Tech Stocks Bounced Back As The Vaccine-Related Optimism Cooled Down
Commenting on vaccine-related optimism cooling down and today’s trading, Gorilla Trades strategist Ken Berman said:
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The Vaccine-Related Optimism Cools Down
The major indices are all trading higher at midday despite a mixed morning session on Wall Street, but the Nasdaq continues to be decoupled from the Dow and the S&P 500. The tech sector and mega-cap tech stocks, in particular, bounced back following two negative sessions, as the vaccine-related optimism cooled down amid the continued exponential spread of the virus in the U.S. and Europe. The S&P 500 and the Dow could both close at record levels despite this morning’s brief pullback, although trading activity is expected to drop in the second half of the session due to the bank holiday.
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European Central Bank (ECB) President Christine Lagarde warned that even though the vaccine results are promising, the recovery could take a long time in Europe, and she pledged further monetary measures to support growth. The dollar hit a one-week high against the euro in early trading as short-dated Treasury yields hit new multi-month highs thanks to the bullish bets on the U.S. economy. Crude oil is also trading at its highest level since early-September at midday, in the face of the strengthening dollar, and global stocks continue to enjoy tailwinds, which is another bullish sign for U.S. equities.
Dow: 29,509, + 88 or 0.3%
S&P 500: 3,572 + 26 or 0.7%
Nasdaq: 11,726, + 172 or 1.5%
Russell 2000: 1,727, – 10 or 0.6%
Market breadth has been relatively weak this morning, with decliners outnumbering advancing issues by a less than 3-to-2 ratio on the NYSE at midday. Only 4 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 65 stocks hit new 52-week highs. The major indices have been hovering around their daily VWAPs (Volume-Weighted Average Price) throughout the morning session, pointing to a mixed and choppy afternoon. Tech stocks, communication services, and the defensive consumer staples, healthcare, and utilities sectors have been stronger than the broader market in early trading as the trends of the past couple of days reversed, but cyclical issues remained encouragingly stable, and that could hint at a broader-based rally in the second half of the week. Stay tuned!