Stock Market Update: Tuesday, Dec. 29, 2020
Wall Street ended a choppy trading session after setting another round of all-time highs shortly after the open — and more in Tuesday’s stock market update.
Ongoing legislation to boost the next round of stimulus checks to $2000, which was passed by the House and is now up for a vote in the Senate, weighed on sentiment.
The lower close came after Senate Majority Leader Mitch McConnell, R-Ky., blocked immediate approval to increase the one-time payments though the legislation, which could be voted on at a later time or date if McConnell so chooses.
Stock Market Update
The S&P 500 slipped 0.2% with the afternoon low hitting 3,723.
The Dow also dipped 0.2% following the intraday pullback to 30,274.
The Nasdaq fell 0.4% with the midday bottom hitting 12,827.
The Russell 2000 sank 1.9% after testing a low of 1,950.
Healthcare and Consumer Discretionary were the only sectors that closed higher after rising 0.4% and 0.03%, respectively. Energy and Real Estate paced sector laggards after falling 0.8%.
Stock Market Movers
Shares of Snap Inc. (Nasdaq: SNAP) soared 6% after a Goldman Sachs Group Inc. (NYSE: GS) analyst raised the firm’s price target to $70 from $47 and reiterated a Buy rating.
The analyst said since the company’s quarterly results in October, Snap has announced a number of tech innovations and product partnerships that, along with the favorable macro backdrop for online advertising, increase the likelihood of revenue growth acceleration well beyond consensus forecasts for the current quarter and beyond.
Stock Market Outlook
The latest AAII Sentiment Survey revealed bullish sentiment. Expectations nudged up 0.1% to 43.6% last week. Optimism remained above its historical average of 38% for the seventh straight week.
Neutral sentiment rose 4.2% to 34.4% and above its historical average of 31.5%.
Bearish sentiment fell 4.3% to 22%. Pessimism remained below its historical average of 30.5% for the seventh consecutive week.
Global Economy
European markets closed mostly higher with Germany’s DAX 30 lower by 0.2% to buck the trend.
The UK’s FTSE 100 jumped 1.6% and the Belgium20 edged up 0.2%. France’s CAC 40 rose 0.4% and the Stoxx 600 gained 0.8%.
Asian markets settled mostly higher following news that China’s factory activity likely maintained a solid pace of expansion in December.
Japan’s Nikkei surged 2.7% and Hong Kong’s Hang Seng rallied 1%. Australia’s S&P/ASX 200 advanced 0.5% and South Korea’s Kospi climbed 0.4%. China’s Shanghai fell 0.5%.
U.S. Economy
Chain store sales increased 0.4% last week with monthly sales down -0.9% through the third week of December. Compared to December a year ago, the sales pace accelerated to a 5% year-over-year clip versus 3.7% in the prior week. Sales and traffic picked up heading into Christmas with active on-line shopping, as well as in-store, curb pick-up and home delivery. Post-Christmas traffic counts remained relatively high amid exchanging and returning gifts, and redeeming gift cards.
S&P Corelogic Case-Shiller Shiller 20-City home price index rose 1.3% to 235.8 in October, another record peak, after increasing 1.3% to 232.7 in September. The index is up 8% year-over-year versus 6.6% previously. The 10-City index was up 1.4% to 248.6 after the 1.3% September gain to 245.2. The index is up 7.6% year-over-year versus 6.3% previously. All 20 cities surveyed posted year-over-year gains, led by Phoenix (12.7%), Seattle (11.67%) and San Diego (11.58%), with New York (6.03%) and Chicago (6.32%) bringing up the rear.
Stock Market Sentiment
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) had its two-session winning streak snapped following the morning pullback to $156.36. Near-term and upper support at $156.50-$156 was breached but held. A close below the latter would signal additional weakness towards $155-$154.50.
Resistance remains at $157.50-$158 and the 50-day moving average.
Volatility Index
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was up for the second straight session with the second-half high hitting 23.72. Prior and lower resistance at 23.50-24 was cleared but held. A move above the latter would signal a retest towards 25-25.50 and the 50-day moving average.
New support is at 22-21.50 followed by 20.50-20.
Stock Market Analysis
The S&P 400 Mid-Cap Index (NYSE: MID) extended its losing streak to two sessions with the first-half low tagging 2,273. Current and upper support at 2,275-2,250 was breached but held. A close below the latter would indicate a further backtest towards 2,225-2,200.
Resistance is at 2,300-2,325 with Monday’s all-time peak at 2,334.
RSI (relative strength index) is in a downtrend with key support at 60 holding. A move below this level would reopen downside risk towards 55-50 and levels from early November. Resistance is at 65-70.
Sector
The SPDR S&P Retail ETF (NYSE: XRT) was down for the second time in three sessions following the intraday pullback to $63.58. Near-term and upper support at $64-$63.50 was tripped but held. A close below the latter would suggest additional weakness towards $62.50-$62.
Resistance at $65-$65.50 with the recent all-time peak at $65.59.
RSI is in a downtrend after failing to hold key support at 70. Continued closes below this level keeps downside risk towards 65-60 in play. Overbought resistance is at 75 and the monthly top.
Check back after the closing bell for the most important news and numbers in the WealthPress stock market update.