Commenting on today’s trading focusing on the S&P 500 hitting a new record with the help of tech, Gorilla Trading strategist Ken Berman said:
The stock market continues to be dominated by relentless buying pressure, and despite today’s worrying European economic release, the bullish stampede continued. While the Dow lagged the broader market today, mainly because of the weakness in the healthcare sector, small-caps had their best session in over a month, which suggests that bulls are far from being exhausted.
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The major indices all finished higher following Friday’s slight dip, and the Nasdaq and the S&P 500 hit new record highs again, with the help of the mighty tech sector. The Dow was up 79, or 0.3%, to 28,903, the Nasdaq gained 95, or 1.0%, to 9,274 while the S&P 500 rose by 23, or 0.7%, to 3,288. Advancing issues outnumbered decliners by an almost 7-to-3 ratio on the NYSE, where volume was slightly below average.
Besides the market-leading tech sector, which continues to ignore the bearish global divergences and the geopolitical tensions, the consumer sector led today’s charge to new all-time highs. Apple (AAPL, +2.1%) had another stellar day, but Facebook’s (FB,+1.8%) all-time high also contributed to the record-breaking session. Industrials, services, and financials also shined, while materials struggled to keep up with the broader market as the price of oil declined for the sixth day in a row due to the easing geopolitical fears.
Tech leads S&P 500 to new record number
Even though analysts agree that the standoff between the U.S. and Iran is unlikely to lead to an open conflict, the Persian state continues to be in focus. Last week, the fears of an escalation in the Middle East caused a brief pullback in global risk assets, but this week, the Iranian regime has to concentrate its energies to Tehran. The ongoing protests against Ayatollah Khamenei’s rule could further destabilize the country and since the U.S. will likely impose further economic sanctions, Iran could be in for a tumultuous year.
Tesla Inc (NASDAQ:TSLA) (up 9.8%) made headlines yet again today, as the shares of the company hit $500, marking an important technical milestone. The move solidified Tesla’s position as the ‘most valuable U.S. car maker in history’, despite last year’s financial troubles that led to a steep sell-off in the firm’s bonds. The bullish trend in consumer stocks and the ‘phase one’ trade deal with China also continue to fuel the rally. The fact that the cyclical consumer discretionary sector already hit a new all-time high this year, outperforming the ‘recession-proof’ consumer staples sector is another confirmation of the positive trends in the consumer economy.
The consumer sector will likely remain at the center of attention tomorrow as well, due to the releases of the Consumer Price Index (CPI). The key inflation measure beat expectations for two months in a row, and analysts expect another strong reading of 0.2%. Anything higher than that could start to take its toll on equities, as the Fed might soon be under pressure to hike rates in light of the uptick in economic activity. The NFIB Small Business Index and the IBD economic optimism number will also be out tomorrow, while the overnight session will be highlighted by the Chinese trade balance. Stay tuned!