Stock Market Update: Monday, October 12, 2020
Wall Street extended its winning streak to four straight sessions ahead of the start of the third-quarter earnings season — and more in Monday’s stock market update.
In addition to a number of earnings reports from the nation’s biggest banks that start Tuesday, Wall Street is looking ahead to Apple Inc.’s (Nasdaq: AAPL) iPhone launch event and the start of Amazon.com Inc.’s (Nasdaq: AMZN) two-day Prime Day sale.
Stock Market Update
The Nasdaq jumped 2.6% after testing an intraday high of 11,965.
The S&P 500 soared 1.6% with the midday peak hitting 3,549.
The Dow rose 0.9% following the afternoon trip to 28,957.
The Russell 2000 was up 0.7% with the morning peak hitting 1,652.
Technology and Communication Services were the strongest sectors after rallying 2.7% and 2.6%, respectively. Materials was the only sector laggard after giving back 0.2%.
Stock Market Movers
Shares of Dillard’s Inc. (NYSE: DDS) zoomed 27% following news that an investor disclosed a 5.89% stake in the company after Friday’s closing bell, representing 1,081,000 shares. An analyst upgrade on the price target to $46 from $30 also helped sentiment.
Stock Market Outlook
The major indexes are showing signs of making a serious run towards all-time highs with small caps leading the way. While tech has gotten all of the headlines, it is important to note the recent rotation has been healthy with a number of sectors also on the verge of all-time highs. However, with the Financial sector in focus this week with earnings, they will need to perform well to help keep the current stock market momentum intact.
The Financial Select Sector SPDR (NYSEArca: XLF) remains roughly 20% off its 52-week peak and just south of the $31 level. The chart below shows an uptrend since the start of the month with higher highs and higher lows.
A golden cross is also in the process of forming with the 50-day moving average on track to clear the 200-day moving average. This is typically a bullish technical pattern for continued upside. If shares can clear and hold $25.50-$25.75 this week, there is a good chance a run towards $26.50 and the early June peak could come into play. If shares fall back below the $24.50 level, it would confirm a near-term top.
Global Economy
European markets were mixed after UK Prime Minister Boris Johnson imposed a tiered system of further restrictions on parts of England, including closing some pubs, due to the rise in coronavirus cases.
France’s CAC 40, Germany’s DAX 30 and the Stoxx 600 gained 0.7%. UK’s FTSE 100 fell 0.3% and the Belgium20 slipped 0.1%.
Asian markets closed mostly higher on speculation that President Xi Jinping will use his expected visit to Shenzhen this week to signal a further opening of parts of the economy to foreign investment.
China’s Shanghai surged 2.6% and Hong Kong’s Hang Seng soared 2.2%.
South Korea’s Kospi and Australia’s S&P/ASX 200 rose 0.5%. Japan’s Nikkei dipped 0.2%.
U.S. Economy
No major announcements.
Stock Market Sentiment
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) rebounded with the afternoon peak at $160.68. Lower resistance at $160.50-$161 was cleared and held with a close above the $162 level being a more bullish development.
Support remains at $159.50-$159. A close below the monthly low of $158.68 and the 200-day moving average would suggest additional weakness towards $157-$156.50 and levels from early June.
Volatility Index
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) snapped a three-session slide despite tapping an opening low of 24.14. Current and upper support at 24.50-24 was breached but held.
Lower resistance at 25.50-26 and the 50-day moving average was also cleared but held on the bounce to 25.65 afterwards. A move above the 27.50 level would signal a retest towards 29.50-30 and the 200-day moving average.
Stock Market Analysis
The SPDR Dow Jones Industrial Average ETF (NYSE: DIA) extended its winning streak to four straight sessions after trading to an intraday peak of $289.61. Prior and lower resistance from early September at $289.50-$290 was breached but held. A move above the latter would indicate ongoing strength towards $292-$292.50 with the September peak at $292.36.
Current and rising support is at $287-$286.50 with backup help at $285-$284.50.
RSI remains in an uptrend with lower resistance at 65-70 getting challenged but holding. A move above the latter would signal a retest towards 75 and the late August/early September high. Support is at 60 with a close below this level signaling near-term weakness.
Sector
The SPDR S&P Retail ETF (NYSE: XRT) was also higher for the fourth straight session with the intraday high tapping $54.56. Fresh and lower resistance at $54.25-$54.75 was cleared but held. A close above the latter and Friday’s all-time peak at $54.61 level would be an ongoing bullish signal for additional momentum towards $55.50-$56.
Rising support is at $54-$53.50 followed by $52.50-$52.
Be sure to check back after the closing bell each day for the most important news and numbers in the WealthPress stock market update.