Crucial Tech Earnings Surprises Fail To Maintain Momentum

Commenting on a slew of crucial tech earnings and today’s trading, Gorilla Trades strategist Ken Berman said:

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Q3 2020 hedge fund letters, conferences and more

A Slew Of Crucial Tech Earnings

The major indices are all trading significantly lower at midday following a volatile overnight session in the wake of a slew of crucial tech earnings. Facebook (FB, -5.9%), Amazon (AMZN, -3.9%), Google parent Alphabet (GOOG, +4.4%), and Apple (AAPL, -5.2%) all reported positive surprises yesterday, but the tech sector still struggled to maintain yesterday’s bullish momentum as, apart from Alphabet, the mega-cap shares showed weakness post-earnings. The number of new COVID infections hit another record high in the U.S. getting close to 90,000 in the past 24 hours, and the number of global cases was also above 530,000 for the second time this week, as the virus continues to spread very quickly in Europe.

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In economic news, the Core PCE Price Index was in line with expectations, coming in at 0.2%, while personal spending and personal income both handily beat the consensus estimates. The reports continued the string of positive consumer-related surprises ahead of the crucial holiday season and the Chicago PMI was above-forecast as well, despite edging lower compared to last month’s blowout reading. On another positive note, the Eurozone GDP also beat expectations in the third quarter, although the recovery is now in jeopardy due to the resurgence of the virus in the reading.

Market Wrap

Dow: 26,319, - 340 or 1.3%

S&P 500: 3,252 - 58 or 1.8%

Nasdaq: 10,900, - 285 or 2.5%

Russell 2000: 1,537, - 24 or 1.6%

Market breadth has been relatively strong this morning, with decliners only outnumbering advancing issues by a less than 4-to-1 ratio on the NYSE at midday. 34 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 23 stocks hit new 52-week highs. The major indices have been trading below their daily VWAPs (Volume-Weighted Average Price) for most of the morning session, pointing to intraday selling pressure. The tech sector and the Nasdaq were hit hard at the open as most tech giants fell sharply, but consumer-related stocks have also been lagging the broader market this morning, with cyclical issues showing relative strength, despite the negative COVID headlines. Stay tuned!