De S&P 500 index (SNPINDEX: ^ SPX) won 0.34% on Friday, August 21st. Closing at 3,397.16, the 505-share index that makes up the vast majority of the U.S. stock market’s value, ended the week at a high, after returning to record levels on Tuesday.
Today’s move was underlined by a big day for two mega-cap stocks. Call (NASDAQ: AAPL) shares gained more than 5% following positive comments from analyst, and semiconductor giant NVIDIA (NASDAQ: NVDA) shares closed 4.5% on ongoing momentum after their earnings earlier this week. The two tech giants were the two biggest winners in the S&P on the day.
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There were more S&P 500 stocks losing value today than won, with the mega-caps moving higher by making the heavy lift to move the index higher. Big losers covered the airline sector, with United Airlines (NASDAQ: UAL) leading the way down by 3%, along with oil slicks Marathon Oil (NYSE: MRO), Diamondback Energy (NASDAQ: FANG), en Apache Corp (NASDAQ: APA) fall on weak oil prices and concerns about the world economy.
Optimism surrounded tech giants moving the market
Despite the ongoing crisis in coronavirus that ushered in a global recession and put tens of millions of Americans out of work, technology companies have proven surprisingly skilled. Apple shares are up nearly 70% year to date and up nearly double the coronavirus crash in 2020 in March. Nevertheless, his business has remained surprisingly sustainable for a consumer products company, with profits remaining very strong.
At least one analyst thinks the good times could be even better. Dan Ives of Wedbush, in a note to investors, says the stock could run another 27% next year, citing a “superbike” for the upcoming iPhone series as millions of customers look to upgrade to 5g. Ives estimates that 350 million of the 950 million iPhones in service today could be upgraded over the next 18 months.
^ SPX data by YCharts
For NVIDIA, the depth and breadth of the markets that serve its products continues to expand, and investors are piling on. Shares have risen even higher this year than Apple’s, and with a $ 300 billion market cap compared to Apple’s $ 2 trillion market value, investors think there is enough room to run.
Airlines lower on US cuts, economic concerns
Shares of United Airlines were the worst performers of the S&P 500 air actions, but American Airlines (NASDAQ: AAL) stock also fell more than 2.7% to close the week. Yesterday, American detailed its plan to stop service to 15 markets, starting on October 7, by at least early November.
These cuts were delayed due to financial support it and its peers received earlier this year as part of the CARES law, but once the requirements to maintain service and payment levels expire at the end of September, any major airline will be forced to making major cuts, excluding extra – and substantial – government financial support that is becoming less and less likely.
Even with financial support, the airline industry faces what is likely to prove a multi-year decline due to the coronavirus pandemic. Air travel has increased 10-fold in recent months from lows in April, but remains down about 70% in the US. Excluding a medical breakthrough, travelers could avoid air travel in large numbers for at least another year.
Oil wells that feel a similar pinch
The oil sector of the S&P 500 also took the plunge today, with 20 of the 26 sector shares falling. Oil prices ended lower, with Brent and West Texas Intermediate crude futures both down more than 1% and still in the low $ 40s per barrel.
Low prices and weak demand weigh on the global energy industry. While China has demanded far too much oil demand in recent months and benefited from record low prices, most of the rest of the world has to deal with double-digit drips in demand. India imported less oil in July than in any other month in more than a decade, while U.S. travel in June was more than 13%.
MRO data by YCharts
With prices still under scrutiny for many producers, demand remaining limited, and the amount of oil in commercial storage still above averages of five years, the oil demand is feeling great pressure, as a longer decline is likely. This will weigh heavily on oil producers such as Marathon, Apache, and Diamondback.
Arrivals new week
While many of the biggest companies have already dropped their second-quarter results, our new week brings a handful of notable names. Best buy, Hormel Foods, Salesforce.com, en Medtronic report on Tuesday, August 25, giving investors a look at four very different sectors: discretionary spending by consumers, consumer buttons, cloud services and healthcare.
Later in the week, specialty retailers for consumers Tiffany & Co en Ulta Beauty, along with discounts Dollarbeam en Dollar General will report. Be sure to log in here for a closer look when they report it.
