Commenting on the rally in Chinese assets and today’s trading Gorilla Trades strategist Ken Berman said:
A Strong Rally In Chinese Assets
The major indices are all trading significantly higher at midday as the week started out in a clearly bullish fashion across the globe. U.S. stocks surged higher following a long weekend, with the strong rally in Chinese assets and the slowing spread of the COVID-19 virus boosting investor sentiment on Wall Street. While the number of new cases remains very high in the U.S. and globally, the fatality rate of the second wave of U.S. outbreaks remains well below the rate of the first peak, which has been supporting the most lockdown-sensitive issues this morning.
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In economic news, the ISM non-manufacturing PMI came in at 57.1, well above the consensus estimate of 50, signaling a strong posy-lockdown rebound in the crucial services sector. We got a mixed bag of European reports in pre-market trading, but as the virus remains contained on the Old Continent, the key local benchmarks joined the global rally. The Nasdaq hit another all-time high in early trading, with the likes of Amazon (AMZN), Apple (AAPL), and Microsoft (MSFT) leading the charge yet again, all hitting new record highs.
Dow: 26,179, + 351 or 1.4%
S&P 500: 3,180, + 50 or 1.6%
Nasdaq: 10,450, + 243 or 2.4%
Russell 2000: 1,447, + 16 or 1.1%
Market breadth has been in line with the performance of the large-cap benchmarks, with advancing issues outnumbering decliners by a 9-to-1 ratio on the NYSE. Only 7 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 147 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 a mixed and choppy afternoon. Besides tech stocks, the consumer discretionary sector, and financials have been showing relative strength today, but the other key cyclical sectors are also sporting healthy gains at midday, with the weakness among the traditional safe-haven sectors also confirming the risk-on sentiment. Stay tuned!