Before The Bell
It continues to be a day-after-day celebration for the bulls, particularly for the large-cap technology names, such as Apple (AAPL), most recently Zoom (ZM) and also salesforce.com (CRM). These stocks are soaring and the Dow Jones Industrial Average and the NASDAQ are continuing to press forward, in response. That was the case again yesterday, where after a slow start to the day, these two composites were showing triple-digit point advances by mid-afternoon. This latest move forward comes after a strong August that produced a string of all-time highs for the S&P 500 and the NASDAQ.
In addition to the strength generated by the ongoing easy money policies of the U.S. Federal Reserve, the start of September, which has been a difficult month historically for Wall Street, was boosted by data showing a better-than-forecast increase in the ISM's industrial survey. On point, that industry source showed that U.S. manufacturing activity had expanded at its fastest pace in a year and a half in August, with the closely watched survey climbing to a reading of 56. A score in the 54 range had been expected. This gain fueled hopes that a solid business comeback was still possible in spite of COVID-19.
Among individual issues, shares of Walmart (WMT) surged, helping the Dow notably, after the giant retailer announced that its subscription service Walmart+ will be introduced on September 15th. Looking out at the stock market, it would seem that with price-earnings ratios so elevated that equities have gotten ahead of themselves. However, it is just as obvious that many investors, seeing the market soar, do not want to be left out on the sidelines. So, notwithstanding how richly capitalized the market appears to be currently, few are willing to fight the tape.
Meanwhile, stocks continued to press ahead during the middle part of the afternoon, as September was so far following up the best August in more than 30 years by the major large-cap composites. And it is not just the growth and momentum names that are contributing to this latest bullish run, as value stocks and cyclical issues are also in the mix of strong performers at present. That said, it is not a tide that is lifting all boats, as some health-care-related issues are under pressure, including the shares of Dow component Walgreens Boots Alliance (WBA), which hit a 52-week low yesterday.
The market would continue to strengthen as the afternoon wound down, with the Dow rising to a session best gain of 216 points at the close. The S&P 500 Index would rise by 24 points and the NASDAQ would add 164 points, bringing that index to the doorstep of 12,000. All of this comes as the Street now will focus on a pair of upcoming critical reports due out later this week, namely the August survey on non-manufacturing activity from the ISM (out tomorrow) and the monthly report from the Labor Department on non-farm payrolls and the unemployment rate. That issuance is scheduled for Friday morning.
Looking out at a new day now, we see that the rally is likely to continue in the early going at least, as the equity futures are showing significant gains on apparent optimism about the economic comeback.
– Harvey S. Katz, CFA
At the time of this article's writing, the author had positions in AAPL.
