Stock Market Update: Wednesday, Nov. 25, 2020
Wall Street traded mostly lower throughout today’s session following a bevy of economic news ahead of and shortly after the opening bell — and more in Wednesday’s stock market update.
Tech was a bright spot after trading higher throughout the session and ahead of the market closure on Thursday with a half session on Friday.
Stock Market Update
The Nasdaq rose 0.5% after tapping a fresh all-time high of 12,114 in the final hour of trading.
The Dow lost 0.6% following the intraday pullback to 29,806.
The Russell 2000 was lower by 0.5% with the low reaching 1,831.
The S&P 500 slipped 0.2% following the intraday dip to 3,617.
Utilities led sector strength with a gain of 0.3% while Real Estate and Technology nudged up 0.2%. Energy was the worst performing sector after sinking 2.3%.
Stock Market Movers
Shares of Slack Technologies Inc. (NYSE: WORK) surged 37% following news that Dow component Salesforce.com Inc. (CRM) is interested in buying the company. The Wall Street Journal and Reuters both mentioned the possibility of a takeover, saying Salesforce views the potential acquisition as a logical extension of its enterprise offerings.
With today’s 52-week peak just below $41, there was a lot of chatter on potential buyout targets in the high $40s and above $50. The near-term call options exploded as traders speculated on the news. The WORK Dec. 18 $40 calls (WORK201218C00040000, $4.00, up $3.75) zoomed 1,500% after opening at 25 cents while skyrocketing to an intraday high of $4.50.
Stock Market Outlook
Black Friday is one of the most important retail and spending events in the United States, but this year will be different to say the least. Wall Street likes to make predictions about the level of sales on Black Friday, and investor confidence may be affected by whether or not expectations are met or exceeded.
If consumers spend a lot of money on Black Friday and retailers show strong numbers, investors might have their first indication that it is shaping up to be a strong shopping season. This confidence is often reflected in share prices.
Conversely, investors take it as a sign of trouble if retailers are unable to meet expectations on Black Friday. Concerns over the health of the economy have become magnified due to coronavirus, and it remains to be seen how much this affects consumer spending.
Global Economy
European markets settled mostly lower.
The Belgium20 and UK’s FTSE 100 were down 0.6%. The Stoxx 600 slipped 0.1% and Germany’s DAX 30 was off nearly 3 points, or 0.02%. France’s CAC 40 climbed 0.2%.
Asian markets were mixed.
Australia’s S&P/ASX 200 gained 0.6% and Japan’s Nikkei rose 0.5%. Hong Kong’s Hang Seng added 0.3%. China’s Shanghai fell 1.2% and South Korea’s Kospi was down 0.6%.
U.S. Economy
MBA Mortgage Applications were up 3.9% following a -0.3% dip in the prior week. The refi index climbed 4.5% after falling -1.8% previously. The purchase index rose another 3.5% after a similar gain in the prior week. The 30-year mortgage rate slid to 2.92%, another record low, from 2.99% last week. The 5-year ARM dropped to 2.63%, also a new record low, from 2.84% previously.
Initial Jobless Claims rose 30,000 to 778,000, missing forecasts of 740,000, after gaining 37,000 to 748,000 in the prior week. The four-week moving average climbed to 748,500 from 743,500 previously.
Q3 GDP growth was left unrevised at 33.1% from the Advance report. Growth has bounced back at a historic pace after cratering at a record -31.4% rate in Q2.
Stock Market Sentiment
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) extended its losing streak to three sessions following the afternoon fade to $158.62. Near-term and upper support at $159-$158.50 failed to hold. A close below the latter would signal additional weakness towards $157.50-157.
Lowered resistance remains at $160-$160.50 and the 50-day moving average.
Volatility Index
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) fell for the third straight session after testing a low of 21.13. Current and upper support at 21-20.50 was challenged but easily held. A close below the 20 level and the August low of 20.28 would signal another leg higher for the stock market.
Resistance remains at 22.50-23 is 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 afternoon high of $296.94. Near-term and lower resistance at $296.50-$297 was cleared but held. A close above the latter would indicate a retest towards $298.50-$299 with the monthly peak at $299.14.
Support is at $294.50-$294 followed by $293-$292.50.
RSI (relative strength indicator) is in an uptrend after clearing and holding lower resistance at 60-65. A close above the latter would signal additional strength towards 70-75 and levels from late August. Support is at 55-50.
Sector
The Consumer Discretionary Select SPDER(NYSEArca: XLY) was up for the third straight session with the intraday peak hitting $158.14. Lower resistance at $157.50-$158 was recovered. A close above the latter and Tuesday’s all-time high at $158.21 would likely lead to a run towards $160-$160.50.
Support is at $157-$156.50 followed by $155-$155.
RSI remains in a slight uptrend with key resistance at 65 holding. A close above this level and the mid-October peak would suggest additional strength towards 70-75. Support is at 60.
Check back after the closing bell for the most important news and numbers in the WealthPress stock market update.