And so it begins. The Nasdaq Composite has been going up for so long now, it’s hard to remember if it feels like it’s going down. Now we know.
Yes, that’s an exaggeration, but not much. He had been active for seven of the past nine trading days and six of the past eight weeks. Today it looked like it would be more of the same: the Nasdaq rose 2% at its peak of the day, before the sale started.
At the end of the day, the Nasdaq lost 2.1%, while the S&P 500 ended 0.9%.
It would be easy to point out, for example, California’s decision to close museums, movie theaters, restaurants and bars, at least the inside parts of those businesses, while Los Angeles and San Diego said the school would be online only when the school year of autumn begins
There’s only one problem: Nasdaq and high-flying tech stocks have offered safety from Covid storm for the past month, while cyclical stocks have taken it in the chin. But the Dow Jones Industrial Average managed to make an M profit today, finished 10.50 points, and was helped not only by pharmaceutical giant Pfizer (PFE) and healthcare titan United Health (UNH), but also by industrialists Caterpillar. (CAT) and 3M (MMM), JPMorgan Financial Chase (JPM) and Goldman Sachs (GS), and Dow INC.
(DOW) Each finished over 1%.
So what’s going on? NatAlliance Securities’ Andrew Brenner postulated that the California announcement was indeed the reason for the drop, that is, after all the time the market fell back. His explanation of why it was the Nasdaq that was hit: “It led to profit taking by some of the top players,” he writes. “We could see the same scenario tomorrow.”
But it could also be the beginning of the earnings season that is causing the change. Banks’ earnings will come tomorrow, with JPMorgan, Wells Fargo (WFC) and Citigroup (C) reporting Tuesday morning, and they have not recovered much since the March lows, a sign of very low expectations. However, the technology gains must be good enough to justify gains of 30% to 40% over the past three months, something that could be difficult to do. “[We would] suppose the momentum / growth reversal continues if the Bank’s earnings are well tomorrow, “writes Dennis DeBusschere of Evercore ISI.
What if they are not? We could end the worst of both worlds: technology and cyclical downturns … and a complete correction.
Stay tuned for bank earnings tomorrow to find out.
Write to Ben Levisohn at [email protected]