Today we’ll see if the market can roll a “lucky” seven as the Dow Jones Industrial Average ($DJI) enters Friday up six sessions in a row. It’s the first six-spot since last fall. Rising oil prices, high-achieving tech earnings, and even stock buybacks combined to help power the market higher this week.
Today’s open follows gains in Asia overnight but mixed results in European markets. No major earnings reports are due. Two Fed speakers take the microphone today: San Francisco Fed President John Williams and St. Louis Fed President James Bullard.
A Different Hero Every Day
Sunnier May weather seemed to filter into the tech sector recently, and those warmer feelings in tech might be giving the entire market a new spring in its step. While info tech helped lead the major indices higher on Thursday, it was also encouraging to see other sectors play a role.
It’s often a positive sign when different sectors step up one after the other, because it could mean investors are feeling more bullish across the spectrum rather than in one or two specific areas. On Thursday, health care and consumer staples shined, but the day before it was energy. Financials haven’t been carrying the torch as much, but they had a good day Thursday. Every S&P 500 sector finished higher.
Energy continued its winning ways Thursday and rose another 0.8 percent. Friction in the Middle East, where Israel and Iran had a skirmish, could be helping bolster oil prices. While geopolitics plays a big role in the energy sector, keep in mind, too, that U.S. oil stockpiles are well below their year-ago levels, and this also plays into oil’s recent strength. Look today for the updated U.S. rig count number from Baker Hughes for insight into whether producers may be stepping up to catch the higher prices.
Green Apple Brightens Tone
Oil is one big story this week, but it really feels like tech is setting the pace. That’s partly a function of strength from Apple Inc. AAPL, the biggest of the tech stocks. Once again, AAPL posted new all-time highs Thursday. The AAPL rally began about a week ago, and that’s really helped change the psychology. Many investors still appear to take their cue from AAPL, and the rest of the so-called FAANG stocks quickly jumped aboard, too.
Besides the rally in tech, other reasons for the change in psychology from a week ago seem to be subdued inflation numbers that have some investors a little less worried about potential Fed tightening, a corresponding retreat in 10-year Treasury yields from the 3 percent level to around 2.96 percent early Friday, and the strength in oil that’s helping boost energy names and which some analysts see as a barometer of consumer confidence. All of this comes as earnings season continues to mostly impress, but another test comes next week when many big retailers start reporting.
The better than 1 percent jump in health care stocks Thursday came as a bit of a surprise, because the sector has been in the dumps most of the year amid worries about possible regulatory moves affecting drug pricing. The rally came before today’s scheduled speech on the subject by President Trump, so maybe it indicates that some investors decided to cover short positions ahead of Trump’s remarks. If Trump sounds a bearish tone for the big pharmas, a retreat might be on the prescription pad.
VIX Heads South
The S&P 500 (SPX) and $DJI were back in the green for the year as of yesterday’s close, and as stocks rolled along volatility beat a quick retreat. The Cboe Volatility Index (VIX) was trading just above 13 early Friday. Some investors view a lower VIX as indicating the potential for less turbulent trading, which would probably come as welcome news to those long-term investors who’ve patiently stuck with this market since it began tossing and turning in early February. But we’ll just have to wait and see what happens.
Crude moved slightly higher Thursday but wasn’t able to close above key resistance in the $71.90 a barrel area. The oil market traded both sides of unchanged early Friday.
Meanwhile, earnings after the close Thursday from NVIDIA Corporation NVDA failed to help the stock much in pre-market futures trading despite the company beating Wall Street analysts’ expectations. Gaming revenue rose 68 percent year over year, which looks good considering it accounts for more than half of the company’s revenue. Sometimes when shares fall after a strong quarter, it could mean investors taking profits now that the news is out, or it might be reaction to the company maybe not meeting some of the “whisper” numbers people sometimes hear right before a report.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.