Before The Bell
The unrelenting push higher by the stock market continued yesterday, especially the S&P 500 and the NASDAQ. The Dow Jones Industrial Average, meantime, which has been a laggard as it includes both energy-related issues and defensive stocks, started the day lower, before it regrouped and erased a near-100-point deficit as the afternoon began. But the S&P 500 and the NASDAQ both hit record highs as the morning ended. Helping boost sentiment was a stronger-than-expected showing by July durable goods orders.
Leading the latest run higher was strength in the bigger technology issues, such as Tesla (TSLA), which has pushed above $2,100 a share and Apple (AAPL), which has climbed back past $500 a share. Both issues have been on a tear since announcing stock splits. This selective strength came even as the Kansas City Federal Reserve President, Esther George warned about a possible double-dip recession should the coronavirus see a resurgence. She also indicated concerns about much higher inflation. Some Fed officials have pushed for higher prices.
Meanwhile, the NASDAQ started to surge as the afternoon began, with that composite gaining almost 200 points over the lunch hour. The lone index to move lower at that point was the small-cap Russell 2000. Also contributing to the day's strength was salesforce.com (CRM), which exceeded profit expectations for its latest fiscal quarter. It should be noted that this services' giant is one of three pending additions to the Dow Industrials. Even so, not all of the action was positive, as shares of Dow component Walgreens Boots Alliance (WBA) fell once more.
The stock market then continued to strengthen as the afternoon moved along and again it was selective tech names that led the way, including shares of streaming giant Netflix (NFLX), which gained almost 57 points during the day on upbeat analyst reports. Netflix helped the NASDAQ to gain nearly 200 points on the day. The S&P 500 also would climb nicely higher, ultimately adding 35 points and closing in on 3,500 in the process. The Dow also rose during the day, but by a more modest 83 points.
Then, in after-hours trading yesterday afternoon and evening, NetApp (NTAP) shares jumped more than 10% after the data-storage company posted unexpected sales and earnings growth. In all, the company recorded higher earnings, whereas a decline in net had been forecast. On the other hand, Williams-Sonoma (WSM) also posted better-than-expected earnings per share, but the home goods retailer saw its stock fall more than 6% in trading after the close of the regular session.
As for the outlook going forward, the futures were trading slightly lower last evening after the conclusion of trading. This narrow downtrend is continuing this morning, although momentum is so strong that we would not be surprised to see a further push higher during the session, particularly in the tech sector.
- Harvey S. Katz, CFA
At the time of this article's writing, the author had positions in shares of APPL.
