Stock Market Update: Thursday, Oct. 29, 2020
Wall Street rebounded while showing overall strength for the first time in four sessions as better-than-expected economic news lifted spirits — and more in Thursday’s stock market update. The gains weren’t enough to offset the prior session’s losses, with the major indexes still down substantially for the week.
Stock Market Update
The Nasdaq showed the most strength after soaring 1.6% with the afternoon peak reaching 11,287.
The S&P 500 soared 1.2% with a late-day high of 3,341.
The Russell 2000 also rallied 1.2% after trading to a session high of 1,565.
The Dow rose 0.5% following the late-day push to 26,891.
Energy was the strongest sector after surging 3.1% while Communication Services and Materials jumped of 2.5% and 2.1%, respectively. Healthcare and Consumer Staples were the only sector laggards after falling 0.8% and 0.03%.
Stock Market Movers
Pinterest Inc. (NYSE: PINS) shares rallied 27% after reporting earnings that topped Wall Street expectations. The company reported a profit of 13 cents a share on revenue of $443 million versus forecasts of 2 cents a share on revenue of $377 million. Pinterest expects Q4 revenue will grow around 60% year-over-year, a modest acceleration compared to the growth rate from the recently ended third quarter.
Stock Market Outlook
There were a number of big tech earnings after the closing bell, as Apple Inc. (Nasdaq: AAPL), Amazon.com Inc. (Nasdaq: AMZN), Alphabet Inc. (Nasdaq: GOOGL) and Facebook Inc. (Nasdaq: FB) and Twitter Inc. (NYSE, TWTR) announced results.
The overall results were beats on profits with AMZN at $12.37 a share versus $7.41 and GOOGL at $16.40 versus $11.29. Both stocks were up in after-hours trading.
Friday’s action will likely decide October’s results on the last trading day with the major indexes showing overall gains for the month.
Global Economy
European markets were mostly lower after the European Central Bank decided to keep its rates and wider monetary policy unchanged, suggesting that additional policy action in the eurozone could come as soon as December.
The Belgium20 lost 0.4% and the Stoxx 600 slipped 0.1%. France’s CAC 40 and UK’s FTSE 100 were both off a point, or 0.03% and 0.02%. Germany’s DAX 30 climbed 0.3%.
Asian markets settled mostly in the red after the Bank of Japan left rates and asset purchases unchanged.
Australia’s S&P/ASX 200 sank 1.6% and South Korea’s Kospi lost 0.8%. Hong Kong’s Hang Seng fell 0.5% and Japan’s Nikkei declined 0.4%. China’s Shanghai nudged up 0.1%.
U.S. Economy
Initial Jobless Claims dropped -40,000 to 751,000 following the -51,000 slide to 791,000 in the prior week. This brought the four-week moving average to 787,750 from 812,250. Claims not seasonally adjusted declined -28,400 to 732,200 after sliding -69,200 to 760,600. Continuing claims dropped -709,000 to 7,756,000 after tumbling -933,000 to 8,465,000 previously. The insured unemployment rate was 5.3%, down from 5.8%.
Q3 GDP growth surged 33.1%, rebounding from the -31.4% contraction in Q2 and the -5% decline in Q1. Personal consumption posted a strong 40.7% gain following the -33.2% crash in the prior quarter. Business fixed investment climbed 28.5% versus -29.2%, with residential investment zooming 59.3% versus -35.6%, and nonresidential investment up 20.3% from -27.2%. Exports climbed at a 59.7% pace compared to the -64.4% drop in Q2, with imports jumping 91% versus -54.1% previously.
Pending Home Sales fell -2.2% to 130 in September following the 8.8% climb to an historic high of 132.9 in August. Compared to last September, the index accelerated to a 21.9% year-over-year pace versus 20.6% in August.
Stock Market Sentiment
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) had its four-session win streak snapped following the intraday pullback to $158.47. New and upper support at $158.50-$158 was breached but held. A move below the latter would reopen downside risk towards $157.50-$157.
Current resistance is at $160-$160.50 and the 200-day moving average.
Volatility Index
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) fell for the first time in four sessions despite tapping an opening high of 41.16. Current and upper resistance at 40.50-41 was stretched but held. A move above 41.50 would likely trigger a retest towards 42-44 with the June high at 44.44.
The fade to 35.63 afterwards held upper support at 35.50-35 with a more important recovery hurdle at the 34 level.
Stock Market Analysis
The SPDR Small-Cap 600 ETF (NYSE: SLY) snapped a three-session slide after testing a high of $63.44. Fresh and lower resistance at $63-$63.50 was cleared and held. A close above the latter and the 50-day moving average would signal a possible near-term bottom with additional rebound potential towards $64.50-$65.
Current support is at $62-$61.50 followed by $60.50-$60 and the 200-day moving average.
RSI (relative strength indicator) is back in a slight uptrend with lower resistance at 45-50 getting cleared and holding. A move above the latter would signal additional strength towards 55-60. Crucial support is at 40.
Sector
The Consumer Discretionary Select SPDR Fund (NYSE: XLY) was up for the first time in four sessions with the intraday peak reaching $147.84. Lowered resistance at $147.50-$148 was tripped but held. A close above $148.50 and the 50-day moving average would signal ongoing strength towards $150-$150.50.
Current support is at $145-$144.50. A close below the latter would be a renewed bearish development with additional downside risk towards $143-$142.50.
RSI bounced higher with lower resistance at 40-45 getting cleared and holding. A close above the latter would suggest additional strength towards 50-55. Key support is at 40 and a level that has been holding since mid-September.
Check back after the closing bell for the most important news and numbers in the WealthPress stock market update.