Commenting on the fall in shares of Tesla, Apple, and Zoom and today’s trading Gorilla Trades strategist Ken Berman said:
Q2 2020 hedge fund letters, conferences and more
The major indices are mixed at midday following a very active morning session, with the Nasdaq and the S&P 500 hitting new all-time highs again and the Dow scoring a new recovery high too. Even though the tech benchmark topped the 12,000 level for the first time ever at the open, it has been lagging the broader market this morning, due to the weakness of yesterday’s stars, Tesla (TSLA, -6.7%), Apple (APPL, -2.7%), and Zoom (ZM, -6.5%). The rising number of new COVID cases in the Midwest continues to keep a lid on the rally, but bulls are still eager to buy every dip, leading to choppy and unusually volatile price action near the all-time highs of the large-cap benchmarks.
In economic news, factory orders beat expectations, surging higher by 6.4%, and confirming the speedy recovery in manufacturing but the highly anticipated ADP payrolls number was much worse-than-expected in August. The measure came in at 428,000 versus the consensus estimate of 1.25 million and even though last month’s reading was revised higher, the outlook for Friday's government jobs report got bleaker. We also got another batch of weak European indicators, with German retail sales disappointing the most, but risk assets held on to their gains thanks to the hopes of more monetary and fiscal stimulus.
Market Wrap
Dow: 28,821, + 175 or 0.6%
S&P 500: 3,544, + 18 or 0.5%
Nasdaq: 11,925, - 38 or 0.3%
Russell 2000: 1,579 + 1 or 0.1%
Market breadth has been relatively weak in early trading, with advancing issues only outnumbering decliners by a 5-to-4 ratio on the NYSE at midday. Only 124 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 194 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. Yesterday’s trends once again reversed on Wall Street as the key defensive sectors have been showing strength in early trading, while cyclicals lagged have been lagging behind, with the exception of financials and industrials which were buoyed by the bullish factory orders release. Stay tuned!
