The S&P 500 Index (SNPINDEX:^SPX) gained 0.34% on Friday, August 21. Closing at 3397.16, the index of 505 stocks that makes up the overwhelming majority of the U.S. stock market’s value, ended the week at an all-time excessive, after returning to file ranges on Tuesday.
Right this moment’s transfer greater was underpinned by a giant day for 2 mega-cap stocks. Apple (NASDAQ:AAPL) shares gained greater than 5% following constructive analyst feedback, and semiconductor large NVIDIA (NASDAQ:NVDA) shares closed up 4.5% on continued momentum following its earnings earlier this week. The 2 tech giants have been the 2 largest gainers within the S&P on the day.
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There have been extra S&P 500 stocks that misplaced value right this moment than gained, with the mega-caps that moved greater doing the heavy lifting to maneuver the index greater. Large losers included the airline sector, with United Airways (NASDAQ:UAL) main the way in which down 3%, together with oil stocks Marathon Oil (NYSE:MRO), Diamondback Vitality (NASDAQ:FANG), and Apache Corp (NASDAQ: APA) falling on weak oil costs and issues in regards to the international economic system.
Optimism round tech giants shifting the market
Regardless of the continued coronavirus disaster that began a world recession and put tens of thousands and thousands of Individuals out of labor, expertise firms have proved surprisingly resilient. Apple shares are up nearly 70% yr thus far and up about double from the 2020 coronavirus crash in March. But its enterprise has confirmed surprisingly sturdy for a shopper merchandise firm, with earnings remaining very robust.
Not less than one analyst thinks the nice occasions might get even higher. Dan Ives of Wedbush, in a notice to traders, says the stock might run one other 27% over the following yr or so, citing a “supercycle” for the upcoming iPhone collection as thousands and thousands of shoppers look to improve to 5g. Ives thinks as many as 350 million of the 950 million iPhones in service right this moment might get upgraded over the following 18 months.
^SPX information by YCharts
For NVIDIA, the depth and breadth of the markets its merchandise serve proceed to develop, and traders are piling in. Its shares have surged even greater than Apple’s this yr, and with a $300 billion market cap in comparison with Apple’s $2 trillion market value, traders assume there’s loads of room to run.
Airline stocks down on American service cuts, financial worries
United Airways shares have been the worst-performing of the S&P 500 airline stocks, however American Airways (NASDAQ: AAL) stock additionally fell greater than 2.7% to shut the week. Yesterday, American detailed its plan to droop service to 15 markets beginning on October 7, via at the least early November.
These cuts have been delayed as a consequence of monetary help it and its friends received as a part of the CARES Act earlier this yr, however as soon as the necessities to take care of service and payroll ranges expire on the finish of September, each main airline can be pressured to make main cuts, barring extra — and substantial — authorities monetary help that’s more and more unlikely.
Even with monetary help, the airline business is dealing with what’s going to seemingly show a multi-year downturn because of the coronavirus pandemic. Air journey has elevated 10-fold over the previous few months from the lows in April, however nonetheless stays down about 70% within the U.S. Barring a medical breakthrough, vacationers might keep away from air journey in giant numbers for at the least one other yr.
Oil stocks feeling the same pinch
The S&P 500’s oil sector additionally took it on the chin right this moment, with 20 of the 26 sector stocks falling. Oil costs completed decrease, with Brent and West Texas Intermediate crude futures each down greater than 1% and nonetheless within the low $40s per barrel.
Low costs and weak demand proceed to weigh on the vitality business on a world foundation. Whereas China soaked up a whole lot of extra oil demand in latest months, profiting from file low costs, many of the remainder of the world has handled double-digit drops in demand. India imported much less oil in July than in some other month in additional than a decade, whereas U.S. driving journey was down greater than 13% in June.
MRO information by YCharts
With costs nonetheless under breakeven for a lot of producers, demand remaining constrained, and the quantity of oil in industrial storage nonetheless above five-year averages, the oil patch continues to really feel immense stress as a protracted downturn seems seemingly. This can proceed to weigh on oil producers like Marathon, Apache, and Diamondback for a while to come back.
Earnings subsequent week
Whereas most of the largest firms have already dropped their second-quarter outcomes, subsequent week brings us a handful of notable names. Greatest Purchase, Hormel Meals, Salesforce.com, and Medtronic report on Tuesday, Aug. 25, giving traders a take a look at 4 very totally different sectors: shopper discretionary spending, shopper staples, enterprise cloud providers, and healthcare.
Later within the week, shopper specialty retailers Tiffany & Co and Ulta Magnificence, together with discounters Greenback Tree and Greenback Common will report. Make sure you tune in right here for a more in-depth look after they report.