Stock Market Update: Tuesday, Oct. 20, 2020
Wall Street showed strength throughout in preparation for House speaker Nancy Pelosi’s deadline for a stimulus deal by the closing bell — and more in Tuesday’s stock market update. Pelosi, D-Calif., met with Treasury Secretary Steven Mnuchin in the final hour of trading, with the major indexes holding strong gains into the closing bell.
Positive developments on the coronavirus front also helped sentiment after Moderna Inc. (Nasdaq: MRNA) said the federal government could approve emergency use of the company’s experimental coronavirus vaccine in December.
Stock Market Update
The S&P 500 rose 0.5% after tagging an intraday high of 3,419.
The Dow was higher by 0.4% with the midday peak hitting 28,575.
The Nasdaq added 0.3% following the afternoon push to 11,632.
The Russell 2000 also rose 0.3% after testing a second-half high of 1,632.
Energy rallied 1.1% and was the strongest sector while Consumer Discretionary gained 0.8%. Consumer Staples were the only sector laggard after slipping 0.1%.
Stock Market Movers
Corsair Gaming Inc. (Nasdaq: CRSR) jumped 14% after six Wall Street analysts initiated coverage on the stock with buy and outperform ratings. The price targets ranged between $23-$25 citing future growth, a niche market and the the company being a dominant leader in the do-it-yourself computer gaming hardware space.
Stock Market Outlook
The third-quarter earnings season gets busier this week, with 84 S&P 500 and eight Dow companies on deck. Among the 2020 heavy hitters due, the stock market will pay close attention to results from Tesla Inc. (Nasdaq: TSLA) on Wednesday and Netflix Inc. (Nasdaq: (NFLX) after today’s close.
Netflix has missed earnings estimates the past two quarters after topping during the previous two over the past year. The company is expected to report a profit of $2.13 a share on revenue of $6.38 billion. In July, shares were at $527 into the prior earnings announcement and closed at $492 following the news.
A 5%-10% move is likely given the severity of a beat or another earnings miss, and could be roughly a $25-$50 swing from current levels. The all-time high from mid-July reached $575 and the 50-day moving average is at $505, with one of these scenarios likely to come into focus in after-hours trading and into Wednesday’s open.
Global Economy
European markets finished mostly lower as the number of new coronavirus infections reached a record high across the pond.
Germany’s DAX 30 dropped 0.9% and the Stoxx 600 stumbled 0.4%. France’s CAC 40 was off 0.3% and the Belgium20 slipped 0.1%. UK’s FTSE 100 nudged up 0.1%.
Asian markets closed mixed as traders fretted the outcome of the U.S. stimulus package deadline.
Australia’s S&P/ASX 200 fell 0.7% and Japan’s Nikkei gave back 0.4%. South Korea’s Kospi and China’s Shanghai rose 0.5% while Hong Kong’s Hang Seng edged up 0.1%.
U.S. Economy
Housing Starts rose 1.9% to 1,415,000 in September after dropping -6.7% to 1,388,000 in August. Strength was in single-family starts, which surged 8.5% to 1,108,000 after rising 2.9% to 1,021,000. Multifamily starts dropped -16.3% to 307,000 following a -25.9% tumble to 357,000. Starts were up in the Northeast South and West, but dropped in the Midwest.
Building Permits climbed 5.2% to 1,553,000 following a revised -0.5% slip to 1,476,000 million previously.
Stock Market Sentiment
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) fell for the fourth straight session with the midday low reaching $159.06. Near-term and upper support at $159.50-$159 and the 200-day moving average were breached but failed to hold. A close below the latter and the monthly low at $158.68 would be an ongoing bearish development with additional downside risk towards $158-$157.50.
Lowered resistance is at $160-$160.50 with additional hurdles at $161-$161.50.
Volatility Index
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) extended its winning streak to seven straight sessions with the morning high tapping 29.57. Lower resistance at 29.50-30 was cleared but held with backup help at 30.50-31 and the 200-day moving average.
Support is at 28-27.50 followed by 26-25.50 and the 50-day moving average.
Stock Market Analysis
The SPDR Small-Cap 600 ETF (NYSE: SLY) rebounded after testing a high of $66.06. Near-term and lower resistance at $66-$66.50 was cleared but held. A close above the latter and the monthly peak would be a renewed bullish signal for a retest towards $67.50-$68 and levels from mid-February.
Current support is at $65-$64.50 followed by $63.50-$63 and the 50-day moving average.
RSI (relative strength indicator) is back in a slight uptrend with key resistance at 60 holding. A move above this level would signal additional strength towards 65-70 with the latter representing the monthly and early August top. Support is at 55-50.
Sector
The Industrials Select Sector SPDR Fund (NYSE: XLI) was up for the fourth time in five sessions after testing an intraday high of $82.04. Current and lower resistance at $82-$82.50 was cleared but held. A close above the latter would be a bullish signal for breakout potential towards $85-$85.50 with the all-time high peak at $85.33 in February.
Support is at $80.50-$80. A drop below the $79.50 level would signal a possible near-term top with backtest potential towards $78.50-$78 and the 50-day moving average.
RSI is back in a slight uptrend after clearing and holding lower resistance at 60. Continued closes above this level would suggest ongoing strength towards 65-70. Support is at 55-50.
Check back after the closing bell each day for the most important news and numbers in the WealthPress stock market update.