D&D Note (4.28.2020) ~ Big Tech Drags Down Markets ~
Markets opened with a rally (the S&P 500 gapping up to 2920) but that quickly fizzled to trading flat throughout the day as the Mega Cap and Big Tech stocks dragged down the indices. This ahead of these companies reporting earnings this week. Also adding downward pressure was US Consumer Confidence in April falls to lowest level since 2014.
Big Tech losses on the day:
TSLA down -3.71% (up 1.02% after-hours)
GOOG down -3.31% (up 7.16% after-hours)
AMZN down -2.61% (up 1.49% after-hours)
FB down -2.45% (up 3.55% after-hours)
MSFT down -2.44% (up 1.26% after-hours)
AAPL down -1.62% (up 0.79% after-hours)
NFLX down -4.16% (up 0.39% after-hours)
Equity markets did rally off an intraday double bottom out of the red to propel the DOW and S&P 500 into the green with the tech heavy NASDAQ never being able to back to positive on the day. In the final 10 minutes of trading the major indices fell back into the red.
DOW down -0.13%
S&P 500 down -0.52% (2863.39)
NASDAQ down -1.40%
The VIX also traded mixed from gains to losses and finished the day up 0.84% to 33.57.
Oil swings after a major index gets out of the June contract to position itself in longer dated contracts. Investors have begun to see the same volatility and possible negative price action in the June contract as what happened with May contract.
Oil drops 3.4% to $12.34 a barrel. (Range intraday from $13.69 to $10.07)
Google says they will stagger people back to work but for all workers to expect to work from home until at least June 1st. The parent company Alphabet reported earnings after the bell with the stock gaining 7.16% on the back of Q1 earnings sales beat.
Dr. Anthony Fauci says the United States could be in for a “bad fall” season if the country doesn’t have an effective treatment for Covid-19 by then. He continued to say that the virus is “not going to disappear from the planet.”
Trump orders meat plants to stay open despite them becoming mini hotspots across the nation. The Defense Production Act being initiated as the supply of red meat is in jeopardy in coming weeks. Shares of plant-based burger company Beyond Meat (BYND) rose 0.62% on the day.
Texas cases of Coronavirus rise 3.5% to 26,171 and hospitalization rate jumps this as the state is readying themselves to reopen the economy. Retail stores, restaurants, and theaters are all set to reopen except only at 25% capacity. This is something the market is not pricing in, only a 25% return to economic activity.
California reports 1,576 new virus cases and 54 deaths in last 24 hours.
New Jersey reports 402 new deaths for a total of 6,442.
New York reports 295,106 virus cases up from 291,996.
Mexico City hospitals hit max capacity as virus spreads.
Germany cases increase after lockdown measures are loosened.
~ Dave James / Principal Trader and Market Strategist