Stock Market Update: Wednesday, Dec. 16, 2020

Wall Street got off to a tentative start as traders waited on a stimulus package update— and more in Wednesday’s stock market update. 

As expected, the Federal Reserve kept short-term interest rates near zero and agreed to keep buying government bonds to help the economy until it sees substantial improvement.

The mostly higher session was highlighted by fresh all-time highs for Tech and the small caps, although volatility remains elevated.

Stock Market Update 

The Nasdaq rallied 0.5% following the late-day run to 12,687.

The S&P 500 edged up 0.2% after testing a second-half high of 3,711.

The Dow dipped 0.2% with the intraday low kissing 30,080.

The Russell 2000 fell 0.4% despite trading to a high of 1,966.

Technology and Consumer Staples were the strongest sectors with gains of 0.7%. Utilities led sector laggards after falling 1.2%.

Stock Market Movers

ContextLogic Inc. (Nasdaq: WISH), the parent company of e-commerce retailer Wish, priced 46 million shares at $24 — at the high end of a $22-$24 range in its initial public offering. Goldman Sachs Group Inc. (NYSE: GS), JPMorgan Chase & Co. (NYSE: JPM) and Bank of America Corp. (NYSE: BAC) acted as joint book-running managers for the deal. 

The IPO raised $1.1 billion but it was a disappointing debut. Shares opened at $22.75 before closing the session down 16%. The e-commerce company offers products from more than 500,000 merchants, mostly from China, with some 150 million items. Wish has more than 100 million monthly active users.

Stock Market Outlook 

FedEx Corporation (NYSE: FDX) will announce quarterly results after Thursday’s closing bell. The company is expected to earn a profit of $3.98 a share on revenue of $19.46 billion. The high estimate is at $4.51 a share with the low at $3.31,equating to a 53-cent beat or a 67-cent miss.

The company has topped forecasts the past two quarters by $2.18 and $1.01 a share while matching estimates and missing forecasts by 25 cents previously. There are 27 analysts that cover the stock with nine “Strong Buy” ratings, 13 “Buys” and five “Holds”.

Global Economy

European markets settled higher — aside from the Belgium20, which fell 1%. 

Germany’s DAX 30 jumped 1.5% and the UK’s FTSE 100 rose 0.9%. The Stoxx 600 gained 0.8% and France’s CAC 40 added 0.3%. 

Asian markets closed mostly higher, as well.

Hong Kong’s Hang Seng rallied 1% and Australia’s S&P/ASX 200 advanced 0.7%. South Korea’s Kospi rose 0.5% and Japan’s Nikkei climbed 0.3%. China’s Shanghai slipped a quarter-point, or 0.01%. 

U.S. Economy

MBA Mortgage Applications were up 1.1%, versus the -1.2% decline in the prior week. It is up 75.3% year-over-year versus the 63.8% clip last week. The purchase index rebounded 1.8% after the -5% prior drop and is up 26.5% year-over-year versus the prior 2.2% rate. The refi index increased 1.4% after the prior 1.8% gain and surged to a 105.0% year-over-year rate, up from 89.1% previously. The 30-year fixed-rate mortgage rate continues to fall and made a new all-time low at 2.85%, versus last week’s print of 2.9%. Refis were 72.7% of loans last week, up from 72% previously.

Retail sales dropped -1.1% in November and, excluding autos sales, fell -0.9%. Sales excluding autos, gas and building materials dropped -1% versus a prior -0.1% dip. Clothing sales plunged another -6.8% after the prior -3.4% slide. Department store sales tumbled -7.7% following the prior -4.9% drop. Electronics tumbled -3.5% following a 1.1% increase in October. Vehicle sales and parts declined -1.7% versus unchanged while eating/drinking establishments sales fell -4% from -0.4%.

Stock Market Sentiment

The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) extended its losing streak to three sessions with the intraday low tagging $156.39. Current and upper support at $156.50-$156 was tripped but held. A move below the latter would signal additional weakness towards $155-$154.50.

Resistance remains at $158.50-$159 and the 50-day moving average.

Volatility Index

The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) fell for the second straight session with the intraday low tapping 22.29. Current and upper support at 22.50-22 was breached but held. A move below the latter would suggest additional weakness towards 21-20.50.

Lowered resistance is at 23.50-24 followed by 24.50-25.

Stock Market Analysis

The Invesco QQQ Trust (Nasdaq: QQQ) extended its winning streak to three sessions after trading to an intraday all-time high of $309.79. Unchartered territory and lower resistance at $309.50-$310 was cleared but held. A close above the latter would indicate additional momentum towards $311.50-$312.

Rising support is at $307-$306.50 followed by $305.50-$305.

RSI (relative strength indicator) is in an uptrend with key resistance holding at 70. A close above this level would signal additional strength towards 75-80 and levels from early September. Support is at 65-60.

Sector

The Technology Select Sector SPDR Fund (NYSE: XLK) extended its winning streak to three  sessions following the late-day push to $128.14 and new record peak. Fresh and lower resistance at $128-$128.50 was cleared but held. A move above the latter would signal ongoing strength towards $129.50-$130.

Current and rising support is at $127-$126.50 followed by $125.50-$125.

RSI remains in an uptrend with key resistance at 70 holding. A close above this level would signal upside towards 75-80 with the latter representing the September top. Support is at 65-60.

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Check back after the closing bell for the most important news and numbers in the WealthPress stock market update.