Stock Market Update: Monday, Dec. 28, 2020
Wall Street closed at record highs today after President Donald Trump signed the $2.3 trillion stimulus bill that will fund the government through September — and more in Monday’s stock market update.
The bill also includes the $900 billion coronavirus relief package.
There is bullish sentiment that the House of Representatives will approve $2,000 in relief checks following a vote Monday evening.
Stock Market Update
The S&P 500 rallied 0.9% after trading to an afternoon high of 3,740.
The Nasdaq was higher by 0.7% with the late-day peak reaching 12,930.
The Dow also advanced 0.7% following the second-half run to 30,525.
The Russell 2000 fell 0.4% despite tapping a high of 2,026 shortly after the opening bell.
Communication Services led sector strength after rising 1.8% while Consumer Discretionary and Technology were higher by 1.1%. Energy and Materials were the only sector laggards after giving back 0.6% and 0.4%, respectively.
Stock Market Movers
Bit Digital Inc. (Nasdaq: BTBT) skyrocketed 81% following the continued Bitcoin rise. The price cleared a high of $28,200 on Sunday, up from Friday’s close just above $24,000, before closing at $26,876 following Monday’s session.
Ideanomics Inc. (Nasdaq: IDEX), Marathon Patent Group Inc. (Nasdaq: MARA) and Riot Blockchain Inc. (Nasdaq: RIOT) are other stocks benefiting from the recent Bitcoin surge.
Stock Market Outlook
The third-quarter earnings calendar is light this week with no major companies reporting numbers. The start of the fourth-quarter earnings season will begin in a couple of weeks, with the focus on expectations for full-year 2021 following the pandemic-plagued 2020.
Estimates have been rising since early July, with S&P 500 earnings for the year expected to be up nearly 22%. As for the current Q4, earnings are expected to be down -11.3% on flat revenues, which would follow a -7% earnings decline in Q3 on -0.7% lower revenues.
For the small-cap S&P 600 index, Q4 earnings are expected to fall -18.3% on -3.2% lower revenues. This would follow the -7% decline on -6.3% lower revenues for the third quarter.
As for specific sectors, the Financial sector is expected to decline -8.9% on -3.3% lower revenues, which would follow declines of -11.7% in the third quarter; -45.3% in the second quarter, and -32.6% for the first quarter of 2020.
For the Technology sector, fourth-quarter earnings are expected to slip -0.2% on 9.1% higher revenues, which would follow 13% earnings growth for the third-quarter.
Looking at 2020 for the S&P 500 index, earnings are expected to decline -16.9% on -3.8% lower revenues. For full-year 2020, the S&P 600 index is expected to post a -28.9% decline in earnings on -10.4% lower revenues, with earnings growth expected to rebound to 35.6% in 2021.
Global Economy
European markets settled higher with the UK’s FTSE 100 closed for an extended holiday break.
Germany’s DAX 30 jumped 1.5% while France’s CAC 40 rallied 1.2%. The Stoxx 600 rose 0.7% and the Belgium20 nudged up 0.1%.
Asian markets closed mostly higher.
Japan’s Nikkei gained 0.7% and Australia’s S&P/ASX 200 added 0.3%. South Korea’s Kospi edged up 0.1% and China’s Shanghai was up less than a point, or 0.02%. Hong Kong’s Hang Seng was down 0.3%.
U.S. Economy
Dallas Fed Manufacturing Business Index for December came in at 9.7 versus forecasts for a print of 5. The employment gauge rose to 19.6 following the increase to 11.7 for November. Hours worked dipped to 9.3 from 9.7 while new orders climbed to 17.8 from 7.2. Shipments rose to 21.9 from 13.7. The prices-paid index soared to 49 from 35 with the prices-received index jumping to 17.4 from 4.7. The six-month component declined to 17.6 after slipping to 25.8 in November. Employment is at 27.5 and hours worked unchanged at 14.6. New orders dropped to 38.8 versus 43.2. The future prices-paid index increased to 50 from 42.2, with prices received at 32 from 21.4.
Stock Market Sentiment
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) was up for the second straight session despite trading to a low of $156.10. Current and upper support at $156.50-$156 was breached but held. A move below the latter would signal a retest weakness towards $155-$154.50.
Resistance remains at $157.50-$158 and the 50-day moving average.
Volatility Index
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) snapped a three-session slide despite the day’s low tagging 21.15. Near-term and upper support at 21.50-21 was tripped but held for the second straight session. A move below the latter would suggest additional weakness towards 20.50-20.
Resistance remains 22.50-23 followed by 24-24.50.
Stock Market Analysis
The Invesco QQQ Trust (Nasdaq: QQQ) was up for the second straight session after trading to a fresh all-time high of $313.17. Unchartered territory and lower resistance at $313-$313.50 was cleared but held. A close above the latter would indicate additional momentum towards the $314.50-$315 area.
New support is at $312-$311.50 followed by $310.50-$310.
RSI (relative strength indicator) is in an uptrend with key resistance at 70 holding. A close above this level would signal additional strength towards 75-80 and levels from early September. Support is at 65-60.
Sector
The iShares PHLX Semiconductor ETF (Nasdaq: SOXX) settled lower despite showing signs of breaking out of a four-session trading range with the morning peak reaching $377.70. Current and lower resistance $377-$377.50 was cleared but held. A close above the latter would indicate a retest towards the $380-$380.50 with this month’s all-time peak at $384.05.
Near-term and upper support at $372.50-$372 was breached but held on the second-half fade to $372.16. A close below the latter would be a slightly bearish signal with downside risk towards $370.50-$370.
RSI is showing signs of rolling over with key support at 60 holding. A move below this level would signal additional weakness towards 55-50. Resistance is at the 65-70.
Check back after the closing bell for the most important news and numbers in the WealthPress stock market update.