Big Tech Earnings in Focus

Big Tech Earnings in Focus

Dow Jones: Second Stimulus Bill

The Dow futures are trading higher because traders are optimistic about the news regarding a possible coronavirus vaccine. Stock investors are also feeling comfortable with the idea that the current economic weakness is supported by stimulus measures. Yesterday, European leaders finally reached a deal to unleash a landmark stimulus package that would aid the Eurozone’s economic recovery. Investors are keeping close tabs on Washington, where the second round of stimulus bill is being discussed. Speculators believe that the second stimulus package is a done deal, and the only question is regarding the size of the envelope. The reason behind this is that policymakers cannot leave things halfway; the U.S. economic and health situation is still dire, and it needs immediate attention. For the time being, fiscal and monetary policies are the only pills that are helping to ease the coronavirus economic pain. 

Steven Mnuchin, the U.S. Treasury Secretary, has all of his focus on returning children to school and boosting job growth. Mnuchin is asking for funding for these causes. President Trump’s agenda is more focused on the payroll tax cut, and previously he has supported another round of stimulus checks for Americans as well. 

The European stock market is likely to record another positive session as the E.U. leaders got their act together. 750 billion Euros of joint debt will be raised by member states to fight the economies woes. An envelope worth 390 billion Euros will be handed in as a grant to mitigate the economic downturn and 360 billion Euros in low-interest rate loans. This move confirms that policymakers are serious about the future of the Eurozone, and they are willing to do whatever it takes to bring the economic recovery back. The FTSE MIB, the Italian index, is the one to watch, as it is Italy that is going to receive a large portion of grants and loans. 

The Dow Jones futures, along with the S&P 500 futures, are also focused on the big tech stock rally as the earnings season continues to unfold. For many tech companies, the cure for Covid-19 is providing more Cloud and work from home solutions for corporations. IBM reported its second-quarter earnings results yesterday, and its revenue soared 5.4% to $18.1 billion. IBM was able to thrash Wall Street’s revenue estimate, the estimate for IBM’s revenue was $17.62 billion. IBM’s Cloud product sales soared 30% to $6.3 billion, which helped the company mitigate income loss in consulting services. Microsoft will also report its earnings today, and investors will dissect various parts of its earnings report to understand the future landscape better.

In the global stock markets, all the major indices cheered the vaccine news and closed with gains. The Shanghai index was the only one that recorded losses; it fell 0.12%. The HSI index and the Japanese Nikkei index closed higher and recorded gains of 1.66% and 0.72%, respectively. 

Gold Prices At a 9 Years High 

Gold prices continue to trade near 9 years high, and they are firmly holding on to their $1,800 price level. There is no doubt that there is strong demand among investors for safe-haven assets despite the rally in the U.S. stock markets. The on-going geopolitical tension between the U.S. and China are causing significant causes for concern. The U.K. has also escalated tensions with China at a time when it needs Beijing’s help the most because of Brexit. The U.K.’s stance towards Hong Kong over a national security law is likely to cost the U.K. in the long run. Traders believe that the shinning metal is their best bet in times like this. 

Dow Index and S&P500 Index: Market Breadth

The coronavirus stock market’s breadth indicates that bulls lost some ground yesterday. 47% of the Dow Jones industrial stocks traded above their 200-day moving average, a 3% drop from the day before. 

The S&P 500 stocks also signal weakness. 50% of the shares are trading above their 200-day moving average, a 2% decline from a day earlier.  

Dow Jones and S&P 500 Futures Today

The Dow Jones futures are trading higher by 50 points. Investors are cheering the coronavirus vaccine news and are hopeful that a vaccine will be produced by the end of this year. All eyes are on the next U.S. stimulus bill that can shift the coronavirus stock market rally in a higher gear. 

The Dow Jones futures’ weekly chart shows that bulls are trying to push the price envelope further. This week’s Dow Jones price is still within the DJ30’s highs and lows of the last week. However, the Dow Jones futures’ price is trading above the 50 and 100-day simple moving average SMA on a weekly chart. For Dow Jones’s traders, this is a positive and bullish sign, and as long as the Dow price continues to trade above the 200-day SMA, the DJIA’s price can continue its bull trend. 

Below is the Dow Jones daily chart 

The S&P 500 index’s price has already crossed last week’s high, and this confirms the continuation of a bull trend for the S&P 500 stocks. The S&P 500 index is always considered a better representation of the U.S. stock market overall. The S&P 500’s price is trading above all of the critical averages: 50, 100, and 200-day SMA. This confirms that the bulls are in control of the S&P 500’s price. 

Stock Market Rally 

 The S&P500 index closed with decent gains yesterday. It jumped higher by 0.84% and closed at 3251. In terms of the S&P 500 sector rotation, eight sectors fell while three gained. The energy and utility sectors led the losses while consumer discretionary posted the most gains. 

The Dow Jones index recorded minor gains of 0.03% and closed in positive territory by recovering its earlier losses. Ten stocks of the Dow Jones recorded gains while 20 shares fell. Microsoft was the best performer while the 3M Co was the biggest drag for the Dow Jones. 

The NASDAQ composite, a tech-savvy index, soared 2.88% yesterday and had its best day against the S&P 500 since mid-April. Nasdaq prices are trading nearly 21% above their average 100-day price. 

Coronavirus Cases Top 14 Million 

Coronavirus global tracker confirms 608K deaths due to Covid-19 and over 14.6 million global coronavirus cases. 

Donald Trump’s administration has pushed Americans to start wearing masks to safeguard themselves from coronavirus. This is a sudden change in the Trump administration’s stance because Trump previously ridiculed the idea of wearing a mask.

Traders are optimistic because the vaccine that is being developed by the University of Oxford and AstraZeneca has shown more promising results during the earlier human trail data. Of course, this is not the trail that is taking place to address coronavirus. Pfizer’s partnership with BioNtech Se and China’s Cansino Biologics Inc has also achieved some valuable results indicating that progress is being made regarding a Covid-19 vaccine. All of this strengthens the argument that a coronavirus vaccine may be available by the end of this year.