In an intra-day note to investors, Gorilla Trades strategist Ken Berman, while comenting on the Fed’s plan to extend its bond buying program, said:
Q1 2020 hedge fund letters, conferences and more
Fed’s Bond Buying Program To Cover Junk Bonds
The major indices are all in the green with small-caps leading the way high for the second day in a row. The Fed announced the details of its comprehensive $2.3 trillion lending program to assist the post-COVID recovery this morning, with a stronger focus on the hardest hit small- and mid-sized businesses. The Russell 2000 surged higher thanks to the announcements and high-yield corporate bonds also skyrocketed as the Fed also unveiled its plan to extend its bond buying program to cover certain lower-rated ‘junk’ bonds.
In economic news, the weekly number of new jobless claims was much high-than-expected for the third week in a row, coming in at 6.6 million and last week’s figure was also revised higher and the three-week total is close to 17 million. The Michigan consumer sentiment number also missed the already bearish expectations, coming in at 71, its lowest reading since late-2011. The Producer Price Index (PPI) and the core PPI were both higher-than-expected, and Italian industrial production also declined by a bit less than the consensus estimate, giving bulls hope that the manufacturing sector could hold up amid the COVID crisis.
Market Wrap
- Dow: 23,856, + 423 or 1.8%
- S&P 500: 2,794, + 44 or 1.6%
- Nasdaq: 8,146, + 55 or 0.7%
- Russell 2000: 1,229, + 37, or 3.1%
Market breadth has been strong this morning thanks to the broad rally among, with advancing issues outnumbering decliners by a more than 9-to-1 ratio on the NYSE. Only 2 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 13 stocks hit new 52-week highs. The S&P 500 and the Dow have been trading above their VWAPs (Volume-Weighted Average Price) for most of the morning session, but the Nasdaq has been stuck below its VWAP pointing to a mixed and choppy afternoon session. Tech stocks have been relatively weak yet again this morning, while financials, industrials, and energy-related issues shined, together with the lockdown-sensitive utilities. Stay tuned!
