Wall Street showed continued momentum while extending its win streak to four sessions amid unclear election results — and more in Thursday’s stock market update.
Former Vice President Joe Biden remains favored to win, but incumbent President Donald Trump isn’t going down without a fight after filing lawsuits against several states.
Meanwhile, the Federal Reserve reiterated its commitment to provide sustained stimulus amid the coronavirus pandemic, saying the ongoing public health crisis will continue to weigh on economic activity, employment and inflation.
The Russell 2000 rallied 2.8% after testing an afternoon high of 1,664.
The Nasdaq jumped 2.6% with the intraday peak reaching 11,924.
The S&P 500 gained 2% following the opening push to 3,529.
The Dow also rose by 2% after tapping a morning high of 28,495.
Materials were the strongest sector after zooming 4.1% while Technology and Financials skyrocketed 3.2% and 2.4%, respectively. Energy was the only sector laggard after slipping 0.03%.
Shares of Yeti Holdings Inc. (NYSE: YETI) surged 16% while tapping a fresh all-time high on better-than-expected earnings. The company reported a third-quarter profit of 61 cents a share on revenue north of $294 million. Wall Street was expecting a profit of 37 cents a share on sales of $260 million.
Looking ahead, Yeti sees Q4 adjusted earnings per share of 57-60 cents versus current forecasts of 56 cents. The company also expects Q4 revenue growth of 15%-16%, with forecasts at $340 million.
The stock market lost nearly 10% in two weeks to close out October as rising coronavirus cases, a lack of another stimulus package and election anxiety pushed investors to the sidelines into cash.
This week’s rebound has been an indication some of the estimated $4.5 trillion investors have in their coffers is coming back into stocks as the uncertainty of the election outcome could be over by Friday. However, if the outcome is decided by the courts, volatility could return.
In any event, some Wall Street analysts believe a 10% rally could occur if former Biden is announced the winner, with cyclical stocks leading and tech stocks lagging because of tax risks.
On the flip side, if Trump manages to survive and win, a 15%-20% rally could be in the works, as there would be less of a threat of more lockdown measures despite the continued rise in coronavirus cases. Analysts believe a Trump victory would benefit both cyclical and Tech stocks.
If a contested election result is dragged into next week, some analysts believe it could erase this week’s gains.
European markets hit a two-week high, supported by a handful of strong earnings reports and more stimulus for Britain’s economy.
Germany’s DAX 30 bounced 2% and France’s CAC 40 soared 1.2%. The Stoxx 600 added 1.1% and UK’s FTSE 100 climbed 0.4%. The Belgium20 edged up 0.1%.
Asian markets closed higher across the board.
Hong Kong’s Hang Seng zoomed 3.3% and South Korea’s Kospi soared 2.4%. Japan’s Nikkei rallied 1.7% while Australia’s S&P/ASX 200 and China’s Shanghai gained 1.3%.
Challenger Job-Cut Report announced layoffs dropped -3,100 in October to 80,700 after rising 3,000 to 118,800 in September. Most of the month’s layoffs came from the entertainment/leisure sector with -11,800 in reductions, followed by energy companies with -11,800. On a 12-month basis, announced job cuts are up 60.4% year-over-year versus a 185.9% rate. Meanwhile, holiday hiring plans are at 699,900 versus 813,800 last October.
Initial Jobless Claims fell -7,000 to 751,000, following the -39,000 decline to 758,000 in the prior week. This brought the four-week moving average to 787,000 versus 791,000 previously. Claims not seasonally adjusted slipped -500,000 to 738,200 following the -27,800 to 738,700. Continuing claims contracted -538,000 to 7,285,000 versus the -649,000 drop to 7,823,000 previously.
The Federal Reserve left its benchmark interest at 0%-0.25% with the pace of quantitative easing unchanged at $120 billion per month. This was widely expected in the aftermath of the election, especially with ongoing uncertainties and while the Fed has already provided an extraordinary amount of liquidity and backstops.
There were virtually no changes in the policy statement relative to that from September. The Committee reiterated it is committed to using its full range of tools to support the economy and is prepared to adjust policy as appropriate if risks emerge.
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) was up for the second straight session with the morning high reaching $161.74. Lower resistance at $161.50-$162 and the 50-day moving average was cleared but levels that held. A close above the latter would signal additional strength towards $163-$163.50.
Support remains at $160.50-$160 and the 200-day moving average.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was down for the fourth straight session following the intraday fade to 26.04. Prior and upper support from mid-October at 26.50-26 was breached but held. A close below the latter would indicate additional weakness towards 25-24.50.
Lowered resistance is at 28.50-29 and and the 50-day moving average followed by 30-30.50.
The Invesco QQQ Trust (Nasdaq: QQQ) extended its winning streak to four sessions after trading to a high of $295.39. Prior and lower resistance from mid-October at $295-$295.50 was cleared but held. A close above the latter would indicate additional momentum towards $297-$297.50.
Fresh support is at $292-$291.50 followed by $290.50-$291.
RSI (relative strength indicator) remains in an uptrend after clearing and holding key resistance at 60. Continued closes above this level would signal additional strength towards 65-70. Support is at 55-50.
The iShares PHLX Semiconductor ETF (Nasdaq: SOXX) was up for the fourth straight session after trading to a fresh all-time high of $338.63. Uncharted territory and lower resistance $338.50-$339 was cleared but held. A close above the latter would indicate an ongoing breakout with upside potential towards the $340 area.
Near-term and rising support at $335.50-$335 followed by $332.50-$332.
RSI is in a strong uptrend after clearing and holding resistance lower resistance at 65-70. A move above the latter and the October top would signal additional strength towards 75-80. Support is at the 60 level.
Check back after the closing bell for the most important news and numbers in the WealthPress stock market update.