Before The Bell
The correction in the tech-driven NASDAQ--defined as a decline of more than 10%--came to a seeming end yesterday, as that composite posted a big wire-to-wire win on a huge comeback by beaten-down tech names. Leading the way were shares of electric car maker Tesla (TSLA), retail giant Amazon (AMZN), and iconic iPhone maker Apple Inc. (AAPL). The Dow Jones Industrial Average also posted a strong advance for much of the session before wilting near the close to end barely in positive territory.
In all, the tech rebound led to the biggest gain by the NASDAQ in more than four months. Driving the stock market higher, in addition to bargain hunting, was a drop in Treasury note yields--the first in five sessions. The pullback in yields especially helped the tech sector to rebound. In all, the NASDAQ jumped 464 points, or 3.7%. That comeback cut the recent drop in the NASDAQ by about a third. It was a rare buy-the-dip recovery in this volatile composite. In another factor, there remained optimism the giant federal stimulus package would soon pass in Congress.
Meanwhile, upbeat sentiment on a strong second-half economic recovery remained in place as COVID-19 vaccine rollouts continued to gain traction. At the same time, crude oil prices, on a multi-month joyride higher, took a rare breather yesterday trimming recent gains, while gold rebounded nicely after easing earlier this year. Thus, for one day at least, the recent skittishness caused by an upward spike in Treasury note and bond yields eased a bit. Going forward over the next couple of weeks, there will be plenty of reports out on both economic activity and inflation to dictate the direction of the bond market.
Breaking the equity market down, we see that consumer discretionary and information technology stocks clearly led the way, while seven of the 10 major stock groups rose on the day and three declined--the worst of which being energy. In after-hours trading, meantime, a key mover included luxury homebuilder Toll Brothers (TOLL). This issue rose in after-market trading after the company hiked its quarterly distribution by 54% to $0.68 a share.
Looking out at a new day now and after yesterday's big win for the bulls, we see that the equity futures are poised to start the session on a somewhat muted note.
– Harvey S. Katz, CFA
At the time of this article's writing, the author had a positions in AAPL.
