Commenting on Halliburton Company (NYSE:HAL) and IBM (NYSE:IBM)’s earnings and today’s trading Gorilla Trades strategist Ken Berman said:
Q2 2020 hedge fund letters, conferences and more
The major indices are mixed at midday following a volatile and hectic morning session on Wall Street. The European Union’s (EU) record-long summit, which should have ended on Saturday, remained in focus today and according to the latest reports, a deal on the EU’s historic package could still be reached today. The Trump administration is also expected to come forward with a new stimulus plan this week, as the federal unemployment benefit will expire in less than two weeks. Risk assets gained ground thanks to the rumored EU-deal, but the gloomy COVID-related headlines have been weighing on the most-affected industries in early trading.
Seth Klarman: Investors Can No Longer Rely On Mean Reversion
"For most of the last century," Seth Klarman noted in his second-quarter letter to Baupost's investors, "a reasonable approach to assessing a company's future prospects was to expect mean reversion." He went on to explain that fluctuations in business performance were largely cyclical, and investors could profit from this buying low and selling high. Also Read More
HAL And IBM Earnings
The number of new cases continues to very high both in the U.S. and globally, and although we got more positive vaccine news, the pandemic remains a major threat to financial markets. As for corporate earnings, Halliburton's (HAL) report made the biggest waves, and the shares of the battered oil & gas company have been pushing higher in the face of the negative trends in the sector. IBM's quarterly numbers will highlight the after-hours session, but the possible EU-deal could have an even bigger impact across asset classes.
Market Wrap
Dow: 26,615, - 57 or 0.2%
S&P 500: 3,236, + 11 or 0.3%
Nasdaq: 10,648, + 145 or 1.4%
Russell 2000: 1,468, - 6 or 0.4%
Market breadth has been relatively weak this morning, as small-caps lagged the broader market, with decliners outnumbering advancing issues by a 5-to-4 ratio on the NYSE at midday. Only 3 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 121 stocks hit new 52-week highs. The major indices have been trading above their daily VWAPs (Volume-Weighted Average Price) for most of the morning session, pointing to intraday buying pressure. The key sectors have been diverging substantially, and contrary to last week's trends, tech stocks have been the strongest, while real estate stocks and industrials fared the worst, with the key defensive sectors being mixed in the nervous environment. Stay tuned!
