D&D Note (4.24.2020) ~ Tech and Oil Push Markets to Rally Into Close ~
Markets begun the day a bit tepid and briefly fell into the red before staging a solid rally in the afternoon session.
The Tech sector and Mega Cap Tech stocks helped lead the rally along with the continued rebound in Oil.
While Jobless Claims are still staggering we did see a weekly decline which is a positive sign that many of the people who are needing to go on unemployment have already filed. However, many self employed Americans are still waiting to be able to file for jobless benefits next week which could cause a weekly uptick next Friday.
DOW up 1.11%
S&P 500 up 1.39% (2836.74)
NASDAQ up 1.65%
VIX falls -13.17% to 35.93
Oil gains 4.12% to $17.18 a barrel.
The FED cut its QE buying by another $10 Billion a day. This is another positive sign that the backstopping by the FED is becoming less critical as markets find stabilization.
State economies are beginning to surgically reopen. While this is great for the economy it also brings the risk we reopen too fast and cause a second wave of infections. All eyes will be on how Georgia cases fluctuate with their reopening.
Most experts say the stay at home orders should stay in effect until there has been 14 days of decline in Covid-19 cases. Right now we look to be perhaps jumping the gun with reopening while the curve has only leveled off flat and not actually come down, nor has had 14 days of falling cases.
When states reopen it is critical that measures of social distancing, wearing face masks, and testing is continued until we can finally have a vaccine.
Despite todays rally there are mixed signals that it is not full risk on with high yield also rallying and we are still roughly trading around the 50 day moving average.
Big earnings come out next week with the bulk of the S&P 500 reporting including heavy weights Facebook and Apple.
~ Dave James / Principal Trader and Market Strategist