Stock Market Update: Friday, Dec. 4, 2020
Wall Street closed higher despite a disappointing jobs report, remaining focused on positive vaccine developments — and more in Friday’s stock market update.
The gains lifted all four of the major indexes to fresh all-time highs with volatility continuing to hold a key level of support.
Stock Market Update
The Russell 2000 surged 2.4% while closing on its session high of 1,892.
The S&P 500 was higher by 0.9% after settling on its session peak of 3,699.
The Dow gained 0.8% following the close on its session high of 30,218.
The Nasdaq rose 0.7% to finish on its closing high of 12,464.
Energy and Materials were the strongest sectors with gains of 5.5% and 2%, respectively. Utilities were the only sector laggard after dropping 1%.
Stock Market Movers
Shares of PagerDuty Inc. (NYSE: PD) zoomed 26% despite reporting a quarterly loss that topped expectations. The company reported a loss of 9 cents a share on revenue of $53.8 million versus forecasts for a loss of 10 cents on sales of $52.54 million.
There were six Wall Street analysts who raised their price targets following the news — with the most bullish being Monness Crespi. The firm lifted its price target on PagerDuty to $46 from $35 while keeping a Buy rating on the stock.
The analyst, who believes PagerDuty has a significant opportunity in the real-time digital operations market, argues that the stock carries a much lower valuation compared to other next-gen software vendors while also being involved squarely in the digital transformation trend.
Stock Market Outlook
The House of Representatives approved legislation that would decriminalize marijuana and seek to “address the devastating injustices caused by the War on Drugs.” Friday’s vote in the Democratic-led House is the first time a chamber of Congress has voted on federal marijuana decriminalization.
Analysts believe it has little chance of passing the Republican-led Senate. The bill passed largely along party lines with 222 Democrats, five Republicans and one libertarian voting in support — while 158 Republicans and six Democrats voted against.
Publicly traded companies in the space include Aphria Inc. (Nasdaq: APHA), Aurora Cannabis Inc. (NYSE: ACB), Canopy Growth Inc. (NYSE: CGC), Cronos Group Inc. (Nasdaq: CRON), Tilray Inc. (Nasdaq: TLRY), Trulieve Cannabis (OTC Market: TCNNF) and Zynerba Pharmaceuticals Inc. (Nasdaq: ZYNE).
Global Economy
European markets settled higher across the board.
UK’s FTSE 100 soared 0.9% while the Stoxx 600 and France’s CAC 40 were higher by 0.6%. Germany’s DAX 30 advanced 0.4% and the Belgium20 was up 0.3%.
Asian markets closed mostly higher despite signs of ongoing trade squabbles between China and Australia.
South Korea’s Kospi jumped 1.3% and Hong Kong’s Hang Seng gained 0.4%. Australia’s S&P/ASX 200 added 0.3% and China’s Shanghai edged up 0.1%. Japan’s Nikkei slipped 0.2%.
U.S. Economy
Nonfarm payrolls increased 245,000 in November, following October’s 610,000 gain. The unemployment rate dipped to 6.7% from 6.9%. The labor force fell -400,000, and household employment was down -74,000 after respective October increases of 724,000 and 2,243,000. The labor force participation rate slid to 61.5% from 61.7%. Average hourly earnings rose 0.3% from 0.1%, and were steady at 4.4% year-over-year. Total private payrolls were up 344,000, less than half the 877,000 prior increase, with the service sector adding 289,000, and the goods producing sector 55,000. Manufacturing increased 27,000 while government employment was down -99,00p.
October trade deficit widened 1.7% to -$63.1 billion amid ongoing gains in exports and imports, after narrowing -4.4% to -$62.1 billion in September. Exports rose 2.2% to $182 billion after jumping 2.4% to $178 billion. Imports were up 2.1% to $245.1 billion after the prior 0.6% gain to $240.1 billion. The “real” goods deficit climbed to -$89.9 billion from -$87.7 billion.
Stock Market Sentiment
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) fell for the fourth time in five sessions with the first-half low tapping $154.77. Prior and upper support at $155-$154.50 was breached but held. A close below the latter and the November low at $154.63 would indicate additional weakness towards $153.50-$153 and levels from early June.
Lowered resistance is at $156-$156.50 followed by $157.50-$158.
Volatility Index
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) had its three-session winning streak snapped following the morning tumble to 19.97. Current and upper support at 20-19.50 was breached but held. A close below the latter would indicate a further pullback towards 18.50-18.
Resistance is at 21-21.50 followed by 22.50-23.
Stock Market Analysis
The Wilshire 5000 Composite Index (NYSE: WLSH) extended its winning streak to four straight sessions with the new record high and close at 38,703. Unchartered territory and lower resistance at 38,500-38,750 was cleared and held. A move above the latter would indicate momentum towards 39,000-39,250.
New support is at 38,250-38,000 with a close below the latter signaling a possible near-term top.
RSI (relative strength index) remains in a slight uptrend after clearing and holding key resistance at 70. Continued closes above this level would indicate additional momentum towards 75-80 and levels from late August/early September. Support is at 65-60.
Sector
The Communication Services Select Sector SPDR (NYSE: XLC) was up for the third time in four sessions after tagging an intraday high of $67.12. Current and lower resistance is at $67-$67.50 was cleared but held. A close above the latter and Thursday’s all-time peak at $67.46 would suggest further strength towards $68.50-$69.
Support is at $66.50-$66 followed by $65.50-$65.
RSI has leveled out with key resistance at 70 holding. A close above this level would signal strength towards 75-80 and prior levels from August. Support is at 65-60.
Check back after the closing bell for the most important news and numbers in the WealthPress stock market update.