pharmaceutical companies continue to work on a vaccine. Drug giant Pfizer (PFE) is making considerable progress in this regard.
Elsewhere, the corporate sector has been holding up relatively well, all things considered. Many companies came through the second quarter with better-than-expected results. This was impressive, as analysts, on average, anticipated significant shortfalls. It is worth noting that some businesses, particularly in the healthcare, Internet, and technology sectors have managed to make progress in the current climate. Although the financial sector has not performed too well, bank balance sheets were strong heading into the pandemic, and lenders have been able to cope with the economic downturn. This week, among the big names to watch, Palo Alto Networks (PANW) is set to weigh in with its numbers today. Best Buy (BBY), NetApp (NTAP), and Dollar General (DG) follow later in the week.
In economic news, today will be relatively quiet. Tomorrow, we will get a look at the consumer confidence numbers for the month of August, and the new home sales figures for July. Despite turning lower earlier in the year, the housing market seems to be recovering, which is encouraging, given that the real estate sector is vital to the economy. Sustained progress in the housing arena will likely depend on a stronger job market in the months ahead. On Wednesday, durable goods orders for July will be released. More issuances follow later in the week, including jobless claims and the revised second-quarter GDP figure.
Technically, the stock market continues to press ahead as we wrap up the month of August. Meanwhile, with the major market averages well off the lows hit in March, concerns about valuations seem to be emerging. Currently, the Value Line median price-to-earnings multiple stands at roughly 22, which leaves little room for disappointments.
– Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
