Wall Street rebounded to close out a strong week following better-than-expected earnings from some big names — and more in Friday’s stock market update.
The small caps showed the most strength despite new shutdown measures in Chicago and New York. Mayor Bill de Blasio said New York City parents should be prepared for schools to end in-person classes as soon as Monday while Chicago Mayor Lori Lightfoot announced a 30-day stay-at-home advisory that will also take effect Monday.
The Russell 2000 rallied 2.1% after trading to a late-day, all-time peak of 1,749.
The Dow soared 1.4% with the intraday high hitting 29,559.
The S&P 500 also jumped 1.4% following the afternoon run to 3,593.
The Nasdaq was up 1% after testing a high of 11,849 ahead of the closing bell.
For the week, the Dow zoomed 4.1% and the S&P 500 gained 2.1%. The Russell 2000 skyrocketed 5.6% while the Nasdaq lost 0.6%.
Energy was the strongest sector after surging 3.6% while Real Estate and Industrials added 2.3% and 2.2%, respectively. There was no sector weakness.
DraftKings Inc. (Nasdaq: DKNG) shares were up nearly 4% despite reporting mixed earnings. The company reported a loss of 98 cents a share versus forecasts for a loss of 61 cents, but revenue of $133 million topped forecasts of $131.75 million. More importantly, the company gave guidance for 2020 and 2021 that topped forecasts.
The company expects 2020 revenue between $540-$560 million, up from $500-$540 million, while introducing 2021 revenue guidance of $750-$850 million with current estimates north $772 million.
Co-founder and CEO Jason Robins said the resumption of major sports such as the NBA, MLB and the NHL in the third quarter, as well as the start of the NFL season, generated tremendous customer engagement.
DoorDash Inc. made public its regulatory filing for an initial public offering (IPO) on the New York Stock Exchange, setting the company up to float its shares before the end of the year. DoorDash filed for an IPO of $100 million, although that is a placeholder amount and is expected to change.
The company recently reported $1.9 billion in revenue for the nine months ending Sept. 30 with a net loss of $149 million. Its last private valuation was $16 billion, and it has raised $2.5 billion.
DoorDash’s filing kicks off a frenetic period for the stock market, with several high-profile names including home rental giant Airbnb, e-commerce firm Wish and lending startup Affirm lined up for stock market debuts in December.
European markets settled mostly higher with UK’s FTSE 100 bucking the trend after falling 0.4%.
The Belgium20 was higher by 0.5% and France’s CAC 40 climbed 0.3%. Germany’s DAX 30 advanced 0.2% while the Stoxx 600 was up less than a point, or 0.01%.
Asian markets closed mostly lower to end the week.
China’s Shanghai dropped 0.9% and Japan’s Nikkei fell 0.5%. Australia’s S&P/ASX 200 slipped 0.2% and Hong Kong’s Hang Seng dipped 0.1%. South Korea’s Kospi rose 0.7%.
New York Federal Reserve President John Williams said the economy is on a positive trajectory with the recovery going better than expected. He sees the economy slowing as a result of a rise in virus cases. Regarding the recent rise in interest rates, he said the sell-off was a function of the good news on a vaccine and the improved outlook on the economy, and not an inflation fear. He did note, however, that a better-than-expected performance of the economy could pull forward rate hikes. But for now, low rates will continue to support the economy.
St. Louis Fed President James Bullard said the economy has recovered more quickly than expected as a result of exceptionally effective monetary and fiscal policies. He added the rebound in employment was faster than projected as a lot of the layoffs were temporary, and said the unemployment rate could fall substantially in the coming months. Bullard added the labor market recovery is 48 to 50 months ahead of where it was following the 2007-09 recession.
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) fell for the first time in three sessions despite testing an intraday high of $158.50. Current and lower resistance at $158.50-$159 was kissed but held. A close above the latter would signal additional upside towards $159.50-$160.
Support is at $158-$157.50 followed by $156.50-$156. A death cross has officially formed with the 50-day moving average falling below the 200-day moving average. This is typically a bearish signal for lower lows.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) settled lower for the eighth time in 10 sessions with the intraday low tapping 22.74. Current and upper support at 23-22.50 was breached but held. A close below the latter and Monday’s low at 22.41 would indicate further weakness towards 22-21.50 and levels from late August.
Lowered resistance is at 24.50-25 followed by 26-26.50.
The Wilshire 5000 Composite Index (NYSE: WLSH) rebounded with the second-half high tapping 37,072. Near-term and lower resistance at 36,750-37,000 was cleared and held. A close above the latter would indicate a retest towards 37,250-37,500 with Monday’s all-time peak at 37,565.
Support is at 36,500-36,250 with a close below 36,000 signaling a possible near-term top.
RSI is in an uptrend after clearing and holding lower resistance at 60-65. A close above the latter would indicate additional momentum towards 70-75 and levels from late August. Support is at 55-50.
The Financial Select Sector SPDR Fund (NYSE: XLF) snapped a two-session slide after testing an intraday high of $27.14. Current and lower resistance at $27-$27.25 was recovered. A move above the latter would indicate another run towards $27.50 with Monday’s high at $27.44.
Support is at $26.75-$26.50. A close above $26.25 would be a slightly bearish development with backtest potential towards $25.75-$25.50.
RSI is back in a slight uptrend after clearing and holding lower resistance at 65-70. A close above the latter would signal further strength towards 75 and the early June highs. Support is at 60.
Check back after the closing bell for the most important news and numbers in the WealthPress stock market update.