Marketmind: Move over Evergrande, Time to Watch Soaring Bond Yields

A look at the day ahead from Saikat Chatterjee.

European and U.S. stock futures fluctuated between gains and losses after U.S. stocks posted their biggest two-day rise since July.

While a large part of those gains can be attributed to easing concerns about Evergrande contagion, Thursday’s spike in yields in the global $60 trillion plus government debt markets raised the prospects of tighter monetary policy sooner than later.

Long-term U.S. Treasury yields have surged the most in 18 months as traders brought forward expectations for the first Fed rate hike to the end of 2022 and the Bank of England opened the door to a 2021 rate increase — sparking the biggest jump in two-year UK gilt yields since March 2015.

Yield curves from Australia to Germany bear steepened in response and the dollar sprung to the top of its 2021 trading range. While it remains to be seen whether the rise in yields can be sustained, some signs of weakness can be detected in the “buy the dip” trade from investors.

Value stocks, a beneficiary of higher yields, outperformed growth ones on Thursday while FAANG stocks have underperformed broader markets so far this month. And if investors are hoping quiet weekend, think again.

Sunday’s election in powerhouse European economy Germany will provide food for thought as Chancellor Angela Merkel steps down after 16 years in charge.

Her successor will play a new role in shaping domestic and broader EU policy and have to steer Germany’s economy through a still uncertain post-COVID environment.

Thursday’s flash PMIs for September pointed to a sharp slowdown in economic activity from the previous month from rising energy prices and difficulty in sourcing parts and materials, headwinds that are unlikely to abate in the coming days.

Key developments that should provide more direction to markets on Friday:

– ECB’s Lagarde says many causes of inflation spike temporary: CNBC

– Nike warns on holiday delays, cuts full-year sales estimate

– Daimler’s Mercedes-Benz to take a 33% stake in battery cell manufacturer Automotive Cells Company

– Germany’s IFO survey for September

– Fed speaker corner: Powell, Clarida

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Saikat Chatterjee; Editing by Dhara Ranasinghe)

Apple’s iPhone Privacy Update Is The Reason Why Facebook Underreported Ad Performance

Facebook has admitted that it has underreported ad performance due to the recent privacy changes implemented by Apple.

Apple’s Changes Affected Facebook’s Ads Performance Report

The social media giant Facebook has revealed earlier today that it underreported ad performances due to the recent privacy changes Apple made to its iPhones. Facebook said the privacy changes affected the performance it was reported to iPhone users.

In a blog post published earlier today, the social media giant admitted that it underreported web conversions on Apple’s iOS by roughly 15% in the third quarter of the year. The company added that there is a wide range of reports for different advertisers.

Graham Mudd, Facebook’s VP of product marketing, stated that they believe that the real world conversions, like sales and app installs, were much higher than what was reported to numerous advertisers.

“As we noted during our earnings call in July, we expected increased headwinds from platform changes, notably the recent iOS updates, to have a greater impact in the third quarter compared to the second quarter. We know many of you are experiencing this greater impact as we are,” Facebook added.

Facebook CFO David Wehner had previously warned of the potential effect of the iOS changes during the company’s last earnings call in July. Apple’s privacy changes gave iPhone and iPad users the choice to decide whether to opt in to be tracked when they first launch an app. This has affected businesses like Facebook that depend on specialized tracking to deliver more personalized ads to the users.

Facebook’s Stock Price Down By 4%

Mudd said he is optimistic about Facebook’s multi-year effort to put in place new privacy-enhancing technologies. These technologies are expected to minimize the amount of personal information Facebook processes while allowing the social media giant to show personalized ads and measure their effectiveness.

FB stock chart. Source: FXEMPIRE

The shares of Facebook are down by 4% since the company published the blog post earlier today. FB is trading at $342 per share, down from the $349 it was trading when the market opened a few hours ago.

YTD, FB has still performed excellently. FB started 2021 trading at $268 per share but is now up over 30%. It is one of the best-performing tech stocks so far this year.

S&P500 – Expect Volatility Upon FOMC Release

The S&P 500 index fell the lowest since July 20 on Monday, as it reached the daily low of 4,305.91. It was 239.9 points or 5.28% below the September 2 record high of 4,545.85. We’ve witnessed an intraday rebound as the market closed around 52 points above the daily low. And on Tuesday it got back to the 4,400 price level before closing 0.08% lower, at 4,354.19.

The nearest important support level of the broad stock market index is now at 4,300-4,330 and the next support level is at 4,200. On the other hand, the nearest important resistance level is now at 4,400-4,450, marked by the previous support level. The S&P 500 broke below its over four-month-long upward trend line, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

Medium-Term Downward Reversal or Just a Correction?

The S&P 500 index broke below its medium-term upward trend line a few weeks ago. On Monday it fell to the nearest important support level is of 4,300, as we can see on the weekly chart:

Dow Jones Remains Relatively Weak

Let’s take a look at the Dow Jones Industrial Average chart. In early September the blue-chip index broke below a two-month-long rising wedge downward reversal pattern. It remained relatively weaker in August – September, as it didn’t reach new record high like the S&P 500 and the Nasdaq. And on Monday it fell below its July local low of around 33,740 before bouncing back to the 34,000 mark. The resistance level is now at 34,000-34,500, and the support level remains at around 33,500, as we can see on the daily chart:

Apple Is At the Previous Local lows

Apple stock weighs around 6.3% in the S&P 500 index, so it is important for the whole broad stock market picture. In early September it reached a new record high of $157.26. And since then it has been declining. So it looked like a bull trap trading action. On Monday the stock sold off to the previous local lows along $142 price level. They act as a support level. On the other hand, the resistance level is at around $145-146, marked by the recent local lows.

Conclusion

On Monday, the S&P 500 index accelerated the downtrend from the early September record high and yesterday it bounced to the 4,400 price level before closing virtually flat. It looked like a short-covering rally and a short-term upward correction. Today, we will have the important FOMC release at 2:00 p.m. We will likely see an increased volatility and the index may fluctuate within its Monday’s daily trading range.

There have been no confirmed positive signals so far. Therefore, we think that the short position is justified from the risk/reward perspective.

Here’s the breakdown:

  • The market accelerated its downtrend on Monday, as the S&P 500 index got close to 4,300 level.
  • Our speculative short position is still justified from the risk/reward perspective.
  • We are expecting some more downward pressure and a correction to 4,200-4,250 level.

Like what you’ve read? Subscribe for our daily newsletter today, and you’ll get 7 days of FREE access to our premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

Thank you.

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak,
Stock Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care

* * * * *

The information above represents analyses and opinions of Paul Rejczak & Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Paul Rejczak and his associates cannot guarantee the reported data’s accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Rejczak is not a Registered Securities Advisor. By reading his reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Wall Street Ends Sharply Lower in Broad Sell-Off

The Nasdaq fell to its lowest level in about a month, and Microsoft Corp, Alphabet Inc, Amazon.com Inc, Apple Inc, Facebook Inc and Tesla Inc were among the biggest drags on the index as well as the S&P 500.

All 11 major S&P 500 sectors were lower, with economically sensitive groups like energy down the most.

Investors also were nervous ahead of the Federal Reserve’s policy meeting this week.

The banking sub-index dropped sharply while U.S. Treasury prices rose as worries about the possible default of Evergrande appeared to affect the broader market.

“You kind of knew that when there was something that caught markets off guard, that it was going to lead to probably a bigger sell-off and you didn’t know what the reason would be,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute.

“I guess it’s the China news but… it’s not altogether surprising given how bullish people were.”

Wednesday will bring the results of the Fed’s policy meeting, where the central bank is expected to lay the groundwork for a tapering, although the consensus is for an actual announcement to be delayed until the November or December meetings.

Unofficially, the Dow Jones Industrial Average fell 620.22 points, or 1.79%, to 33,964.66, the S&P 500 lost 75.28 points, or 1.70%, to 4,357.71 and the Nasdaq Composite dropped 325.95 points, or 2.17%, to 14,718.02.

The S&P 500 is down sharply from its intra-day record high hit on Sept. 2 and is on track to snap a seven-month winning streak.

Strategists at Morgan Stanley said they expected a 10% correction in the S&P 500 as the Fed starts to unwind its monetary support, adding that signs of stalling economic growth could deepen it to 20%.

The CBOE volatility index, known as Wall Street’s fear gauge, rose.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Caroline Valetkevitch in New York; additional reporting by Devik Jain and Sagarika Jaisinghani in Bengaluru and by Noel Randewich in San Francisco; Editing by Sriraj Kalluvila and Lisa Shumaker)

Will Quadruple Witch Send Stock Prices Lower?

The broad stock market index lost 0.16% on Thursday as it fluctuated within a short-term consolidation following last week’s declines. On September 2 the index reached a new record high of 4,545.85. Since then it has lost over 110 points. This morning stocks are expected to open virtually flat again following a pre-session rebound from overnight lows.

The index remains elevated after the recent run-up, so we may see more profound profit-taking action at some point.

The nearest important support level of the broad stock market index is now at 4,435-4,450 and the next support level is at 4,400-4,410. On the other hand, the nearest important resistance level is now at 4,490-4,500, marked by the previous support level. The S&P 500 bounced off its over four-month-long upward trend line, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

S&P 500’s Medium-Term Downward Reversal?

The S&P 500 index broke below its medium-term upward trend line a few weeks ago. However, it is still relatively close to the record high. The nearest important support level is at 4,300, as we can see on the weekly chart:

Dow Jones Trades Within a Consolidation

Let’s take a look at the Dow Jones Industrial Average chart. The blue-chip index broke below a potential two-month-long rising wedge downward reversal pattern recently. It remained relatively weaker in August – September, as it didn’t reach a new record high like the S&P 500 and the Nasdaq. The support level is now at around 34,500 and the near resistance level is at 35,000, marked by the recent support level, as we can see on the daily chart:

Apple at Support Level

Apple stock weighs around 6.3% in the S&P 500 index, so it is important for the whole broad stock market picture. Last week it reached a new record high of $157.26. And since then it has been declining. So it looked like a bull trap trading action. On Friday the stock accelerated its downtrend following an unfavorable federal judge’s ruling. We can still see negative technical divergences between the price and indicators and a potential topping pattern. The stock is at an over two-month-long upward trend line – it’s a ‘make or break’ situation.

Conclusion

The S&P 500 index continued to trade within a short-term consolidation yesterday. It’s been a week since the market reached the current price levels. So is this a flat correction within a downtrend or some bottoming pattern? Today we will most likely see another flat opening of the trading session – later in the day we may see some more volatility because of a quarterly derivatives expiration known as ‘quadruple witching Friday’.

The market seems overbought, and we may see some more profound downward correction soon. Therefore, we think that the short position is justified from the risk/reward perspective.

Here’s the breakdown:

  • The market retraced more of its recent advances this week, as the S&P 500 index extended its decline below 4,450 level.
  • Our speculative short position is still justified from the risk/reward perspective.
  • We are expecting a 5% or bigger correction from the record high.

Like what you’ve read? Subscribe for our daily newsletter today, and you’ll get 7 days of FREE access to our premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

Thank you.

Paul Rejczak,
Stock Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care

* * * * *

The information above represents analyses and opinions of Paul Rejczak & Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Paul Rejczak and his associates cannot guarantee the reported data’s accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Rejczak is not a Registered Securities Advisor. By reading his reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

iPhone 13 Is Already Recording Early Strong Sales In China

Apple presented the iPhone 13 only two days ago, but it has already started gaining traction in China, one of the company’s largest markets.

Apple Sees High Interest In Its iPhone 13 In China

A report by the South China Morning Post earlier today, Apple has received more than 2 million orders of iPhone 13 in China. The orders have come through Apple’s official store via e-commerce platform JD.com

Apple launched the iPhone 13 in an event earlier this week, sparking the interest of millions of people globally. The 2 million pre-order in China for iPhone 13 surpassed the 1.5 million the company received when it launched it’s iPhone 12.

The tech giant continues to be the number one premium smartphone seller in China following the recent struggles of Huawei. Huawei has come under pressure in the United States in recent years, and this has affected its manufacturing power.

Counterpoint Research senior analyst Ethan Qi pointed out that at the moment, iPhone 13 is the smartphone that has no counterpart in the market. The phone, which will start selling at 5,000 yuan (US$776), is currently the leading smartphone in the world.

Earlier this year, Huawei launched its P50 and P50 Pro Android Smartphones. However, the phones have not attracted that much attention since it doesn’t have 5G. This is due to the company’s inability to access advanced US technologies because of certain restrictions.

AAPL Down By 0.6%

The shares of Apple are down by less than 1% today despite the positive news coming out of China. AAPL is trading at $148 per share, down by 0.6% during Thursday’s trading session. Apple’s stock has underperformed this year, losing nearly 8% of its value year-to-date.

AAPL stock chart. Source: FXEMPIRE

China remains one of the most important markets for Apple. The strong interest in iPhone 13 could prove key to Apple’s performance in the fourth quarter of the year. AAPL could rally in the holiday quarter of the year if the company records strong sales for its iPhone 13.

Wall Street Gains as Crude Price Surge, Strong Economic Data Prompt Broad Rally

All three major U.S. stock indexes gathered strength as the session progressed, with economically sensitive cyclicals, smallcaps and transportation stocks leading the charge.

While value stocks initially held the advantage, the risk-on sentiment gained momentum through the afternoon, broadening to include growth stocks.

“Today is the first time in a while when both growth and value stocks are doing pretty well. It’s been either or for much of the last few weeks and today it’s both,” said Chuck Carlson, chief executive of Horizon Investment Services in Hammond, Indiana. “Breadth matters, and that’s something investors like to see.”

A host of economic data showed hints of waning inflation and an ongoing return to economic normalcy, even as supply constraints, complicated by hurricane Ida, hindered factory output.

Import prices posted their first monthly decline since October 2020, in the latest sign that the wave of price spikes has crested, further supporting the Federal Reserve’s position that current inflationary pressures are transitory.

Next week, the Federal Open Markets Committee’s two-day monetary policy meeting will be closely parsed for signals as to when the central bank will begin to taper its asset purchases.

The graphic below shows major indicators against the Fed’s average annual 2% inflation target.

The Dow Jones Industrial Average rose 236.82 points, or 0.68%, to 34,814.39; the S&P 500 gained 37.65 points, or 0.85%, at 4,480.7; and the Nasdaq Composite added 123.77 points, or 0.82%, at 15,161.53.

Among the 11 major sectors in the S&P 500, all but utilities gained ground. Energy was by far the biggest gainer, benefiting from a jump in crude prices driven by a drawdown in U.S. stocks.

U.S.-listed Chinese stocks extended recent losses, as weak retail sales data pointed to a possible economic slowdown in the mainland, while Beijing’s regulatory overhaul of Macau’s casino industry further dampened appetite for Chinese stocks.

This follows a series of regulatory moves by China against major technology firms, which has wiped out billions in market value this year.

“It would be tough to buy any Chinese stocks,” Carlson said. “From an investor standpoint you don’t know what sector is next.”

“I don’t think the situation is going to get better any time soon and it’s probably going to spread,” he added.

U.S.-based casino operators Las Vegas Sands Corp, Wynn Resorts Ltd and MGM Resorts International slid between 1.7% and 6.3%.

Apple Inc snapped a decline over recent sessions following an adverse court ruling on its business practices, and a lukewarm response to its event on Tuesday where it unveiled updates to its iPhone and other gadgets. Its shares gained 0.6%.

Lending platform GreenSky Inc shot up 53.2% after Goldman Sachs Group Inc said it would buy the company in an all-stock deal valued at $2.24 billion.

Advancing issues outnumbered declining ones on the NYSE by a 2.15-to-1 ratio; on Nasdaq, a 1.70-to-1 ratio favored advancers.

The S&P 500 posted seven new 52-week highs and three new lows; the Nasdaq Composite recorded 55 new highs and 106 new lows.

(Reporting by Stephen Culp; additional reporting by Ambar Warrick and Sruthi Shankar in Bengaluru; Editing by Richard Chang)

S&P 500: Striking Similarity to the September Last Year

The broad stock market index fell to the daily low of 4,435.46 on Tuesday and it was the lowest since August 20. On September 2 the index reached a new record high of 4,545.85. Since then it has lost over 110 points. This morning stocks are expected to open virtually flat.

The index remains elevated after the recent run-up, so we may see some more profound profit-taking action at some point.

The nearest important support level of the broad stock market index is at 4,435 and the next support level is at 4,400-4,410. On the other hand, the nearest important resistance level is now at 4,465-4.475, marked by the recent support level. The S&P 500 got back close to its over four-month-long upward trend line, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

Dow Jones – Short-term Consolidation

Let’s take a look at the Dow Jones Industrial Average chart. The blue-chip index broke below a potential two-month-long rising wedge downward reversal pattern last week. It remained relatively weaker, as it didn’t reach a new record high like the S&P 500 and the Nasdaq. The support level is now at around 34,500 and the near resistance level is at 34,750, marked by the recent support level, as we can see on the daily chart:

September Last Year – S&P 500 Fell Almost 11%

In 2020, the S&P 500 index reached a local high of 3,588.11 on September 2 and in just three weeks it fell 10.6% to local low of 3,209.45 on September 24. This year, September’s downward correction has started at the new record high of 4,545.85 on September 3, so there is a striking similarity between those two trading actions. However, the index is just 2.4% down this time.

Apple Stock at Trend Line

Apple stock weighs around 6.3% in the S&P 500 index, so it is important for the whole broad stock market picture. Last week it reached a new record high of $157.26. Since then it has been declining. So it looks like a bull trap trading action. On Friday the stock accelerated its downtrend following an unfavorable federal judge’s ruling. We can still see negative technical divergences between the price and indicators and a potential topping pattern. The two-month-long upward trend line remains at around $147.

Conclusion

Yesterday, the S&P 500 index extended its short-term downtrend following breaking below 4,500 level on Friday. For now, it still looks like a correction within an uptrend. Today we will most likely see a flat opening of the trading session – we may see some more short-term consolidation.

The market seems overbought, and we may see some more profound downward correction soon. Therefore, we think that the short position is justified from the risk/reward perspective.

Here’s the breakdown:

  • The market retraced more of its recent advances this week, as the S&P 500 index extended its decline below 4,450 level.
  • Our speculative short position is still justified from the risk/reward perspective.
  • We are expecting a 5% or bigger correction from the record high.

Like what you’ve read? Subscribe for our daily newsletter today, and you’ll get 7 days of FREE access to our premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

Thank you.

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak,
Stock Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care

* * * * *

The information above represents analyses and opinions of Paul Rejczak & Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Paul Rejczak and his associates cannot guarantee the reported data’s accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Rejczak is not a Registered Securities Advisor. By reading his reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Marketmind: Pandeconomics Part 2

A look at the day ahead from Julien Ponthus.

The rise in inflation, for one, may persuade central banks to speed up their stimulus exit plans.

U.S. consumers’ expectations for inflation are at the highest since 2013 while a market gauge of future euro zone inflation has risen to mid-2015 highs.

The ECB has already decided to slow, at least temporarily, the pace of bond-buying while in the United States, the question is how soon the Federal will announce stimulus tapering plans. U.S. annual inflation data, due later in the day and forecast at 4.2%, may show the way.

Even Australia, where inflation is far below target, has not blinked while proceeding with bond-buying plans

Nor is fiscal tightening out of the question in the policy guide book. Britain is at the vanguard of announcing tax hikes to restore public finances while U.S. Democrats are mulling a rollback of Trump-era tax cuts that benefited wealthy companies and individuals.

Market impact? A U.S. corporate tax increase to 25% and the passage of about half of a proposed increase to tax rates on foreign income, reduce S&P 500 earnings by 5% in 2022, Goldman Sachs estimates.

Meanwhile, the competition landscape which allowed tech giants to thrive in the last decade is also shifting.

On Friday, a U.S. judge stopped short of labelling Apple an “illegal monopolist”, while a Dutch court’s ruling that Uber drivers are employees follows a similar judgement in Britain.

China too continues to clobber its tech firms, telling them to end their practice of blocking each other’s links on their sites.

Key developments that should provide more direction to markets on Tuesday:

— Evergrande warned of default risks amid plunging property sales; JD Sports Fashion reported record earnings in H1; British online supermarket Ocado reported a 10.6% revenue decline

— UK payrolled employment rises by record 241,000

— RBA committed to low rates

— Indonesia pledges to keep rates low

— Japan’s Q3 growth forecast more than halved

— G20 finance and central bank deputies meet

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Julien Ponthus; editing by Sujata Rao)

‘Fortnite’ Creator Epic Games to Appeal Ruling in Apple Case

The judge on Friday said Apple would have to loosen some rules on developers. But the ruling favored Apple on many counts, including allowing the iPhone maker to continue its prohibition of third-party, in-app payment systems.

It also allowed Apple to continue to charge commissions of 15% to 30% for its own in-app payment system. Epic had said it would continue its legal fight.

Analysts said the impact may depend heavily on how Apple chooses to implement the judge’s decision. Apple’s critics and rivals said they are more likely to turn to legislators, rather than courts, to pursue the changes they seek. Both Apple and Epic declined to comment on Sunday.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Stephen Nellis; Writing by Rodrigo Campos; Editing by Cynthia Osterman and Daniel Wallis)

Apple Under Pressure After Adverse Ruling

Dow component Apple Inc. (AAPL) fell 3.3% on Friday after the U.S. District Court in Northern California found the tech icon in violation of the state’s Unfair Competition Law and issued an  injunction that allows developers to place external links at the Apple store, enabling them to bypass the company’s formerly-exclusive payment system. The news may have been anticipated because the stock fell more than 2% in the two sessions ahead of the ruling.

Barrage of Anti-Trust Complaints

The injunction will have a material impact on earnings because it permanently restrains Apple from “prohibiting developers from (i) including in their apps and their metadata buttons, external links, or other calls to action that direct customers to purchasing mechanisms, in addition to In-App Purchasing and (ii) communicating with customers through points of contact obtained voluntarily from customers through account registration within the app”.

Big tech faces a barrage of anti-trust complaints in the next year, mostly originating from an increasingly hostile Congress. Apple and other mega-caps have been using their immense footprints to grab market share and increase profits, igniting the wrath of those dependent on their ecosystems. Plaintiff Epic Games CEO Tim Sweeney summed up this anger, noting “Today’s ruling isn’t a win for developers or for consumers. Epic is fighting for fair competition among in-app payment methods and app stores for a billion consumers.”

Wall Street and Technical Outlook

Wall Street consensus is mixed after 2020’s outsized 81% return, yielding an ‘Overweight’ rating based upon 27 ‘Buy’, 5 ‘Overweight’, 10 ‘Hold’, 1 ‘Underweight’, and 1 ‘Sell’ recommendation. Price targets now range from a low of $90 to a Street-high $190 while the stock closed Friday’s session about $20 below the median $169 target. The court decision may force analysts to revisit spreadsheets, suggesting that Apple is more than fully-valued.

Apple mounted the January 2020 peak at 81.96 in June, entered a powerful uptrend that flamed out in the upper 130s in September. A January 2021 breakout failed, adding to rangebound action, ahead of a summer advance that added just 20 points to the 2020 high before turning tail last week. Unfortunately, accumulation readings have failed to confirm the mid-year breakout, exposing downside that could reach the 200-day moving average near 130 in the fourth quarter.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Apple’s Pain Is Gaming Developers’ Gain

Apple suffered a defeat after a federal court decided the i-Phone maker must make changes to its App Store policies. The ruling came on the heels of a high-profile legal battle between Epic Games, which is behind Fortnite, and Apple in which the game developer sought to keep a bigger piece of the revenue pie.

Judge Yvonne Gonzalez Rogers decided that Apple can no longer stop developers — including gaming companies — from using third-party sites rather than the App Store for online transactions. The decision could cost the tech giant billions of dollars.

Court Ruling

The ruling will have far-reaching implications for this market segment, the size of which is valued at some $100 billion. The revenue that Apple generates from its App Store has been a driver of its earnings. The company has benefited from taking a cut of between 15-30% of the gross revenue that developers generate on its platform. The new rule goes into effect in December.

Ultimately the court ruled on Epic’s side on California’s unfair competition law but sided with Apple on the other nine counts in the complaint. Apple’s shares tumbled 3% on the development.

Epic Games is on the hook for a cut of the revenue it generated for sending its users off the App Store for purchases last year.

Gaming Stocks

While Apple was not found to hold a monopoly in the gaming market, the court ruling was a boon for gaming-related stocks. Companies such as Zynga and Roblox saw their shares advance by 6% and 2%, respectively. They could see their revenues increase now that they don’t have to direct a cut to Apple if they can send online purchases elsewhere.

One exception was GameStop, which did not participate in the gaming stock rally. In its recent earnings report, GameStop revealed how it is transforming to more of a tech company rather than the brick-and-mortar video game retailer that it has come to be known.

GameStop plans to invest in modernizing its e-commerce platform and product line beyond just video games to areas such as collectibles, toys, and other relevant categories. Investors, however, seemingly don’t see GameStop as an e-commerce play that is poised to benefit from the Apple court ruling.

S&P 500 Ends Down After Jobless Claims Hit 18-Month Low

The Labor Department said initial claims for state unemployment benefits dropped 35,000 to a seasonally adjusted 310,000 for the week ended Sept. 4, the lowest level since mid-March 2020. That suggested that job growth could be hindered by labor shortages rather than cooling demand for workers.

Microsoft, Apple and Amazon each declined, all three among the stocks weighing most on the S&P 500 and Nasdaq.

The S&P 500 real estate and healthcare indexes were among the poorest performers of 11 sectors, while financials and materials made modest gains.

JPMorgan, Wells Fargo, Citi Group and Morgan Stanley each rose, tracking a slight rise in benchmark bond yields following the claims data.

“The problem with the market these days is it’s rotating more than it’s moving. Today, because of the jobs claims report, everyone is buying cyclical stocks,” said Jay Hatfield, chief executive of Infrastructure Capital Management in New York. “We see it as a rangebound market, between 4,400 and 4,600 (on the S&P 500).”

Investors have become more worried in recent sessions after a recent monthly jobs report showed a slowdown in U.S. hiring, suggesting the economic recovery may be losing steam faster than expected. Also dragging on sentiment has been uncertainty about when the U.S. Federal Reserve’s will scale back massive measures enacted last year to shield the economy from the coronavirus pandemic.

Unofficially, the Dow Jones Industrial Average fell 147.25 points, or 0.42%, to 34,883.82, the S&P 500 lost 20.44 points, or 0.45%, to 4,493.63 and the Nasdaq Composite dropped 38.17 points, or 0.25%, to 15,248.46.

Lululemon Athletica soared after providing a strong annual forecast, as demand for its yoga pants remains strong despite the easing of coronavirus restrictions.

Reports that Beijing slowed down approval for all new online video games sent shares of U.S.-listed gaming stocks Activision Blizzard Inc, Electronic Art Inc, and Take-Two Interactive Software Inc down more than 1%.

Digital Realty slid after the data center REIT announced a public offering of 6.25 million shares.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Noel Randewich; Additional reporting by Shashank Nayar in Bengaluru; Editing by Anil D’Silva, Arun Koyyur and Aurora Ellis)

Wall Street Ends Lower, Weighed Down by Big Tech

Investors have become more cautious following Friday’s weak August payrolls data, while pressures from rising costs, despite the economy slowing, have increased concerns that the Fed could move sooner than expected to scale back massive monetary measures enacted last year to shield the economy from the coronavirus pandemic.

The U.S. economy “downshifted slightly” in August as concerns grew over how the renewed surge of coronavirus cases would affect the economic recovery, the Fed said on Wednesday in its latest Beige Book compendium of anecdotal reports about the economy.

The S&P 500 has dipped less than 1% from its record closing high last Thursday, and it remains up 20% year to date, buoyed by the Fed’s accommodative monetary policy.

“Investors are pulling petals from a daisy, saying, ‘The economy will grow, the economy won’t grow,'” said Sam Stovall, chief investment strategist at CFRA. “They can’t make up their minds, so they have not commitment to long-term positions.”

St. Louis Federal Reserve Bank President James Bullard told the Financial Times that the Fed should move forward with a plan to trim its pandemic stimulus program despite a slowdown in job growth.

Six of the 11 S&P 500 sector indexes fell, with materials and energy the deepest decliners, down over 1% each.

The Dow Jones Industrial Average fell 0.2% to end at 35,031.07 points, while the S&P 500 lost 0.13% to 4,514.07.

The Nasdaq Composite dropped 0.57% to 15,286.64.

Perrigo Company Plc jumped 9% after the drugmaker said it plans to buy HRA Pharma from investment firms Astorg and Goldman Sachs Asset Management in a deal valued at 1.8 billion euros ($2.13 billion).

Cryptocurrency exchange Coinbase Global Inc fell 3.2% after the U.S. securities regulator threatened to sue the firm if it goes ahead with plans to launch a crypto lending scheme.

U.S. payments giant PayPal Holdings Inc declined 2.7% after it said it would acquire Japanese buy now, pay later firm Paidy in a $2.7 billion largely cash deal.

Volume on U.S. exchanges was 9.5 billion shares, compared with the 9.1 billion average for the full session over the last 20 trading days.

Declining issues outnumbered advancing ones on the NYSE by a 1.71-to-1 ratio; on Nasdaq, a 2.18-to-1 ratio favored decliners.

The S&P 500 posted 32 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 55 new highs and 41 new lows.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Noel Randewich; Additional reporting by Shashank Nayar and Medha Singh in Bengaluru; Editing by Anil D’Silva, Aurora Ellis and Arun Koyyur)

S&P 500: More Short-Term Weakness Despite Tech Rally?

The broad stock market index lost 0.34% on Tuesday (Sep. 7), as it bounced from the resistance level of around 4,550. Last Thursday (Sept. 2) saw the index reach a new record high of 4,545.85. This morning the market is expected to open virtually flat. However, it retraced the overnight decline.

The index remains elevated after the recent run-up, so we may see some more profound profit-taking action at some point.

The nearest important support level of the broad stock market index remains at 4,500, and the next support level is at 4,465-4,470, marked by the previous Thursday’s low. On the other hand, the nearest important resistance level is at 4,550. The S&P 500 bounced from its four-month-long upward trend line recently, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

S&P 500 Continues to Climb Along the Trend Line

The S&P 500 index remains close to its almost year-long upward trend line. The nearest important medium-term support level remains at 4,300, as we can see on the weekly chart:

Dow Jones Broke Down

Let’s take a look at the Dow Jones Industrial Average chart. The blue-chip index broke below a potential two-month-long rising wedge downward reversal pattern yesterday. It remains relatively weaker, as it didn’t reach a new record high like the S&P 500 and the Nasdaq. The support level remains at around 35,000, as we can see on the daily chart:

ChartDescription automatically generated

Apple Reached Yet Another Record High

Apple stock weighs around 6.3% in the S&P 500 index, so it is important for the whole broad stock market picture. Yesterday it reached a new record high of $157.26. We can still see negative technical divergences between the price and indicators and a potential topping pattern. The two-month-long upward trend line remains at around $145, and the nearest important support level is now at $150-152.

ChartDescription automatically generated

Is Short Position Still Justified?

Let’s take a look at the hourly chart of the S&P 500 futures contract. We opened a short position on August 12 at the level of 4,435. The position was profitable before the recent run-up. We still think that a speculative short position is justified from the risk/reward perspective. (chart by courtesy of http://tradingview.com):

Graphical user interface, chartDescription automatically generated

Conclusion

The S&P 500 index remains relatively close to its last week’s record high of 4,545.85. However, we can see some short-term profit-taking action, although yesterday’s decline has been stopped by the relatively strong tech sector. Today we will most likely see a neutral opening of the trading session followed by another profit-taking action.

The market seems short-term overbought, and we may see some profit-taking action soon. Therefore, we think that the short position is justified from the risk/reward perspective.

Here’s the breakdown:

  • The market extended its advance last week, as the S&P 500 index broke above the 4,500 level.
  • Our speculative short position is still justified from the risk/reward perspective.
  • We are expecting a 5% or bigger correction from the new record high.

As always, we’ll keep you, our subscribers, well-informed.

Paul Rejczak,

Stock Trading Strategist

Sunshine Profits: Effective Investments through Diligence and Care

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For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak,

Stock Trading Strategist

Sunshine Profits: Effective Investments through Diligence and Care

* * * * *

The information above represents analyses and opinions of Paul Rejczak & Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Paul Rejczak and his associates cannot guarantee the reported data’s accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Rejczak is not a Registered Securities Advisor. By reading his reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Apple Invites Media Outlets To Its September 14 Launch Event

Apple sent an invite to its upcoming launch event, and the tech giant is expected to announce the launch of new iPhones at the event.

Apple Sets September 14 As The Date For Its Launch Event

Tech giant Apple has set September 14 as the date for its launch event this year. The company has now sent invites to media outlets, announcing the event and inviting them to attend and cover the event.

In the event, Apple is expected to introduce new iPhones and probably announce their expected launch periods. Furthermore, the tech giant could reveal the development of new Apple Watch and AirPods models. The company has a tradition of releasing Apple Watches annually while its AirPods could be set for an upgrade. The last Apple released new AirPods was in 2019.

Keeping in line with safety measures, the company has held virtual launch events since the Coronavirus pandemic hit in 2020. Apple’s latest launch event would be streamed on its website. Apple has maintained its position as one of the leading phone manufacturers in the world.

The company is also one of the largest companies in the world in terms of market cap. Apple has a history of announcing its latest phones in September. However, it was forced to shift the event to October last year when it announced the launch of its iPhone 12. The company used the September event last year to launch the Apple Watch Series 6, Apple Watch SE, new iPads, Apple One and a subscription service for streaming.

Apple could do something similar this year. The company is also expected to refresh the MacBook Pro and iPad models later this year. However, it is unlikely that Apple would do that during the same event as the launch of a new iPhone.

AAPL stock chart. Source: FXEMPIRE

AAPL Up By Nearly 2% Today

The shares of Apple are up by 1.65% so far today. AAPL is trading at $156 and has experienced an excellent start to the year. AAPL began 2021 trading at $132 per share, but it is now up by nearly 20% to currently trade at $156 per share.

El Salvador’s World-First Adoption of Bitcoin Hits Snags

The Chivo digital wallet became available on the app platforms hosted by Apple and Huawei shortly before midday local time Tuesday, after President Nayib Bukele, who pushed for adoption of the cryptocurrency and has promised $30 of bitcoin for each user, railed against the tech giants for not carrying the application.

The government purchased an additional 150 bitcoins on Tuesday, worth around $7 million, and McDonalds began accepting the cryptocurrency in its restaurants in El Salvador.

Bukele said using bitcoin will help Salvadorans save $400 million a year on commissions for remittances, while giving access to financial services to those with no bank account.

Carlos Garcia, who went to a booth giving out advice on the new currency at a shopping mall on Tuesday to learn about how transactions would work, said he was excited about the opportunities bitcoin could provide.

“El Salvador is taking a great step forward today,” he said.

However, the poorest may struggle to access the technology needed to make bitcoin work in El Salvador, where nearly half the population has no internet access and many more only have sporadic connectivity.

“I’m going to continue suffering with or without bitcoin,” said sweets seller Jose Herrera, who said he had trouble accessing a mobile phone.

Over a thousand people protested against the implementation of bitcoin around noon, marching to the Supreme Court building, burning a tire and setting off fireworks.

Some say the move may fuel money laundering and financial instability. It has already muddied the outlook for more than $1 billion in financing that El Salvador is seeking from the International Monetary Fund (IMF).

Bukele, 40, scores highly in opinion polls but has been accused of eroding democracy, not least by the administration of U.S. President Joe Biden.

Last week, top judges appointed by his lawmakers ruled that he could serve a second term, breaking away from a constitutional rule that forbade consecutive terms.

Earlier on Tuesday, Salvadorans trying to download the Chivo digital wallet had found it was unavailable on the main app stores. Bukele said the government had temporarily unplugged it, in order to connect more servers to deal with demand.

Bukele blamed Apple Inc, Alphabet’s Google and Huawei’s app download platforms for the delay.

“Release him! @Apple @Google and @Huawei,” Bukele wrote in a tweet, which was accompanied by a red-faced ‘angry’ emoji. The wallet was later available from Huawei and Apple.

Google and Apple did not immediately respond to requests for comment.

PRICE SLIDE

Polls indicate Salvadorans are wary of the volatility of the cryptocurrency, which can shed hundreds of dollars in value in a day.

Ahead of the launch, El Salvador bought 400 bitcoins worth around $20 million, Bukele said, helping drive the price of the currency above $52,000 for the first time since May. Hours later, bitcoin had weakened and last traded down 8.84% at $47,327.32.

Ethereum, another crypto currency, fell 10.52% to $3,537.62, while crypto exchange Coinbase Global slid 3.96% after reporting delays in some transactions on its platform.

The change means businesses should accept payment in bitcoin alongside the U.S. dollar, which has been El Salvador’s official currency since 2001 and will remain legal tender.

It remains unclear whether businesses will be penalized if they do not accept bitcoin.

In the run-up to the launch, the government installed ATMs that allow bitcoin to be converted into dollars and withdrawn without commission from the digital wallet, called Chivo.

“Like all innovations, El Salvador’s bitcoin process has a learning curve,” Bukele said in a tweet. “Not everything will be achieved in a day, or in a month.”

“We must break the paradigms of the past. El Salvador has the right to advance towards the first world,” he wrote.

In barely two years in office, Bukele has taken control of almost all levers of power. But although he has promised to clean up graft, the Biden administration recently put some of his close allies on a corruption blacklist.

Analysts fear that the adoption of bitcoin, whose transaction records are distributed across the internet, beyond the reach of national jurisdictions, could fuel money laundering.

After the bitcoin law was approved, the ratings agency Moody’s downgraded El Salvador’s creditworthiness, while its dollar-denominated bonds have also come under pressure.

The World Bank reiterated on Tuesday that it could not help El Salvador in its process of adopting bitcoin as legal tender “given environmental and transparency shortcomings,” a World Bank spokesperson told Reuters.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Anthony Esposito in Mexico City and Nelson Renteria in San Salvador; Additional reporting by Wilfredo Pineda in El Zonte, El Salvador and Frank Jack Daniel; Editing by Alistair Bell and Rosalba O’Brien)

Apple to Hold Event on Sept 14, New iPhones Expected

Since 2013, Apple has delivered new iPhones around September like clockwork. The tech giant, which launched a redesigned iPhone with 5G connectivity last year, is not expected to make radical changes this year, with most analysts pointing to small technical updates to the phone’s processor and camera system.

“Upgrades rates peaked in 2021 on 5G, we expect upgrade rates to moderate but still drive high volumes in 2022,” J.P.Morgan analyst Samik Chatterjee wrote in a note, adding that he still expects a record year thanks to higher sales of the lower priced iPhone SE.

The new line of smartphones are expected to expand the Portrait mode feature to video and also have higher-quality video recording format, according to a Bloomberg report.

The Portrait mode uses the phone’s depth sensor to focus on faces while blurring the background, allowing amateur photographers to produce high-quality snaps.

Apple was not immediately able to comment beyond the invitation sent to the media.

The mid-September launch results in a sales surge in the last week of Apple’s fiscal fourth quarter as millions of avid shoppers snap up the newly releases iPhones.

Last year, however, the event got delayed by a month because of the COVID-19 pandemic, meaning opening-weekend iPhone sales were not included in fourth-quarter results.

The event also helps Wall Street analysts model their sales projections for the holiday shopping season in Western markets, typically Apple’s largest sales quarter.

Known for its splashy phone launches packed with hundreds of journalists at its sprawling campus in Cupertino, California, Apple has turned to virtual events since last year because of the pandemic.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Subrat Patnaik in Bengaluru; Editing by Saumyadeb Chakrabarty)

Introduction to the Major Fundamental Influences on Forex Prices

When most individuals think of trading, they think of stocks and futures. This is probably because of the long-term history of these investment vehicles. Some may even think of cryptocurrencies because of their huge popularity with a younger generation of investors.

What they may not realize, however, that in terms of market value, there is one asset class that dwarfs them all and, in fact, some may not have even realized that they’ve already speculated in it when they’ve traveled internationally or bought something from a foreign country.

This huge investment class is the foreign exchange market, also known as FOREX. In the FOREX market, an estimated $6 trillion is traded on a daily basis. To put this in perspective, the U.S. stock market trades around $257 billion a day; quite a large sum, but only a fraction of what FOREX trades.

For a novice trader, there is a lot to learn about trading in the foreign exchange market because it lacks the familiarity of stocks like Apple, IBM and Google, as well as the glamor of gold and silver futures.

Before even attempting to trade or invest in the FOREX market, individuals have to become aware of the macro-economic and geo-political factors that help drive the price action in this trading vehicle.

Table of contents

What is FOREX?

Simply stated, the word FOREX is derived by combining parts of foreign currency and exchange. It is also referred to as FX trading.

Foreign exchange is the process of changing one currency into another for a variety of reasons, usually for commerce, trading, finance or tourism. FOREX markets tend to be the largest and most liquid asset markets in the world.

Briefly, Forex markets exist as spot (cash) markets as well as derivatives markets, offering forwards, futures, options, and currency swaps.

Market participants use Forex to hedge against international currency and interest rate risk, to speculate on geopolitical events, and to diversify portfolios, among other reasons.

What is a FOREX Pair?

In foreign exchange, currencies trade against each other as exchange rate pairs. For example, EUR/USD is a currency pair for trading the Euro against the U.S. Dollar.

A FOREX pair or currency pair is simply the quotation of the value of a given currency against another. The first is termed the base currency and is the currency being sold, while the second is known as the quote currency and is the currency being bought.

For example, the quotation EUR/USD = 1.0700 would mean 1 Euro is exchanged for $US1.07.

What are the Factors Affecting Forex Pairs?

If you desire to become a successful FOREX trader then you have to develop an understanding of the fundamentals that drive the price action. This is the information that will help you to establish an informed hypothesis about whether a particular FOREX pair is being fairly valued at present and what potential upsides or downsides might be from current price levels.

These include: central bank policy, interest rates, inflation, economic growth, trade data, and political/government factors.

How Does Central Bank Policy Influence FOREX Prices?

The major central banks influence Forex prices by controlling open market operations and interest rate policies. They are responsible for fixing the price of its domestic currency on Forex.

Any action taken by a central bank in the FOREX market is done to stabilize or increase the competitiveness of that country’s economy. A central bank may weaken its own currency by creating additional supply during periods of long deflationary trends, which is then used to purchase foreign currency. This effectively weakens the domestic currency, making exports more competitive in the global market.

Central banks use these strategies to calm inflation. Their doing so also serves as a long-term indicator for FOREX traders.

How Do Interest Rates Influence FOREX Prices?

Interest rates have a significant influence on currency movements. So much so that a currency pair will often spike up or down following a central bank announcement.

The main reason for the volatility is the so-called carry trade, where investors borrow at lower interest rates in one currency and invest at higher interest rates in another.

Basically, investors tend to chase yields so when a central bank raises rates, it tends to make that country’s currency a more attractive investment.

How Does Inflation Influence FOREX Prices?

Central banks raise and lower interest rates to control inflation. Therefore, movement in the inflation rate can impact currency prices. For example, if a country’s central bank believes inflation is rising too quickly, it may raise interest rates to lift the cost of borrowing and to take money out of the system. This action is designed to slow the economy.

For this reason, the national consumer price index (CPI) is one of the most closely watched pieces of information for FOREX traders.

How Does Economic Growth Influence FOREX Prices?

Economic growth is tied directly to the inflation rate, which relates to interest rates. When a country’s economy is growing quickly as measured by the Gross Domestic Product (GDP), for example, the rate of inflation will typically start to rise. This usually means the central bank will need to lift interest rates to slow the rate of growth.

This is why the currency of a country showing strong economic growth will often appreciate against those of other countries showing slow or negative growth.

How Does Trade Data Influence FOREX Prices?

Balance of Trade data, which is based on the relationship between a country’s imports and exports, also has an impact on the direction of a currency’s prices. Trade figures can also be seen by some as a sign of the strength of the economy, which in turn has implications for inflation and interest rates, and therefore the domestic currency.

If a country is exporting more goods than it imports, for example, it increases demand for its currency as the money used to pay for those exports ultimately needs to be converted into the domestic currency.

How Does Political/Government Factors Influence FOREX Prices?

Government policy can have profound implications on FOREX prices especially if it influences the inflation rate.

A government could decide to trim spending and pay down debt, which may end up causing the economy to slow.

Following the pandemic of 2020, many governments flooded their economies with fiscal stimulus. As this money trickled through the economy, it caused inflation which is fueling a response from central banks in the form of interest rate hikes.

In response, Forex markets have experienced heightened volatility as the major central banks race to stem runaway inflation by raising rates. Investors will become more attracted to the currency of the country that raises interest rates more aggressively.

Other Factors to Consider When Trading FOREX

Although fundamental data and daily news events play a major role in the price action of a currency, it is important to note that an estimated 90% of the daily FOREX volume is fueled by speculators (traders). So in addition to knowing the major fundamental influences on the long-term direction of currencies, traders will also need to learn about the technical factors that play a major role in the movement of currency prices.

Match Shares Jump on S&P 500 Addition

The S&P 500 index has met its match. Online dating site Match is getting added to the broader stock market index, and its shares are soaring 9% in response during extended-hours trading. The stock took investors on a wild ride over the summer but is just about flat year-to-date. The changes in the S&P 500 are part of the index’s quarterly shufflings based on the latest market activity.

In & Out Index

S&P Dow Jones Indices announced that Match Group will replace the outgoing Perrigo Company, the latter of which will move to the S&P MidCap 400 index. In addition to Match Group, other newcomers to the S&P 500 index include insurer Brown & Brown and IT company Ceridian HCM Holding.

The Match stock bump could have something to do with the fact that index funds that track the S&P 500 must gain exposure to the stock by design. In order for Match as well as Brown & Brown and Ceridian to keep their spots, they must maintain a minimum market cap of $13.1 billion. Match shouldn’t have any trouble as it currently boasts a market cap of $41 billion.

Going Steady

One of the companies that the trio of new S&P 500 members beat out was meme stock GameStop. The video game retailer recently joined the S&P MidCap 400 Index, and with a market cap of $15 billion could technically qualify for the S&P 500. The sticking point for GameStop, however, is its inherent volatility as a meme stock. S&P Global tends to select names that are more predictable in nature, such as insurance stock Brown & Brown.

Shares of Brown & Brown are up nearly 2% in after-hours trading on the index development. Year-to-date, the dividend-paying stock is up 24%. In the same period, GameStop’s stock is up more than 900%. Ceridian, the third stock to be added, tacked on just over 1% in after-hours trading on the index development.

Match is poised to generate revenues of $3 billion-plus this fiscal year. The company is among those to benefit from Apple’s recent decision to change its App Store fine print so that subscription-based companies can keep a larger piece of the sales pie. Match, which owns the popular dating app Tinder, is behind Tinder subscriptions tiers Tinder Plus, Tinder Gold and Tinder Platinum.