Commenting on today’s trading in the S&P 500 (.INX) Gorilla Trades strategist Ken Berman said:
Stocks had their most bullish session in over a week, as all of the main sectors and even small-caps followed the broader market higher thanks to the improving global sentiment. European stocks gave a huge pre-market boost to the U.S. market, with several key benchmarks hitting new all-time highs, and bulls continued to push equities higher throughout the session, with all signs pointing to a major risk-on shift.
The major indices all hit record highs today, boosted by the decreasing number of new coronavirus cases, with the Dow Jones Industrial Average (INDEXDJX:.DJI) finally showing signs of life following weeks of relative weakness. The Dow was up 275, or 0.9%, to 29,551, the Nasdaq (INDEXNASDAQ:.IXIC) gained 87, or 0.9%, to 9,726 while the S&P 500 (indexsp:.inx) rose by 22, or 0.7%, to 3,379. Advancing issues outnumbered decliners by a more than 2-to-1 ratio on the NYSE, where volume was slightly above average.
Worst Performers: Defensive Utilities And Healthcare Sectors
The defensive utilities and healthcare sectors were the worst performers today, despite the bullish quarterly numbers published by CVS (CVS, +0.1) and United Health (UNH, +4.3%) strong rally. Treasury yields and the dollar surged higher, with the Dollar Index (DXY) getting very close to its three-year high, from October. Despite the rally in rates, financials lagged the broader market, but tech stocks, materials, and services pulled their weight, as the energy sector great day thanks to the more than 3% increase in the price of crude oil.
Senator Bernie Sanders officially won the New Hampshire Democratic primary yesterday following the controversial and very close caucus in Iowa, and the election campaign is now entering a much more active phase. While before March 3, the Super Tuesday it’s probably too early to speculate on who the democratic candidate will be, prediction markets suggest that Mr. Sanders has the best chance. Investors have been largely ignoring the nomination process, so far, but should the coronavirus outbreak remain relatively contained, U.S. politics could soon start to matter more on Wall Street.
The S&P 500 (.INX) And The Nasdaq (.IXIC)'s Winning Streak
Although yesterday, the major indices were virtually unchanged, the S&P 500 (.INX) and the Nasdaq (.IXIC) have now built up a winning streak of three days thanks to today’s rally. Add last week’s four-day streak to that, and you can get an idea of how strong the buying pressure actually is on Wall Street. With the impact of the coronavirus outbreak still being uncertain, the resilience that stocks have been showing is more than impressive. So, while last autumn’s technical breakout led to lofty gains for bulls, we could be in for more of the same before an inevitable pullback.
The consumer economy and the labor market will be in focus, in terms of economic releases tomorrow. The Consumer Price Index (CPI) and the core CPI have been both edging lower in recent months, but analysts expect a slight uptick, to 0.2%, in the core measure this month. The weekly number of new jobless claims will also be under scrutiny, as we got a few weaker-than-expected forward-looking indicators from the job market in the past week, and the consensus estimate calls for a still very low 210,000 reading. Stay tuned!