Stock Market Update: Thursday, Dec. 10, 2020
Wall Street opened weak and struggled throughout the session as traders awaited updates on a possible stimulus plan — and more in Thursday’s stock market update.
Tech and the small caps showed strength, closing higher, while the broader market settled slightly lower.
Stock Market Update
The Russell 2000 gained 1.1% with the intraday high reaching 1,924.
The Nasdaq rose 0.5% following the morning run to 12,431.
The S&P 500 slipped 0.1% after tapping an opening low of 3,645.
The Dow dipped 0.2% while testing a low of 29,876 shortly after the opening bell.
Energy showed the most sector strength after jumping 3.1% while Financials added 0.2%. Industrials were the weakest sector after giving back 1%.
Stock Market Movers
Shares of Airbnb Inc. (Nasdaq: ABNB) skyrocketed 113% after making its initial public offering. The company had priced 51.3 million shares at $68 and above the prior $56-$60 range.
Selling holders reduced the deal size by 250,000 shares with Morgan Stanley (NYSE: MS) and Goldman Sachs Group Inc. (NYSE: GS) acting as joint book-running managers for the offering. Shares opened at $146 in the afternoon before settling at $144.71 in its first day of trading.
Stock Market Outlook
Volatility remains a slight concern moving forward despite the stock market’s run to record highs again so far this month. Historically, volatility trades around the 20 level and moves into the mid-to-low teens on record highs.
The recent action has shown the 20 level, holding in eight of the past 10 sessions, with the late-November low tagging 19.51 and the lowest close at 20.57.
The aforementioned charts for the major indexes are showing a consolidation pattern this month following the breakout to record peaks. However, lower lows could be in store if the bottom of these trading ranges are breached.
For the Dow, a move below 29,500 would be troublesome and signal a near-term top, while a close below 3,550 on the S&P 500 would suggest the same. For the Nasdaq, a move below the 12,000 area would indicate further weakness and for the Russell 2000 a drop below 1,850 could also signal a further pullback.
Global Economy
European markets were mixed following a meeting between Britain and EU leaders on a trade deal that failed to yield a breakthrough.
The Belgium20 and the Stoxx 600 lost 0.4% while Germany’s DAX 30 declined 0.3%. UK’s FTSE 100 gained 0.5% and France’s CAC 40 edged up 0.1%.
Asian markets closed mostly lower despite better-than-expected bank lending data out of China.
Australia’s S&P/ASX 200 lost 0.7% and Hong Kong’s Hang Seng fell 0.4%. South Korea’s Kospi declined 0.3% and Japan’s Nikkei slipped 0.2%. China’s Shanghai was up a point, or 0.04%.
U.S. Economy
Initial jobless claims jumped 137,000 to 853,000. The number fell -71,000 to 716,000 in the last week of November. This brought the four-week moving average to 776,000. Continuing claims rose 230,000 to 5,757,000 in the week of Nov. 28 after plunging -562,000 to 5,527,000 previously.
Stock Market Sentiment
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) rebounded to close higher for the third time in four sessions with the afternoon peak reaching $158.29. Current and lower resistance at $158-$158.50 was recovered. A close above the latter would suggest additional strength towards $159-$159.50 and the 50-day moving average.
Support is at $157-$156.50 followed by $155.50-$155.
Volatility Index
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was up for the second straight session after trading to a first-half high of 23.46. Prior and lower resistance at 23-23.50 was breached but held. A close above the latter would signal additional upside towards 24-24.50.
Current and slightly rising support is at 21.50-21 followed by 20.50-20.
Stock Market Analysis
The SPDR Dow Jones Industrial Average ETF (NYSE: DIA) fell for the second straight session following the intraday fade to $299.20. Current and upper support at $299.50-$299 was breached but held. A close above the latter would signal additional weakness towards $298-$297.50.
Current resistance is at $301-$301.50 followed by $302.50-$303.
RSI is back in a downtrend with key support at 60 holding. A close below this level would suggest additional weakness towards 55-50 and levels from early November. Resistance is at 65-70.
Sector
The Industrials Select Sector SPDR Fund (NYSE: XLI) had its two-session winning streak snapped and remains in a 13-session trading range following the pullback to $88.17. Near-term and upper support at $88.50-$88 was breached but held. A close below the $87.50 level would be a slightly bearish signal, indicating additional weakness towards $86.50-$86.
Resistance is at $89.50-$90 with the late-November all-time peak at $90.16.
RSI is in a slight downtrend with support at 60 holding. This level has held since mid-November with a move below 60 signaling ongoing weakness towards 55-50. Resistance is at 65-70.
Check back after the closing bell for the most important news and numbers in the WealthPress stock market update.