Morgans AM

•US equity markets rallied, with technology stocks returning to form - Dow up +290-points or +1.05%. The broader S&P500 gained +1.4% to 3,380.35, settling just 5.8 points shy of the record closing high of 19 February of 3,386.15 (after trading above that level intra-day). Information Technology (up +2.31%) led ten of the eleven primary sectors higher, with Financials (down -0.29%) the only sector to close in the red. Royal Caribbean Group fell 2.5% after the cruise operator said it has secured a US$700M term loan facility from investment bank Morgan Stanley. The technology-centric NASDAQ rebounded +2.10%. Amazon.com Inc (+2.65%), Google parent Alphabet Inc (+1.78%) and Netflix Inc (+1.83%) all gained at least 1.5%. Microsoft Corp (up +2.86%) and Apple Inc (+3.32%) gained more than >2.8% each. Tesla Inc jumped +13.12% after the electric vehicle maker’s board approved a 5-for-1 stock split after the closing bell of the previous session. Uber Technologies Inc fell -1.19% after Chief Executive Officer (CEO) Dara Khosrowshahi warned that the company’s ride-hailing service could shut down in California until November if the company loses its appeal of a judge’s ruling requiring drivers to be classified as employees instead of contractors.

US equity markets retreated, with the Dow and S&P500 relinquishing gains in the final hour of trading to snap a seven session winning streak for both indices - Dow down -105-points or -0.38%, handing back an earlier rally of over >300-points. The broader S&P500 lost -0.80%, logging its worst session since 23 July after trading to within 0.5% of its record intra-day high (3,393.52) set on 19 February earlier in the session. The technology-centric NASDAQ dropped -1.69%. It meant that the Nasdaq snapped a 107-day streak that has seen the index without three down days in-a-row – the second longest such streak in the indice’s history. Facebook Inc (down -2.61%) and Amazon.com Inc (-2.14%) each fell more than 2% along with Microsoft Corp (-2.34%). Apple Inc and Netflix Inc lost -2.97% and -3.4%, respectively. Tesla Inc jumped +7.10% in extended trading after the electric vehicle maker’s board approved a 5-for-1 stock split. Trading will begin on a stock split-adjusted basis on 31 August, 2020.

•Both the Dow and S&P500 booked a seventh straight session of gains, while the Nasdaq underperformed for a second session amid signs of a rotation away from high-growth stocks in the technology sector to more economically sensitive cyclical companies - Dow up +358-points or +1.30%. Economic bellwether Caterpillar Inc climbed +5.26% and Boeing Co +5.52%, adding a combined ~112-points to the Dow. A US$1 move in any of the Dow's 30 components equates to a 6.86-point swing. The broader S&P500 gained +0.27% to 3,360.47) to close within 1% of its 19 February record closing high (3,386.15), with Energy (up +3.08%) and Industrials (+2.43%) leading six of the eleven primary sectors higher. MGM Resorts International (up +13.77%) was the leading S&P 500 constituent, gaining +13.77% after Barry Diller, chairman of IAC/InterActiveCorp US:IAC unveiled a 12% stake in the company. The technology-centric NASDAQ -0.38%. Social media platform Twitter Inc gained +0.81% after The Wall Street Journal reported it had held preliminary talks about a potential combination with TikTok. Microsoft Corp (down -1.99%) is still seen as the front runner in any deal around the video sharing app after weeks of talks between it and TikTok’s owner, Beijing-based ByteDance Ltd.

US equity markets turned in a mixed performance to end the week as investors pondered the latest jobs data, stalled stimulus talks and US-China tensions, with the Dow and S&P500 clawing into positive territory in the final minutes of Friday’s (7 August) session - Dow edged +47-points or +0.17%. Boeing Co fell -1.3% after a report that a 737 craft operated by Air India crash landed in Southern India before breaking in two. Pfizer Inc gained +0.47% after it announced that it will help manufacture Gilead Sciences Inc’s COVID-19 treatment remdesivir as part of a multiyear agreement. The broader S&P500 eked out a +0.06% . T-Mobile US Inc rallied +6.47% following the release of their second quarter result after the closing bell of the previous session that saw the company surpass AT&T Inc (up +0.60%) in number of customers, making it the second-largest largest U.S. provider behind Verizon Communications Inc (+1.21%), following its merger with Sprint. Financials (up +2.18%), Utilities (+1.80%) and Industrials (+1.73%) were the leading primary sectors with gains of over >1.5%, while Information Technology (down -1.56%) was comfortably the worst performing primary sector. The technology-centric NASDAQ lost -0.87% and snapping a seven session winning streak. The small capitalisation Russell 2000 Index outperformed with a +1.6% gain.

The Trump administration, in coordination with the Centers for Disease Control and Prevention, rescinded its international travel warning that has been in place since March, inspiring a late session rally for US equity markets that lifted the technology-centric Nasdaq to yet another record closing high - Dow up +185-points or +0.68%. The broader S&P500 gained +0.64% . Both the Dow and S&P500 extended their recent rally into a fifth straight session. The NASDAQ rose +1.00% (to 11,108.07) to settle above 11,000 for the first time, logging its fourth consecutive record closing high and 32nd of 2020. The Nasdaq Composite also marked its fastest 1,000-point rally to a new round-number milestone in 20 years, taking just 40 trading days to move from 10,000 to 11,0000. It represented the quickest such ascent since the 38-day sessions it took to climb from 3,000 to 4,000 achieved in 1999 during the dot-com boom and bust. Amazon.com Inc rose +0.62%, with regulatory filings recording that founder and Chief Executive Officer (CEO) Jeff Bezos sold 1M shares in the e-commerce giant over the first two working days of August, pocketing US$3.1B. Mr Bezos still owns more than >54M shares worth ~US175B. Facebook Inc jumped +6.49% a day after launching its new short video product Reels for Instagram. Apple Inc +3.49%, Netflix Inc +1.39% and Microsoft Corp +1.6%.

•US equity markets advanced after a choppy session, with investors keeping an eye on fresh stimulus measures and digesting some mixed corporate earnings releases - Dow up +164-points or +0.62%,. Walmart Inc fell -1.36% in extended trading after it was reported that the company has delayed the launch of Walmart+, a subscription service meant to compete with Amazon Prime, for the second time this year, according to a report by Vox. The broader S&P500 gained +0.36%. with Energy (up +2.46%) the clear outperformer and leading nine of the eleven primary sectors higher. Health Care (down -0.45%) and Financials (-0.44%) were the two primary sectors to close in the red. A late rally saw the technology-centric NASDAQ settle with a +0.35% rise, notching a fifth straight day of gains and a fresh record closing high (10,941.17). The so-called FAANG complex was mixed, with Apple Inc up +0.67%, Amazon.com Inc +0.87% and Netflix Inc +2.21%. However, Facebook Inc fell -0.85% and Google parent Alphabet Inc -0.64%. Advanced Micro Devices (AMD) Inc soared to fresh records, carving out a fresh record closing high (up +9.49% US$85.04) and intra-day peak (US$85.81) after another broker upgrade (who described the lead of AMD and its chip fabricator Taiwan Semiconductor Manufacturing Co over Intel Corp as “systemic”). The chipmaker’s market capitalisation (US$99.84B) closed in on the US$100B mark. Listed peer Intel Corp settled +1.72% higher at US$49.13 (affording the company a market capitalisation of US$208.95B). In broader stock news, Eastman Kodak Co (down -3.61%) is reportedly under investigation by the Securities and Exchange Commission (SEC) around the company’s disclosure about being awarded a US$765M loan from the US government to start producing generic drug ingredients in response to the COVID-19 pandemic, according to a Wall Street Journal report. The company’s share price soared as much as 570% during trading on 29 July.

US equity markets opened August on a positive footing, buoyed by solid manufacturing data and merger and acquisition (M&A) activity - Dow up +236-points or +0.89% The broader S&P500 gained +0.72% to 3,294.61, with Information Technology (up +2.49%) again the clear outperformer and leading five of the eleven primary sectors higher. Real Estate (down -1.47%) was the worst performing sector. The S&P 500 also ended the session less than 3% below the intraday record (3,393.52) set on 19 February. The technology-centric NASDAQ rallied +1.47% to a fresh record closing high of 10,902.80 and touching a fresh record intra-day peak of 10,905.40. Microsoft Corp jumped +5.62% (adding +71-points to the Dow) after it said it would push ahead with talks to buy the U.S. operations of Chinese-owned TikTok. President Trump reversed course earlier on a planned ban of the short-video app, instead saying that any sale to a US company must be completed by 15 September or the app will be banned. President Trump also suggested the company should pay the U.S. Treasury as part of the deal. Microsoft’s largest acquisition to date is the 2016 acquisition of business social network LinkedIn for US$27B. Investors of the privately owned ByteDance, the Chinese company that owns TikTok, valued TikTok at US$50B, Reuters reported last week. Secretary of State Mike Pompeo over the weekend said that the White House may take action against other Chinese software companies. Netflix Inc rose +1.99%, while Amazon.com Inc bucked the stronger trend with a -1.67% decline. The small-capitalisation Russell 2000 index gained +1.8%.

A late session rebound saw US equity markets end the week and month on a positive note, with big technology names driving the gains - Dow up +115-points or +0.44% The broader S&P500 gained +0.77%, with Information Technology (up +2.50%) the clear outperformer following strong quarterly results from the big technology quartet after the closing bell of Thursday’s (30 July) session. Energy (down -0.69%) was the worst performing primary sector. The technology-centric NASDAQ +1.49%. Apple Inc outperformed the broader market, jumping +10.47% to a record closing high (US$425) and logging a fresh 52-week high after announcing better-than-expected fiscal third quarter earnings and a four-for-one stock split after the closing bell of the previous session. The latest gain saw Apple usurp Saudi Aramco as the world’s most valuable publicly traded company with a market capitalisation of US$1.84 trillion Microsoft Corp rose +0.54% following multiple media reports that it is in talks to buy TikTok because President Donald Trump is set to order the dance app’s Chinese owner, ByteDance, to divest its ownership of TikTok’s U.S. operations.

Morgans AM: Friday 31 July 2020 by Morgans Financial