Commenting on the impact of the decreasing fiscal stimulus and today’s trading Gorilla Trades strategist Ken Berman said:
Q2 2020 hedge fund letters, conferences and more
The major indices are all trading higher at midday following a choppy but unusually active morning session for a Fed-day. The Nasdaq pulled back following two bullish sessions, but small-caps and cyclicals started out the day in a bullish fashion despite the one-month high in the number of new U.S. COVID cases. Eli Lily’s (LLY, +1.7%) encouraging announcement regarding its antibody treatment has been helping the hardest-hit industries in early trading, even as overseas equities continue to be under pressure due to the pandemic.
The Impact Of The Decreasing Fiscal Stimulus Is Apparent
The much weaker-than-expected retail sales report makes a dovish message more likely from the Fed, as the consumer economy’s resilience has been crucial for the recovery over the past couple of months. Core and headlines both rose by less than the consensus estimates and last month’s readings were revised markedly lower as well, so the impact of the decreasing fiscal stimulus is apparent in the numbers. All eyes will be on this afternoon’s Fed announcements and traders could face a surge in volatility in the last couple of hours of trading.
Market Wrap
Dow: 27,400, + 220 or 0.8%
S&P 500: 3,420, + 19 or 0.6%
Nasdaq: 11,213, + 22 or 0.2%
Russell 2000: 1,558, + 19 or 1.3%
Market breadth has been relatively strong this morning, thanks to the Russell’s strong showing, with advancing issues outnumbering decliners by an almost 4-to-1 ratio on the NYSE at midday. Only 8 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 72 stocks hit new 52-week highs. The major indices have been hovering around their daily VWAPs (Volume-Weighted Average Price) throughout the morning session, pointing to mixed and choppy trading ahead of the Fed’s announcements. The real estate, energy, financial, and industrial sectors have been showing strength in early trading, reversing yesterday’s trends, and while the market-leading tech stocks lost ground, most sectors held up well in the choppy environment. Stay tuned!
