U.S. Stock Futures Mixed After Trump Orders Coronavirus Relief
U.S. stock futures were mixed early Monday morning after President Donald Trump signed several executive orders aimed at extending coronavirus relief. Dow Jones Industrial Average and the S&P 500 futures were up 0.33% and 0.15% respectively as of 3.46 a.m. ET on Monday, while Nasdaq 100 futures were 0.05% lower.
U.S. And China Still At Odds
The U.S.-China tensions have been going from bad to worse and there’s no other way to put it. It appears to be heading to a point of no return. As if slapping tariffs at each other and cancelling trades are not bad enough. Just this year, the US regulators made it difficult for Chinese companies to list in the US stock exchanges and faces potential delisting of Chinese companies if they do not comply with the requirements. And most recently, the ban on famous Chinese apps namely TikTok and WeChat is straining the relationship further. If there’s no consensus between the U.S. and China in the TikTok deals, certain tech stocks, both large and small cap in both countries are expecting to take a hit.
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Corporate Earnings Continue To Wind Down
Earnings season continues this week with another set of companies reporting quarterly earnings results, including a few newly listed companies set to announce their quarterly reports for the first time. Among those closely watched will be Lyft (LYFT Stock Report), NetEase (NTES Stock Report), Canopy Growth (CGC Stock Report). The fresh faces making their first public announcement this week are Lemonade (LMND Stock Report), ZoomInfo Technologies (ZI Stock Report) and Vroom Inc (VRM Stock Report).
Some of these companies have seen soaring stock prices. The earnings releases will likely provide a reality check for the enthusiastic investors. The newly listed companies have at least doubled in stock prices. Yet, they have so far not seen much significant news that can affect their stock prices.
This came as investors continue to be optimistic about the prospects of these newly public companies. Perhaps they are afraid of missing out on the expected growth. With a lack of company guidance, it remains to be seen how the market will react. After all, the market doesn’t necessarily agree with analysts’ consensus.
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Defensive Sectors To Rise, Value Stocks Gain
It’s certainly an interesting year for financial markets. It’s easy not to notice that the S&P 500 Index is now just around 1% below its record high. Recent gainers included defensive sectors such as utilities and real estate. Tech stocks which were the primary driver of the market rally since March appear to be taking the back seat now. Does that mean we are expecting to see a decline in Nasdaq Composite or the rise in “reopening stocks” this week? Fundstrat’s Tom Lee agrees with the latter.
The reopening stocks, also called “epicenter stocks” by Lee, are stocks that should benefit from a steady reopening of the US economy. These include the travel, leisure, and hospitality sectors. With the research carried out by his team in Fundstrat, they conclude that the epicenter stocks are set to outperform sometime this week. He pointed to Friday’s unemployment report, which showed a 50% retracement of jobs lost since the pandemic began. That to him, signals that the economy is healthy and recovering. Of course, he could be wrong too. Ultimately, we need to see how investors react to market sentiments and see if these epicenter stocks could really gain momentum to have another “monstrous rally” before these cyclical stocks could rally big.