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Raise your hand if you saw it coming? That’s the massive gain from the Dow Jones Industrial Average, of course.
The Dow was up 580.25 points, or 2.3%, while the S&P 500 was up 1.5%, and the Nasdaq Composite finished 1.2%.
The first gains were boosted by Boeing (BA), which rose 14% on reports that test flights of the 737 MAX would start today, but eventually spread across the market. Coty (COTY) was up 13.4% because she bought a piece from makeup company Kim Kardashian West. Other defeated retailers also recovered, including Kohl’s (KSS), L Brands (LB), as well as REIT Simon Property Group (SPG).
At the end of the day, the Industrial Select Sector SPDR ETF (XLI) had gained 3.3%, while the Materials Select Sector SPDR (XLB) ETF increased by 2%. Financial and technology stocks finished just 1.1%.
The good news for investors is that the S&P 500 has not closed below 3,000 since May 26, and continues to maintain support there. The bad news: “It was the second gain of at least 1% in the past three days, but it was also the fourth consecutive LOW HIGH,” writes Frank Cappelleri of Instinet. “Therefore, the index respected the uptrend line of the triangle pattern, but the bearish formation remains a concern as well.”
That’s a fancy way of saying that the market is sending mixed messages, and that investors are receiving them out loud and unclear. In a survey of 341 investors, DataTrek found no clear consensus on how the S&P 500 market would end 2020. Up to more than 10% from here, Friday’s close had 20% of the vote, while 21% said the Market would increase from 5% to 10%, 21% said within 5% of current levels, 18% said 5% to 10% from here, and 19% said more than 10%. That’s almost a fifth of the respondents who are put into each of the five baskets. “The bottom line is that we are in a market without convictions,” writes Nicholas Colas, co-founder of DataTrek Research.
That would explain how the market could go from falling one day as if it were the end of the world, to recovering as if everything were OK the next day. When no one has conviction, no one can push things too far in one direction.
Let’s wait and see what tomorrow brings.
Write to Ben Levisohn at [email protected]
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