Commenting on Zoom Video Communications Inc (NASDAQ:ZM)’s earnings report and today’s trading Gorilla Trades strategist Ken Berman said:
The major indices are all sporting modest gains at midday despite a bearish overnight session, with the Nasdaq once again pulling its weight in early trading. Yesterday’s star Apple (AAPL, +2.4%) hit another new record this morning similarly to Zoom Video Communications (ZM, +33%) which reported blowout earnings in pre-market trading. Despite announcing an up to $5 billion stock sale, Tesla (TSLA, -1.9%) also held up well, so the runaway rally in tech stocks is still intact. While the uptick in the number of new COVID cases in the U.S. is a warning sign for bulls, it could fuel further gains in the market-leading sector.
Zoom Video Communications and Tesla Lead
In economic news, the much worse-than-expected European Consumer Price Index (CPI) delivered a major blow to global risk assets, as the indicator’s dynamic is strongly recessionary. Meanwhile, the U.S. ISM manufacturing PMI provided a sizable bullish surprise for the second month in a row, coming in at 56.0, so the growth gap between the U.S. and Europe could widen in the coming months. That said, construction spending grew by less-than-expected in August, but the recovery is still on track in the sector according to the latest data.
Dow: 28,521, + 91 or 0.3%
S&P 500: 3,510, + 10 or 0.3%
Nasdaq: 11,883, + 107 or 0.9%
Russell 2000: 1,569 + 10 or 0.4%
Market breadth has been relatively weak in early trading yet again, with advancing issues only outnumbering decliners by a 6-to-5 ratio on the NYSE at midday. Only 26 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 82 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 showing a much more bullish picture this morning compared to yesterday, with only the defensive healthcare and utilities losing ground, and with materials, consumer-related issues, and industrials joining the tech rally. Stay tuned!