Dow, S&P and Nasdaq recover all losses from sell-off

Business

CNBC Television 21 July, 2021 - 03:07pm 35 views

Read full article at CNBC Television

Dow tumbles more than 700 points on delta variant fears

The Washington Post 21 July, 2021 - 05:01pm

Asian markets closed in the red across the board, with Hong Kong’s Hang Seng Index leading the losses with a 1.8 percent slide and Japan’s Nikkei falling 1.3 percent. European markets posted even bigger declines, with Germany’s DAX and France’s CAC 40 tumbling more than 2.5 percent and the Pan-European Stoxx 600 sliding 2.3 percent.

The Dow Jones industrial average closed down 725.81 points, or nearly 2.1 percent, to 33,962.04 for its worst day of 2021. The S&P 500 index skidded 68.67 points, nearly 1.6 percent, to settle at 4,258.49. The tech-heavy Nasdaq composite index shed 152.25 points, or nearly 1.1 percent, to close at 14,274.98.

Companies whose fates are tethered to the recovery were hit hard in early trading, with Carnival Cruises and United Airlines sliding 5.7 and 5.5 percent, respectively. Energy stocks were also pummeled, with ExxonMobil losing 3.4 percent and Chevron sliding more than 2.7 percent.

“The big concern for the market is whether we going to see a slowdown in the global economic recovery,” Russ Mould, investment director at AJ Bell, wrote in commentary Monday. “This could be the overriding force which results in a bad period for equities in the weeks ahead.”

The market jitters and growing case counts echo the earlier days of the pandemic when stocks whipsawed with record volatility as investors struggled to get their arms around the breadth of the pandemic’s impact on the global economy.

The pandemic plunged the U.S. economy into a two-month contraction, according to a new finding by the National Bureau of Economic Research, marking the shortest recession on record. But the public health crisis has continued to grip the economy.

On Monday, investors flocked to safe havens, pushing the yield on the 10-year U.S. Treasury note down to just shy of 1.20 percent, its lowest level since February. Bond yields fall as prices rise.

Oil prices also tanked. Over the weekend, OPEC and its allies agreed to ramp up production despite the uncertainty with the delta variant, saying that oil demand is showing “clear signs of improvement” in a statement Sunday. Brent crude, the international oil benchmark, shed 6.9 percent to trade at $68.50 per barrel. West Texas intermediate crude, the U.S. oil benchmark, declined more than 7.6 percent to $66.94.

“While some may be focused on the potential of repeating the dramatic volatility that we saw in early 2020, it is important to keep in mind that we are in the middle of summer when trading volumes can be lighter,” Wayne Wicker, chief investment officer at Vantagepoint Funds, told The Washington Post in an email. “Additionally, the delta variant that is driving the current concerns by investors today should not prove to be devastating to the economy since vaccination rates continue to rise and health outcomes will be much better than last year.”

Even with the delta variant’s rise, signs of a strong recovery have been abundant. U.S. air travel hit a post-pandemic high on Sunday, with the Transportation Security Administration reporting more than 2.2 million travelers passing through its checkpoints. Consumer spending, which powers the bulk of the economy, has been steady, with June retail sales beating expectations, the Commerce Department reported last week.

“While goods have seen an increase in price due to supply shortages and increased demand, consumers have not let it [faze] them and instead are maintaining a post-quarantine spending spree,” Marwan Forzley, chief executive of Veem, a payments platform that works with thousands of retailers, said in commentary Friday. “Factors for this include businesses opening up with little to no restrictions, borders for travel reopened, and simply the desire to get out and engage in normal life activities again. ”

Markets had been on a record-breaking run after cratering in the early days of the pandemic. Even after allowing for Monday’s declines, the Dow was up nearly 27 percent compared to the same time last year.

“Our streak of winning weeks in the market has come to an end,” Chris Larkin, managing director of trading at eTrade, said in commentary Monday. “While pullbacks like we’re seeing today can rattle the nerves, it’s important to remember that the market is near all-time highs, and corrections are a natural part of a healthy market.”

The market turbulence comes as the trading platform Robinhood — which has capitalized on the surge in retail investing and excitement around stock trading — prepares its initial public offering with an expected valuation as high as $35 billion. Robinhood’s IPO is one of the most anticipated in a year that has already seen a slew of high-profile market debuts, including the cryptocurrency exchange Blockchain, the online gaming platform Roblox, and the dating app Bumble.

In a regulatory filing Monday with the Securities and Exchange Commission, Robinhood said it plans to sell more than 52 million shares in the $38 to $42 range. That would raise about $2 billion if they sell in the mid-offering price.

The online brokerage was at the center of the trading frenzy earlier this year, when hordes of ordinary investors, egged on by trading forums and social media posts, flocked to so-called meme stocks such as GameStop and AMC, sending their prices soaring. The volatile trading activity also attracted the attention of lawmakers concerned about potential market manipulation and the naivete of first-time investors. As of March, the company said it has 17.7 million monthly active users, with more than half of their customers claiming that Robinhood was their first brokerage account.

Stocks rally for a second day, Dow jumps more than 200 points to recoup Monday's losses

CNBC 20 July, 2021 - 05:02pm

U.S. stocks climbed higher on Wednesday as equities continued their rebound from a one-day rout to start the week.

Better-than-expected earnings reports from Dow members Coca-Cola and Johnson & Johnson added to the bullish sentiment.

The Dow Jones Industrial Average rose 286.01 points, or 0.83%, to 34,798.00. It's sitting less than 1% away from a record. The S&P 500 gained 0.82% to 4,358.69. The Nasdaq Composite climbed 0.92% to 14,631.95.

The 30-stock index rallied nearly 550 points on Tuesday, after tumbling 725 points on Monday for its worst session in eight months. The back-to-back rallies have now completely wiped the losses from the start of the week for all three indexes.

"Tuesday was a textbook oversold bounce following Monday's collapse," Thomas Essaye of Sevens Report Research said in a report Wednesday. "Beyond short-term gyrations, however, for value and cyclicals to reassert leadership, we will need to see yields bottom and economic growth beat estimates (two things we think will happen)."

The bond market, specifically the 10-year Treasury yield, is driving the equity markets. On Wednesday, the 10-year yield rose 8 basis points to 1.29% (1 basis point equals 0.01%). The yield dropped to a new 5-month low on Monday, before stabilizing on Tuesday. The drop in rates unnerved equity investors by signaling a possible slowing of the economy due to spreading Covid variants or a possible Federal Reserve mistake.

Even with bonds moving higher, the trend is still down, compared to five months ago when the 10-year was above 1.7%.

"The catalyst for why investors have become comfortable with risk assets over the past two days is admittedly elusive," Goldman Sachs' Chris Hussey said Wednesday. "Perhaps investors have just come to embrace the notion that the reaction function to a new wave of the virus is unlikely to be the same as the reaction function employed in the spring of 2020."

Stocks that would benefit most from a continued swift economic reopening climbed on Wednesday after rebounding from the Monday sell-off in the prior session. Shares of Carnival were up 9.4%. Las Vegas Sands was up 3.4%.

Energy stocks led the continued rally as oil continued to rebound after falling below $70 a barrel on Monday. The Energy Select SPDR rose 3.4%.

Dow member Coca-Cola gave an early boost to market sentiment after reporting quarterly revenue that topped pre-pandemic 2019 levels and raising its full-year forecast. Coca-Cola shares gained more than 1%.

Fellow Dow member Johnson & Johnson's stock traded nearly flat even after the drugmaker reported better than expected second-quarter earnings and revenue and also raised its 2021 guidance.

Moderna joined the S&P 500, giving the stock a 30% boost from a week ago. Its shares gained nearly 4.5%.

Verizon shares are up slightly after reporting better-than-expected revenue and subscriber growth and raising its full-year outlook.

Shares of Chipotle rose 11.5% as the Mexican fast-food chain reported quarterly revenue that surpassed pre-pandemic levels as dine-in customers returned to its restaurants.

Netflix reported disappointing third quarter subscriber guidance after the bell on Tuesday. The streaming giant said it expects 3.5 million net subscribers in the third quarter, nearly 2 million below analysts' estimates. The company also reported earnings that missed expectations.

Netflix shares were last down 3.2%.

About 85% of S&P 500 companies that have reported so far have beaten estimates, according to FactSet.

On Tuesday, reopening stocks rebounded sharply from Monday's sell-off triggered by a Covid-inspired global growth scare. American Airlines rose 4% and Norwegian Cruise Line rose 10%.

Some strategists see the market heading into a volatile period, in which there could be a deeper pullback. Investors are juggling concerns about inflation as well as new Covid cases rebounding in the U.S. as the delta variant spreads.

"I think what we've seen here are the early warning shots of a correction that we'll see probably... in late August, September, October," said Matt Maley, equity strategist at Miller Tabak. 

However, data shows spikes in Covid case counts typically don't keep the stock market down for long. In the 14 months since the April peak in average daily cases last year, U.S. case counts have flared up four times during which the S&P 500 stayed positive.

Goldman's Hussey said a better knowledge of Covid and the vaccines available to mitigate its impact could be a contributor to market confidence that U.S. economic activity isn't likely to freeze again with another wave of virus cases.

Rich Steinberg, chief market strategist at The Colony Group, told CNBC to expect "the continuation of whip saw behavior from investors."

"We will get a follow-on rally as investors have been conditioned to buy the dip," he said. "They have also been negatively conditioned to worry about the economy and the virus from last year's stressful world. I would describe the environment as skittish, but we are not seeing high levels of short-termism."

Got a confidential news tip? We want to hear from you.

Sign up for free newsletters and get more CNBC delivered to your inbox

Get this delivered to your inbox, and more info about our products and services. 

Data is a real-time snapshot *Data is delayed at least 15 minutes. Global Business and Financial News, Stock Quotes, and Market Data and Analysis.

Is Nvidia About to Replace Intel in the Dow? | The Motley Fool

Motley Fool 20 July, 2021 - 12:59pm

Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.

The stock market bounced back hard on Tuesday, and the Nasdaq Composite (NASDAQINDEX:^IXIC) did quite well. Up 1.5% as of 12:45 p.m. EDT today, the Nasdaq is actually up slightly on the week after a big roller coaster ride.

Many investors follow the Dow Jones Industrial Average more closely than the Nasdaq. Just six stocks out of 30 Dow components are listed on the Nasdaq, but they include some of the biggest tech companies on the planet. Nevertheless, one recent move could make it more likely that the Dow will replace one of its older Nasdaq stocks in favor of a newer and much larger rival. Below, we'll look at Nvidia (NASDAQ:NVDA) to see if it's ready to join the Dow and replace its competitor Intel (NASDAQ:INTC).

Back when Intel joined the Dow in the late 1990s, it was the undisputed powerhouse of the chip industry. Its groundbreaking x86 microprocessor designs had become the standard for personal computers, and the tech boom had put PCs on the cutting edge of innovation.

Today, though, Intel has fallen behind, while Nvidia has moved forward with innovations of its own. The latter's graphics processing units have become favorites not only among video gamers but also for those requiring their superior processing power for other applications, such as cryptocurrency mining. As a result, Nvidia's market capitalization is now roughly twice that of Intel.

Nvidia never would have been able to be considered for the Dow when its stock price was above $800 per share. That's because the Dow is a price-weighted index. Nvidia would instantly have had more than twice the influence of any other single stock in the average, making it a nonstarter as a potential addition to the Dow.

Now, though, Nvidia's 4-for-1 stock split has finally taken effect. As a result, the stock's price has moved to around $185. That's a perfect amount for a new Dow component to take its place within the average.

Some will inevitably argue that Intel is still an extremely strong player in technology and doesn't deserve to lose its place in the Dow. Intel has been able to sustain its track record in areas like data servers, and it still plays a big role in the PC industry.

Yet where it has fallen behind is in chips for mobile devices. Nvidia and others took the lead in that market, and Nvidia's proposed acquisition of ARM Holdings would give it a big leg up not only on Intel but also the rest of the semiconductor industry.

Also, from a Dow standpoint, Intel has almost no influence over the average anyway. Its share price of $55 makes it the third-least-influential stock of the Dow 30, with a weighting of barely 1%. Nvidia would fall in the middle of the Dow pack, with roughly 3% to 3.5% weight.

The managers of the Dow have been busy, making changes to seven Dow components on five separate occasions in the past four years. It's definitely possible that they'll move again if they see Intel as having lost the semiconductor wars.

Joining the Dow would be a mark of distinction for Nvidia. But even if it doesn't happen, investors can take heart in the fact that the GPU giant has already proved its superiority over Intel.

Discounted offers are only available to new members. Stock Advisor will renew at the then current list price. Stock Advisor list price is $199 per year.

Stock Advisor launched in February of 2002. Returns as of 07/21/2021.

Plunges in stocks, bitcoin offer useful lesson in what seemed like ever-rising markets | CBC News

CBC.ca 20 July, 2021 - 12:13pm

New York's Dow Jones Industrial Average, an index made up of 30 top blue-chip companies, took its biggest plunge since last October, and the Toronto Stock Exchange fell the most it has in nearly five months.

For an increasing number of pandemic-era traders who may have been fooled into thinking they could not lose in what seemed like ever-rising markets, suddenly the traditional disclaimer on investment products that "past performance is no guarantee of future results" showed it can also apply to an entire market.

And while stocks in New York and Toronto climbed on Tuesday, for many, the bad news was not over.

Even as traders moved to buy the stock market dip, cryptocurrency speculators got a fresh market warning as bitcoin declined sharply again, at one point trading below $29,500 US.

Bitcoin traders who bought the digital tokens at their April high — above $62,000 US — and sold them Tuesday morning would have lost about 53 per cent in three months.

Stories in the financial press suggested new moves by U.S. Treasury Secretary Janet Yellen to increase crypto regulation were one of the immediate triggers — part of a wider trend by governments and central banks to rein in the explosive growth of the tokens.

Cryptocurrency markets slide as regulatory scrutiny mounts <a href="https://t.co/LX9MSaI1vI">https://t.co/LX9MSaI1vI</a>

And while speculators who dipped their toes into cryptocurrency markets may have already learned the "past performance" lesson after their first big decline a month ago, until Monday, investors who spent a few spare hours this spring learning how to invest in traditional securities markets may not yet have got the word.

"It's become popular during the last year to argue that 'stocks only go up,'" U.S. financial adviser Cullen Roche wrote earlier this year on the website Seeking Alpha. "While the stock market is a wonderful long-term asset, it is often a horrible short-term asset."

As Roche and many others have explained, over a 10- or 20-year time horizon, buying shares in publicly traded companies — in the past at least — has been a reliable way of saving for the longer term future, even if stocks can face sharp declines in the short term.

For many introduced to the stock market in the past few months when retail investing really took off, picking stocks was relatively easy. 

With time on their hands and maybe a little extra cash in their pockets, a surge of new investors decided to try their hand at baking sourdough bread and trading stocks.

As with bread-making, most trading is usually done by professionals. But earlier this year, the TMX Group, which owns and operates the TSX, reported that nearly half of all stock trading was being done by retail traders.

"The positive strength in trading, equity trading particularly, and what's driving it in terms of retail interest, is something that we could see for some time," TMX CEO John McKenzie told Reuters at the time.

But how long that retail interest will last if stocks reverse their recent upward trend remains to be seen.

Because while rock-bottom interest rates and government handouts since the pandemic hit may have helped make investing feel safe, analysts remain wary about what will happen once central banks decide it is time to increase interest rates.

According to the random walk theory of markets, described as the theory "that stocks take a random and unpredictable path that makes all methods of predicting stock prices futile in the long run," successfully picking stock is as much art as it is science.

The market's long, recent upward trend — first during the Trump tax cuts, then during pandemic stimulus — is not normal. 

You don't have to go back to the Great Crash of 1929 to see that markets can also decline or tread water, as the graph above shows.

Just as some headlines about the bitcoin crash blamed Yellen, most of those reporting the stock market decline focused on a single cause: namely the renewed outbreak of COVID-19 driven by the delta variant.

But as we have seen in the past, in the copy below the headlines, the explanation was more nuanced.

In Canada, where the spread of the delta variant has so far been discouraged by increasing vaccination rates, the market decline was more directly attributed to what many believed was over-optimism about the price of oil, which fell about seven per cent Monday following OPEC's move to pump and sell more into world markets.

Despite the recent surge in the need for oil after the pandemic slump, fear of the effects of climate change and a push for more electric cars will presumably reduce demand eventually.

But as random walk reminds us, there is plenty we don't know about the future of energy company stocks.

Maybe, as with baking sourdough, the fad for investing will pass. But for those learning their way, personal experience, including when stocks fall, can provide a valuable education that can last a lifetime.

To encourage thoughtful and respectful conversations, first and last names will appear with each submission to CBC/Radio-Canada's online communities (except in children and youth-oriented communities). Pseudonyms will no longer be permitted.

It is a priority for CBC to create a website that is accessible to all Canadians including people with visual, hearing, motor and cognitive challenges.

Dow tumbles 725 points as investors fear Delta variant - NBC2 News

NBC2 News 19 July, 2021 - 08:52am

NEW YORK / CNN — The Dow Jones Industrial Index took a tumble on Monday as the rising number of the Delta COVID-19 variant spreads around the world.

Shortly after the opening bell, the Dow fell 725 points — a drop of 2.1%. The S&P 500 and Nasdaq also followed suit, each dropping more than one percent.

Investors are fearful of the Delta COVID-19 variant and the potential it has to threaten the US economic recovery.

Forty-eight states are now seeing new case numbers surge at least 10% higher than the previous week, according to data from Johns Hopkins University.

The CNN Business Fear & Greed Index, which looks at seven measures of market sentiment, is now showing signs of Extreme Fear.

Shares of companies in sectors that were widely thought to benefit most from the reopening of the economy are getting hit the hardest. American Airlines, United, and Delta were all down more than 4%. Cruise operators Carnival, Royal Caribbean, and Norwegian each fell about 5%.

Small American companies were also getting hit particularly hard. The Russell 2000 was down more than 1%. That index primarily holds shares of small-cap firms that generate more of their revenue from the United States than international markets.

Not all was lost, though. Cloud-based call center software company Five9 was spared from the market sell-off Monday. Shares rose 8% on the news that video conferencing giant Zoom was buying it for nearly $15 billion. Zoom’s stock subsequently fell.

Copyright © 2021 Waterman Broadcasting of Florida, LLC

Copyright © 2021 Waterman Broadcasting of Florida, LLC

Business Stories