Stock Market Update: Tuesday, Dec. 1 2020
Wall Street showed strong gains following renewed talks of a stimulus package and mostly positive economic news — and more in Tuesday’s stock market update.
A group of bipartisan lawmakers offered a new $908 billion stimulus plan in an effort to break the legislative stalemate as the coronavirus surges throughout the country.
Meanwhile, comments from Federal Reserve Chair Jerome Powell lifted sentiment as he said the Fed is committed to using all its tools to support the recovery and that emergency programs remain available. The gains pushed the Nasdaq to its fourth straight record high and the S&P 500 to a new all-time peak.
Stock Market Update
The Nasdaq surged 1.3% with the afternoon high hitting 12,405.
The S&P 500 soared 1.1% after trading to an intraday top of 3,678.
The Russell 2000 was higher by 0.9% after testing a morning peak of 1,848.
The Dow climbed 0.6% following the opening run to 30,083.
Communication Services and Financials were the strongest sectors after jumping 1.8% and 1.6%, respectively. There were no sector laggards.
Stock Market Movers
Shares of BlackBerry Ltd. (NYSE: BB) skyrocketed 19% after the company and Amazon Web Services announced a deal to develop BlackBerry’s Intelligent Vehicle Data platform (IVY).
BlackBerry IVY is a scalable, cloud-connected software platform that will allow automakers to provide a consistent and secure way to read vehicle sensor data, normalize it and create actionable insights both locally in the vehicle and in the cloud.
Additionally, automakers can use this information to create responsive in-vehicle services that enhance driver and passenger experiences.
Stock Market Outlook
Volatility remains slightly elevated despite Tuesday’s push to record highs. More specifically, traders and investors are waiting to see if volatility can clear and hold longer-term support below 20, and the high-teen levels that were last seen in late February.
Although the 20 level has been tested and breached in four of the past five sessions, it remains one of the most important technical indicators to confirm a continued rally into year-end.
Global Economy
European markets showed strength following better-than-expected economic news with the United Kingdom’s factory activity growing at its fastest pace in three years.
UK’s FTSE 100 advanced 1.9% and the Belgium20 rose 1.4%. France’s CAC 40 was higher by 1.1% while the Stoxx 600 and Germany’s DAX 30 were up 0.7%.
Asian markets closed higher across the board after data showed rapid acceleration in factory activity in China.
China’s Shanghai soared 1.8% and South Korea’s Kospi jumped 1.7%. Japan’s Nikkei was up 1.3% and Australia’s S&P/ASX 200 gained 1.1%. Hong Kong’s Hang Seng added 0.9%.
China’s Caixin/Markit Manufacturing Purchasing Managers’ Index(PMI) rose to 54.9, versus forecasts of 53.5, and up from October’s 53.6 reading.
U.S. Economy
Construction Spending jumped 1.3% in October, stronger than expectations for a rise of 0.8% and following a downward revision to -0.5% in September. Strength remains in the residential category, which rose another 2.9% after a 0.6% gain in September. Nonresidential construction spending was flat in October after falling -1.3% in September. Private spending in October bounced 1.4% versus the prior -0.4% slide in September. Public spending rebounded 1% from -0.7% previously.
Markit Manufacturing Index was unchanged at 56.7 in the final November print versus the preliminary update. The output index increased to 59.2 from October’s 53.3 print. New orders also improved to their highest reading since May 2018.
Stock Market Sentiment
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) was down for the second straight session and for the fifth time in six days after sinking to an afternoon low of $156.68. Prior and upper support at $157-$156.50 was breached but held. A move below the latter would signal additional weakness towards $155.50-$155.
Lowered resistance is at $158-$158.50 followed by $159.50-$160 and the 50-day moving average.
Volatility Index
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) closed higher for the first time in six sessions despite testing a first-half low of 20. Current and upper support at 20-19.50 was tagged but held. A close below the latter would be a bullish signal for the stock market with additional weakness towards 18.50-18.
Resistance is at 21-21.50 followed by 22.50-23.
Stock Market Analysis
The SPDR Dow Jones Industrial Average ETF (NYSE: DIA) rebounded after trading to an intraday peak of $301.01. Current and lower resistance at $301-$301.50 was breached but held. A close above the latter and the recent all-time high at $301.11 would signal a possible breakout towards $302-$302.50.
Current support is at $298-$297.50 followed by $295.50-$295.
RSI is back in a slight uptrend after clearing and holding lower resistance at 60-65. A close above the latter would suggest additional strength towards 70-75 and levels from late August and early September. Support is at 55-50.
Sector
The iShares PHLX Semiconductor ETF (Nasdaq: SOXX) was up for the third straight session and for the fifth time in six days after trading to a fresh all-time high of $370.11. Uncharted territory and lower resistance $370-$370.50 was cleared but held. A close above the latter would indicate an ongoing breakout with upside potential towards the $372-$372.50.
Near-term and rising support at $367.50-$367 followed by $364-$363.50.
RSI remains in an uptrend after clearing and holding lower resistance at 70-75. A move above the latter and the early September top would signal additional strength towards the 80 level. Support is at the 65-60.
Check back after the closing bell for the most important news and numbers in the WealthPress stock market update.