Market Overview

Investors Cheer Tech While Jobs Report Momentum Continues

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It’s the jobs report that keeps on working.

After gaining Friday on a jobs report that was much better than expected, stocks added to those gains Monday and look set to potentially do the same today. Hopes for a stronger economy are forming the backdrop to a rally that appears to be gaining momentum from optimism about tech stocks.

Trade Tensions Seem Less of a Factor — For Now

With 223,000 jobs added in March, well over Wall Street estimates for growth of about 190,000, plus gains in tech and consumer spending stocks, investors appear to be overlooking not-so-bullish news on the trade front.

The widening trade row has gone beyond China, with the U.S. announcing new steel and aluminum tariffs vs. Europe, Mexico, and Canada. Trade seems likely to feature in the discussions at the G7 meeting this week, set to be held in Canada, one of Trump’s tariff targets.

Still, that doesn’t appear to have been worrying Wall Street after the jobs report Friday.

Nasdaq Hits New Record, Propelled by Tech Names

On Monday, investors continued to cheer the strong jobs data and built on that momentum with gains in technology and consumer discretionary names. The tech-heavy Nasdaq (COMP) had a record close. The other two major U.S. indices also rose, with the S&P 500 (SPX) led higher by the consumer discretionary sector. 

Apple Inc. (NASDAQ: AAPL) closed at a record high, and the tech giant got closer to a $1 trillion market capitalization.

In other tech news, Microsoft Corporation (NASDAQ: MSFT) shares did well Monday as investors cheered an acquisition announcement, and Twitter shares are up in pre-market trading this morning after an announcement the company will be included in the S&P 500 (SPX).

Despite fresh worries over data sharing stemming from a New York Times report on Sunday, Facebook, Inc. (NASDAQ: FB) shares didn’t falter much Monday. In other FAANG news, Netflix, Inc. (NASDAQ: NFLX) shares gained Monday and moved higher in pre-market futures trading this morning.  

While tech stocks aren’t immune from the tariff issues, they may be insulated somewhat because so many people and businesses use tech company products.

Meanwhile, Target Corporation (NYSE: TGT) and Macy’s Inc. (NYSE: M) were among the top performers in the consumer discretionary sector of the S&P 500 on Monday. A bullish analyst report from Evercore ISI appeared to help M. Overall, it looks like optimism about the economy is painting a nice picture for retailers as consumers are out spending money.

2018-06-05-chart-mu.jpg Figure 1: Playing Through: Crude oil (candlestick) has been pressured over the last two weeks by heavier supplies and talk of a possible OPEC production increase. Another factor in oil’s downturn is the U.S. dollar (purple line), which continues to look strong amid concerns about the European economy. Data Source: ICE, CME Group. Chart source: The thinkorswim® platform from TD Ameritrade. For illustrative purposes only. Past performance does not guarantee future results.

More on Retailers

Amazon.com, Inc. (NASDAQ: AMZN) isn’t the only retail game in town, folks. Brick-and-mortar retail isn’t dead, it’s just being reorganized. Take Macy’s for example, with its pop up shops. Or look at Target, which has rolled out same-day home delivery in some areas. After being pooh poohed for so long because of the shift to online buying, some retailers are figuring out how to cater to both online customers as well as old fashioned foot traffic. “We are convinced that old-world brands and retailers are figuring out how to manage inventory and market to consumers in the digital era,” according to an Evercore ISI analyst, as reported by CNBC. It will be key, however, to see how retailers have done during next earnings season.

Tracking Investors

In May, with volatility easing, TD Ameritrade clients boosted their overall exposure to equities, with net buying activity causing the Investor Movement Index to rise for the first time in five months. Among the most popular buys were AT&T Inc. (NYSE: T), which reached a 52-week low during the period, and Snap Inc. (NYSE: SNAP), which traded lower on an earnings miss and analyst downgrade. Meanwhile, AAPL and M were among the most popular sells. AAPL hit an all-time high after announcing a share buyback and M reached a 52-week high after reporting stronger-than-expected sales to international tourists. The Investor Movement Index, or the IMXSM, is a proprietary, behavior-based index created by TD Ameritrade that aggregates Main Street investor positions and activity to measure what TD Ameritrade investors actually have been doing and how they have been positioned in the markets.

Under the Hood of Factory Orders

The headline figure for U.S. factory orders in April was a bit worse than expected Monday. Total orders dipped 0.8 percent compared to the 0.5 percent drop economists polled by Briefing.com had been expecting. But when you exclude transportation, orders were up 0.4 percent. Meanwhile, shipments of non-defense capital goods excluding aircraft gained 0.9 percent. As Briefing.com put it, “The key takeaway from the report is that shipments of nondefense capital goods excluding aircraft were slightly higher than what was seen in the advance durable goods orders report for April, so this will provide an added dose of support for Q2 GDP growth forecasts.”

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Posted-In: JJ Kinahan TD AmeritradeNews Commodities Econ #s Markets

 

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