Facebook Bounce Could Offer Opportune Profits

Facebook Inc. (FB) more than doubled in price after March’s 52-week low, posting an all-time high at 304.67 during the last week of August. The stock has sold off more than 13% since that time and is now approaching strong support that should generate a reversal and high percentage bounce. Even so, a breakout to new highs appears unlikely at this time, warning market timers to utilize trailing stops and take opportune profits at high-odds reversal levels.

Facebook Parabolic Rally

The social media giant shook off boycott threats from tier one advertisers during the George Floyd protests, racing to higher ground with a select group of other high tech giants. So-called ‘Robinhood traders’ and huge SoftBank Group Corp. (SFTBF – OTC) options plays drove a good part of this parabolic impulse, ahead of a long-overdue pullback that’s dropped the market-leading Nasdaq-100 index a nearly-equal percentage as Facebook, its 5th highest component.

The company just addressed concerns about election manipulation, advising “we won’t accept new political ads in the week before the election. We’ll remove posts that claim that people will get COVID-19 if they take part in voting, and we’ll attach a link to authoritative information about the coronavirus to posts that might use COVID-19 to discourage voting. We will attach an informational label to content that seeks to delegitimize the outcome of the election or discuss the legitimacy of voting methods, for example, by claiming that lawful methods of voting will lead to fraud.”

Wall Street And Technical Outlook

Wall Street consensus has remained steadfastly bullish this year, with a ‘Strong Buy’ rating based upon 30 ‘Buy’ and 4 ‘Hold’ recommendations. A single analyst now recommends that shareholders close positions and move to the sidelines.  Price targets currently range from a low of $195 to a street-high $335 while the stock closed out Friday’s session $27 below the median $293 target. Along with technical factors, this placement now favors a strong recovery wave.

Facebook sold off within a point of the 50-day moving average on Friday and bounced into the closing bell. This level marked support in June and July, raising odds for a bounce that could end at resistance between the 290 and 300 price levels. Relative strength indicators have dropped into their most oversold technical readings since February at the same time, with both elements predicting the stock will bottom out in the low 260s and head to higher ground.

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

FANG Index Nearing Critical Support – Could Breakout At Any Moment

RESEARCH HIGHLIGHTS:

  • The washout-low price move in FANG stocks may present a needed rotation in price before another upside move sets up.
  • Tweezer Bottoms pattern and RSI pennant formation suggest very clear support levels.
  • Watch how Volume and the VIX pick up over the next few days, and how price reacts to this bounce at 945.

Our Custom FANG Index (consisting of Facebook, Microsoft, Twitter, Amazon, Google, and Nvidia) shows the FANG Index, and technology sector, are trading just above critical support near 945.  The congestion area on this chart between July and August just below this 945 level highlights the key resistance/support level that we are currently watching as price support.

TWEEZER BOTTOMS MAY SUGGEST MORE UPSIDE POTENTIAL

This Custom FANG Index Weekly chart clearly slows the Tweezer Bottoms pattern that formed in the markets after the close on Tuesday, September 8, 2020.  This pattern suggests a very clear support level is found near the recent lows – near 945.  If this support level holds, then the FANG Index price should begin to bounce and move higher.  If this support level is broken, prices may continue to push lower while attempting to find historical support levels.

The Fibonacci Price Amplitude Arcs suggest a broader price frequency inflection point is also setting up near the recent peak.  This Fibonacci Price Amplitude Arc suggests a major inflection point is taking place in the Custom FANG index right now.  We believe the 945 level resulting from the Tweezer Bottoms pattern is a critical price level to support a future price rally in this sector.

Lastly, we want to point out the Pennant/Flag formation in the RSI indicator over the past 8+ months (highlighted in RED).  The combination of these technical patterns, as well as the new Tweezer Bottoms pattern, suggests the current breakdown to the 945 level may present a “washout-low” type rotation after the RSI Pennant Apex.  Overall, this downside move in the FANG index represents a moderately strong APEX rotation.  If this is a “washout” rotation, then we may be setting up for another big upside price move soon.

Right now, we are cautiously watching the 945 level and expecting the Custom FANG Index to recover from these Tweezer Bottoms lows.  We believe there is a very solid chance that the washout-low price move may present a needed rotation in price before another upside move sets up.

Watch for the markets and technology sector to attempt a recovery as long as the 945 level on this Custom FANG Index chart holds. Isn’t it time you learned how I can help you better understand technical analysis as well as find and execute better trades?  If you look back at past research, you will see that my incredible team and our proprietary technical analysis tools have accurately shown you what to expect from the markets in the future.  Do you want to now learn how to profit from these expected moves?  If so, sign up for my Active ETF Swing Trade Signals today!

If you have a buy-and-hold or retirement account and are looking for long-term technical bull/bear signals for when to buy and sell equities, bonds, precious metals, or sit in cash then be sure to subscribe to my Passive Long-Term ETF Investing Signals to stay ahead of the market and protect your wealth!

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

Chris Vermeulen
Chief Market Strategist
Technical Traders Ltd.

 

Weak Technology Sector Helps S&P 500 Snap Seven-Day Winning Streak

The major U.S. stock indexes finished lower on Tuesday, reversing a mostly higher intraday trade late in the session after comments about a stalemate in talks over a fiscal stimulus deal.

The benchmark S&P 500 Index had been higher for much of the session, coming within striking distance of its closing record high from late February, before the onset of the U.S. coronavirus pandemic that triggered one of the most dramatic sell-offs in Wall Street history.

The blue chip Dow Jones Industrial Average also ended lower, and the technology-driven NASDAQ Composite retreated more than 1% and underperformed the other major indexes, as investors continued to rotate out of technology-related heavyweights and into value shares.

In the cash market, the S&P 500 Index settled at 3333.69, down 26.78 or -0.89%. The Dow Jones Industrial Average closed at 27686.91, down 104.53 or -0.42% and the tech-driven NASDAQ Composite finished at 10782.82, down 185.54 or -1.95%.

Stalemate in Coronavirus Aid Legislation Raising Concerns

U.S. Senate Republican leader Mitch McConnell told Fox News that White House negotiators had not spoken on Tuesday with Democratic leaders in the U.S. Congress on coronavirus aid legislation after talks broke down last week.

Investors have been hoping Republicans and Democrats will resolve their differences and agree on another relief program to support about 30 million unemployed Americans, as the battle with the virus outbreak was far from over with U.S. cases surpassing 5 million last week.

Wedbush trader Joel Kulina said concerns about the stalemate in stimulus negotiations added to pressure to sell recently strong performing tech stocks.

“It just feels like an acceleration of the growth unwind that started last Friday. Today marks day three of the unwind out of growth,” Kulina said. “But I’m not seeing panicking.”

Mixed News Fuels Two-Sided Volatility

A return of risk appetite fueled by encouraging economic numbers and hopes of a new coronavirus relief package and even a vaccine boosted the 500-stock index for much of the trading day on Tuesday. However, a plunge in technology shares helped snap a seven-day winning streak.

On the bullish side, the S&P 500 Index has rallied more than 52% since its March low and is 1.8% from its record high. Meanwhile, the Dow Jones Industrial Average dipped more than 100 points but at one point traded above 28,000 for the first time since February.

The loss in the Dow could have been worse if not for strength in stocks that benefit from the reopening of the economy and a COVID-19 vaccine capped the average’s losses.

The NASDAQ Composite was the underperformer, losing 1.7% as investors rotated out of technology stocks. Netflix, Microsoft, Amazon, Facebook, Alphabet and Apple all closed lower.’

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

Asia-Pacific Shares – Worries Over Flaring Tensions Between US-China Capping Gains

The major Asia-Pacific stock indexes are trading mixed early Monday as investors remained cautious over heightened U.S.-China tensions in recent weeks. Worries over flaring tensions between the two economic powerhouses weighed on risk sentiment although a recovery in industrial activity in the world’s second-largest economy capped losses. Nonetheless, ranges remained tight on Monday.

At 03:30 GMT, Japan’s Nikkei 225 Index is trading 22329.94, down 88.21 or -0.39%. Hong Kong’s Hang Seng Index is at 24429.96, down 102.66 or -0.42% and South Korea’s KOSPI Index is at 2373.37, up 21.70 or -0.92%.

In China, the Shanghai Index is trading 3367.01, up 12.97 or +0.39% and Australia’s S&P/ASX 200 Index is at 6085.50, up 80.70 or 1.34%.

Trading is expected to be on the light side with Japanese markets closed for public holidays.

US-China Relations Remain at Forefront

The latest round of concerns was fueled late last week when U.S. President Donald Trump signed two executive orders banning WeChat, owned by Chinese tech giant Tencent, and TikTok in 45 days’ time while announcing sanctions on 11 Chinese and Hong Kong officials.

Additionally, U.S. regulators recommended that overseas firms listed on American exchanges be subject to U.S. public audit reviews from 2022.

In less than a week, traders could feel more grief if the latest moves by the Trump administration jeopardize the U.S.-China trade talks scheduled for August 15. Finally, there is always the possibility of Chinese retaliation to these moves.

“The running assumption in markets has been President Trump needed the phase one deal to succeed, as much as China, this side of the November elections… At the same time President Trump is running a hard China line into the elections,” Tapas Strickland, director of markets & economics at National Australia Bank said.

TikTok suing Trump Administration Over Ban as Soon as Tuesday:  Report

Social media giant TikTok is planning to sue the Trump administration as soon as Tuesday over its planned ban of the app in the United States, according to an NPR report.

TikTok declined to comment on a potential lawsuit, but the company has said that it will do whatever is possible to ensure that TikTok is treated fairly.

“We will pursue all remedies available to us in order to ensure that the rule of law is not discarded and that our company and our users are treated fairly – if not by the Administration, then by the U.S. Courts,” TikTok said in a statement.

NPR reports that the lawsuit will argue the ban is unconstitutional and that its national security justification is baseless.

“TikTok automatically captures vast swaths of information from its users, including Internet and other network activity information such as location data and browsing and search histories, the executive order reads. “This data collection threatens to allow the Chinese Communist Party access to Americans’ personal and proprietary information.”

TikTok disputes this, and said Friday that it “has never shared user data with the Chinese government, nor censored content at its request.”

Why is this important to investors? According to Fox Business News, “Multiple American companies, including Microsoft, Google, and Facebook, have expressed interest in buying TikTok. President Trump has insisted that the U.S. Treasury get a cut of whatever deal is made, which could complicate the negotiations.”

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

U.S. Stocks Set To Open Higher As Big Tech Reports Strong Earnings

Big Tech Beats Earnings Estimates

Amazon, Apple, Alphabet and Facebook have recently provided their second quarter reports.

Amazon revenues were up 40% year-over-year while its earnings of $10.30 per share beat analyst estimates by $8.80.

Apple’s revenue and earnings were also higher than estimates. The company stated that the release of iPhone 12 will be postponed by several weeks and also announced a four-for-one stock split.

Alphabet’s earnings were less spectacular but the company comfortably beat estimates with revenue of $38.29 billion and earnings of $10.13 per share.

Facebook’s revenue was up almost 11% year-over-year despite the challenges brought by coronavirus pandemic while the company’s earnings of $1.80 per share easily beat analyst expectations.

Not surprisingly, all these stocks are gaining ground during the premarket trading session. The Big Tech was the main driver of the market’s upside move from the bottom reached in mid-March, so S&P 500 futures are also up in premarket trading.

Coronavirus Aid Package Negotiations Have Yielded No Deal Yet

While traders cheer the great results of big tech companies, their attention may later shift to coronavirus aid package negotiations.

At this point, there are no signs of progress. The $600 weekly unemployment benefits are about to expire, and failure to maintain the program in some form may put heavy pressure on consumer activity.

While there is always a chance of a last-minute deal, worries about the stimulus package may put some pressure on stocks later in the trading session.

Personal Income Fell By 1.1% In June

The U.S. has just provided Personal Income and Personal Spending reports for June.

Personal Income declined by 1.1% month-over-month, while analysts expected a decline of 0.5%. The pace of the decline has decreased compared to May when Personal Income fell by 0.5%.

Meanwhile, Personal Spending increased by 5.6% month-over-month, mostly in line with the analyst consensus which called for an increase of 5.5%.

While Personal Income is under pressure due to the negative impact of the coronavirus pandemic, Personal Spending is supported by various government aid programs.

That’s why failure to reach a deal on the new coronavirus aid package may have a significant negative impact on the market.

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

Facebook Q2 Revenue Surges 11% Despite COVID-19 Crisis; Target Price $300

Facebook Inc, the world’s largest online social network, reported revenue growth of 11% in the second quarter despite ongoing COVID-19 pandemic and advertising boycott on social media platforms, sending its shares up over 6% pre-market on Friday.

The social media conglomerate said its revenue rose to $18.7 billion in the second quarter, with a net income of $5.2 billion, or $1.80 per share.

That is despite several companies, including UnileverStarbucksCoca-ColaHonda and others, have signed for an advertising boycott of social media platforms including Facebook and Twitter in June. Ben & Jerry’s, Verizon Wireless and Eddie Bauer have also joined the race to pause advertisements for July.

Advertisement sales, the primary source of Facebook’s revenue, jumped 10% to $18.3 billion in the second quarter ended June 30. Facebook’s monthly active users increased 12% year-over-year to 2.70 billion and headcount was 52,534, an increase of 32% year-over-year.

“Due to the strong second-quarter numbers, we have increased our projections for this year and 2021 which resulted in a $265 fair value estimate, up from $245. We recommend waiting for a wider margin of safety before investing in this wide-moat and high uncertainty name,” said Ali Mogharabi, senior equity analyst at Morningstar.

Facebook forecasts its full quarter year-over-year ad revenue growth rate for the third quarter of 2020 will be roughly similar to its July performance and total expenses in the range of $52-55 billion this year, narrowed slightly from the prior range of $52-56 billion. This year’s capital expenditures are anticipated at nearly $16 billion.

Facebook’s shares rose over 6% to $248.8 pre-market on Friday. It has risen over 14% so far in 2020, registering its biggest quarterly rise of more than 35% in the June quarter.

“Facebook 2Q20 results beat on Rev/Op Inc./EPS, as user and engagement strength led to an adv. rebound in May/June vs. April’s flattish levels. FB expects 3Q20 adv revenue +10% y/y (vs. our +9% y/y pre-print estimate). The midpoint of FY20 opex guide was lowered; FY20 capex guide is a bit higher as data center construction resumes. We raised estimate, price target to $290 vs. $280, maintain Outperform. FB shares +7% AH,” said John Blackledge, equity analyst at Cowen.

Facebook stock forecast

Thirty analysts forecast the average price in 12 months at $268.31 with a high forecast of $320.00 and a low forecast of $220.00. The average price target represents a 14.42% increase from the last price of $234.50. From those 30, 27 analysts rated ‘Buy’, three analysts rated ‘Hold’ and none rated ‘Sell’, according to Tipranks.

Just after the earnings result, Credit Suisse upped its target price to $315 from $305; JP Morgan raised its target price to $300 from $290; Cowen and Company raised target price to $290 from $280; RBC raised target price to $290 from $280 and Canaccord Genuity raised it to $290 from $275. Morgan Stanley target price is $285 with a high of $340 under a bull scenario and $200 under the worst-case scenario.

We think it is good to buy at the current level and target at least $300 in the short-term and $400 in a best-case scenario as 100-day Moving Average signals a strong buying opportunity.

Analyst comment

“Monetization Potential: We are positive on FB’s monetization roll-out of Instagram as well as FB’s ability to continue to innovate and improve its monetization (Canvas Ads, Dynamic Ads, video). Combined with the high and growing engagement we see monetization upside going forward, Brian Nowak, equity analyst at Morgan Stanley noted.

“Investing from Position of Strength to Drive Faster Long-Term Growth: We are modelling 11% GAAP opex (excl. one-time items) growth in 2020, implying an incremental $5 billion in opex. Our base case model implies opex per employee moderates in ’20 while FB hiring remains roughly flat on an absolute basis. We believe FB will grow EPS at a 14% CAGR (2019-2022),” he added.

What To Expect After Facebook Earnings

Facebook Inc. (FB) reports Q2 2020 earnings after the July 30th closing bell in the United States, with Wall Street analysts looking for a profit of $1.38 per-share on $17.35 billion in revenue. The stock rose 5.1% after meeting Q1 estimates in April and then added another 21% into this morning’s opening print near 233. The company has chosen not to provide Q2 or fiscal year guidance due to the ongoing impact of the COVID-19 pandemic.

Facebook Held Back By Political Headwinds

The stock has struggled since May, with growing political headwinds persuading on-the-fence investors to stand aside for now. Activists have been pushing for an advertising boycott in the last few weeks, chastising the social media giant for publishing discredited reports and conspiracy theories, mostly from the right wing. It’s also faces Congressional scrutiny about monopolistic practices, with CEO Mark Zuckerberg and other high tech executives called to a Wednesday committee hearing.

Florida Republican Congressman Matt Gaetz filed a criminal referral against Facebook earlier this week, citing alleged censorship directed against conservatives. Gaertz insists that “Mr. Zuckerberg repeatedly and categorically denied his company engaged in bias against conservative speech, persons, policies, or politics and also denied that Facebook censored and suppressed content supportive of President Donald Trump and other conservatives.”

Wall Street And Technical Outlook

The string of controversies hasn’t fazed Wall Street, which rates the stock as a ‘Strong Buy’, based upon 30 ‘Buy’ and 4 ‘Hold’ recommendations. No analysts are advising shareholders to sell their positions at this time. Price targets currently range from a low of $185 to a street-high $305 while the stock is trading more than $25 below the median $259 target. This placement bodes well for additional upside if the company can shake off persistent political pressures.

Technically speaking, Facebook broke out above two-year resistance around 220 in May and stalled above 240 just one week later, easing into a sideways pattern that’s posted 4 failed breakout attempts into July. Selling pressure is now increasing, favoring a bearish reaction if quarterly results fail to top modest expectations. Short-term sentiment may also come into play on Thursday if Zuckerberg’s Wednesday testimony sets of a new round of controversies.

Twitter Trading Higher Ahead Of July 23 Earnings

Twitter Inc. (TWTR) is inching toward the February 2020 high in the upper 30s in Monday’s U.S. session, as speculators place their bets ahead of the July 23rd Q2 2020 earnings release. The stock fell nearly 8% after missing Q1 2020 profit estimates in April, when the company disclosed that advertising revenue fell 27% in the last three weeks of March, as a result of the COVID-19 pandemic. It bottomed out quickly and has risen nearly 30% since that time.

D.C. Critics Take Aim At Twitter

The uptick comes less than two weeks after a report the social media giant is getting ready to build a subscription service that could significantly reduce spam, bots, trolls, and other user distractions. Growing disputes with the Oval Office have dampened renewed buying interest to some extent, with the President and members of Congress complaining that Twitter and Facebook Inc. (FB) are exhibiting bias against conservative opinions.

A July job listing on the Twitter site appears to confirm the initiative, declaring “we are a new team, codenamed Gryphon. We are building a subscription platform, one that can be reused by other teams in the future. This is a first for Twitter! Gryphon is a team of web engineers who are closely collaborating with the Payments team and the Twitter.com.” The company has neither confirmed nor denied the contents of the listing.

Wall Street And Technical Outlook

The news hasn’t impacted cautionary Wall Street consensus in the last two weeks, with a ‘Hold’ recommendation computed from 5 ‘Buy’, 19 ‘Hold’, and 2 ‘Sell’ ratings. If confirmed at this week’s earning’s release, the subscription platform is likely to lift a number of Hold ratings into the Buy column, adding to rally momentum. Price targets currently range from a low of $23 to a street high $43, while the stock is now trading $4 above the median $31 target.

Technical speaking, Twitter could easily add to recent gains and lift into 2019 resistance at 45.85. That price level also marks the 2013 initial public offering’s first trade, which has acted as resistance since a 2014 breakdown. A breakout above that barrier could have a highly-positive impact on sentiment, perhaps allowing this perennial laggard to finally break out of a multiyear range and post new highs.

 

 

‘No Company is Entirely Immune From a COVID-19 Led Economic Slowdown’ Says Fidelity’s Simnegar

No business is completely immune from a COVID-19 led economic slowdown and the ongoing global pandemic isn’t affecting all industries and its stocks in the same way, said Sammy Simnegar, portfolio manager in the equity division at Fidelity Investments.

So far, the deadly coronavirus has infected over 14 million people in 188 countries and killed more than 600 thousand, impacting day-to-day businesses worldwide.

“We shouldn’t think of how COVID-19 is affecting the stock market in monolithic terms because the opportunities and risks are very different at the company level… we try to identify the potential ‘winners’ and ‘losers’ in a post-pandemic world,” noted Fidelity’s Simnegar.

Microsoft

Fidelity’s Simnegar thinks Microsoft is resilient. Microsoft has two main businesses – its Office software suite and its Azure cloud-services operation. Because Office and Azure help customers to be more productive and competitive, Simnegar believes spending on these products is not likely to be hurt much by an economic slowdown, Fidelity noted.

Twenty-four analysts forecast the average price of Microsoft in 12 months at $219.11 with a high forecast of $260.00 and a low forecast of $190.00. The average price target represents an 8.00% increase from the last price of $202.88. From those 24, 23 analysts rated ‘Buy’, one rated ‘Hold’ and none rated ‘Sell’, according to Tipranks.

Morgan Stanley target price is $230 with a high of $290 under a bull scenario and $150 under the worst-case scenario. We think it is good to buy at the current level and target at least $230 as 50-day Moving Average and 100-200-day MACD Oscillator signals a strong buying opportunity.

Amazon

Amazon is another name Simnegar thinks could continue to take market share during this uncertain time. The company’s logistical advantages allow it to ship essential items to Amazon Prime customers with same-day shipping, Fidelity noted.

Thirty-nine analysts forecast the average price of Amazon in 12 months at $2,991.34 with a high forecast of $3,700.00 and a low forecast of $1,987.00. The average price target represents a 0.99% increase from the last price of $2,961.97. From those 39, 36 analysts rated ‘Buy’, two rated ‘Hold’ and one rated ‘Sell’.

Morgan Stanley target price is $3,450 with a high of $4,200 under a bull scenario and $2,200 under the worst-case scenario. We think it is good to buy at the current level and target at least $3,400 as 50-day Moving Average and 100-200-day MACD Oscillator signals a strong buying opportunity.

Facebook and Google

Large media and entertainment holdings in the fund as of the end of May included Facebook and Google-parent company Alphabet. Simnegar thinks usage of these services has increased among many customers since they started sheltering at home due to COVID-19.

Thirty-four analysts forecast the average price of Facebook in 12 months at $257.04 with a high forecast of $300.00 and a low forecast of $185.00. The average price target represents a 6.20% increase from the last price of $242.03. From those 34, 29 analysts rated ‘Buy’, five rated ‘Hold’ and none rated ‘Sell’.

Morgan Stanley target price is $270 with a high of $325 under a bull scenario and $185 under the worst-case scenario. We also think it is good to buy at the current level and target at least $270 as 50-day Moving Average and 100-200-day MACD Oscillator signals a strong buying opportunity. Check this for Google stock forecast.

Others

Other top holdings included credit card companies Visa and MasterCard, as well as Home Depot. The first two continued to ride the strong secular trend toward electronic payments, while Home Depot has benefited from customers who have spent more time in their homes and, therefore, have dedicated more money toward home improvement, Fidelity noted.

Europe Set for Negative Start, US-China Tensions Rise, US Tech Giants Fell

Pfizer and BioNTech are working on four drugs that they are hoping will go on to be coronavirus vaccines, and the FDA put two of the four on a fast track for approval. At the back end of last week, BioNTech said they could receive approval as early as Christmas, but in light of yesterday’s news, it might even be sooner.

European equities closed higher and US stocks got off to a good start on the back of the news. The FDA update carried on nicely from Friday’s news that Remdesivir, the antiviral drug produced by Gilead Sciences, can reduce the fatality rate in coronavirus sufferers by 62%. In the past couple of trading sessions there was a feeling that big pharma stands a chance of taking on the virus.

That being said, many countries are still battling against Covid-19. There were in excess of 60,000 new cases yesterday in the US, while there were 312 deaths. The infection rate remains high, but at least the fatality rate is relatively low. The situation in Florida is getting worse as the growth in the number of new cases was 4.7%, while the seven day average was 4.4%.

Robert Kaplan, the head of the Federal Reserve Bank of Dallas, issued a mixed statement yesterday. The central banker expressed concerns in relation to the infection rate, and he said the Fed might be required to do more should assistance be needed. Mr Kaplan also said the Fed might row back on its stimulus packages should the economy improve.

The NASDAQ 100 set a fresh record high yesterday, a few hours into the trading session. The bullish run didn’t last long as the tech focused index finished down more than 2%, and the S&P 500 closed down nearly 1%. The usual suspects – Apple, Amazon, Netflix, Facebook and Google’s parent, Alphabet – all set all-time highs, but finished lower.

US earnings season will kick-off today as the latest quarterly numbers from JPMorgan, Wells Fargo and Citigroup will be posted. In April, the major banks collectively put aside more than $25 billion for provision for bad debts, the view is that the rate of loan defaults will surge on account of the pandemic.

Last month, the Fed carried out a stress test, and in one extreme scenario, the central bank cautioned that total bad debts provisions could be $700 billion. Dividends will be in focus as the Fed said that pay-outs must be capped at current rates, and there has been speculation that dividends could be cut in an effort to conserve cash.

It was a mixed day for commodities yesterday. The slide in the US dollar helped gold. Silver, copper and palladium were also helped by the move in the greenback, and the overall feel-good factor helped the industrial metals too. Oil on the other hand lost ground as there was talk that OPEC+ are looking to taper off the steep production cuts that were introduced in May. Last month WTI and Brent crude hit three month highs, but they failed to retest those levels since, because of the pausing of the reopening of economies.

Overnight, China posted its trade data for June. Imports were 2.7%, and economists were expecting -10%, keep in mind the May reading was -16.7%. Exports came in at 0.5%, and the consensus estimate was -1.5%, while the May reading was -3.3%. The rebound in imports and exports points to a turnaround in the global economy. It is possible the positive exports reading was largely because of Western government’s demand for personal protective equipment.

Rising tensions between the US and China in relation to Beijing’s territorial claims in the South China Sea has weighed on sentiment. Hong Kong is reintroducing tougher restrictions and a rise in coronavirus cases in Victoria, Australia, has impacted the mood too. Stocks in Asia are in the red, and European markets are called lower.

At 7am (UK time) the UK will release a number of economic reports. The GDP reading for May on an annual basis is tipped to be -20.4% and that would be an improvement on the -24.5% posted in April. The monthly reading is expected to be 5.5%, and keep in mind the April reading was -20.4%. UK industrial output, manufacturing output and construction output are expected to be 6%, 8% and 14.5% respectively.

At the same time, the final reading of German CPI for June will be posted and the consensus estimate is 0.8%.

The German ZEW economic sentiment report for July is tipped to be 60, and that would be a dip from the 63.4 recorded in June. It will be released at 10am (UK time).

Eurozone industrial production will be announced at 10am (UK time) and the May reading on a monthly basis is tipped to be 15%, and that would be a huge rebound from the -17.1% posted in April.

US headline CPI is expected to rebound to 0.6% from 0.1% in May. The core reading is tipped to be 1.1% and that would be a fall from the 1.2% that was posted in May.

EUR/USD – since late June it has been in an uptrend, and a break above the 1.1400 zone might put 1.1495 on the radar. A break below the 1.1168 area might pave the way for 1.1049, the 200-day moving average, to be targeted.

GBP/USD – has been in an uptrend recently, and should the positive move continue, it might target 1.2690, the 200-day moving average. A move through that level should put 1.2813 on the radar. Thursday’s candle has the potential to be a gravestone doji, and a move lower could see it target 1.2432, the 100 day moving average. A drop below 1.2251, might bring 1.2076 into play.

EUR/GBP – yesterday’s daily candle has the potential to be a bullish reversal, and if it moves higher it could see it target 0.9067 or 0.9239. A break below the 50-day moving average at 0.8949, could put the 0.8800 zone on the radar.

USD/JPY – has been drifting lower for the last month and support could come into play at 106.00. A rebound might run into resistance at 108.37, the 200-day moving average.

FTSE 100 is expected to open 78 points lower at 6,098

DAX 30 is expected to open 239 points lower at 12,560

CAC 40 is expected to open 91 points lower at 4,965

By David Madden (Market Analyst at CMC Markets UK) 

Facebook Testing All-Time High Despite Growing Boycott

Facebook Inc. (FB) price action has shaken off a boycott by top tier advertisers in reaction to alleged ‘hate speech’, in the wake of nationwide protests following the George Floyd killing. The initial boycott news triggered a 4-day 38-point slide, which was promptly scooped up by traders and investors looking to ‘buy the dip’. The stock is now situated less than a point under the all-time high, flaunting harsh corporate criticisms.

Zuckerberg Takes Rebellious Tone

CEO Mark Zuckerberg has advised that Facebook will team up with civil rights groups and experts in an effort to forestall the boycott, but organizers are standing firm, awaiting more concrete action. It’s understandable because Zuckerberg has established a poor track record on privacy and political issues since the 2016 election, when foreign agents attempted to influence U.S. opinion through fake accounts.

Zuckerberg has taken a rebellious tone despite those conciliatory actions, stating “my guess is that all these advertisers will be back on the platform soon enough”. He also insists that “we’re not gonna change our policies or approach on anything because of a threat to a small percent of our revenue, or to any percent of our revenue”. He could be right because big advertisers leading the boycott make up just a small percentage of the company’s $70-billion advertising revenue.

Wall Street And Technical Outlook

Wall Street has ignored the boycott so far, with a Canaccord Genuity upgrade marking last week’s only institutional activity. Consensus remains highly bullish, with 28 ‘Buy’ and just 4 ‘Hold’ ratings. No analysts are recommending that investors sell the stock at this time. Price targets currently range from a low of $185 to a street high $300 while Facebook is now trading about $5 under the median $249 target.

The technical outlook looks outstanding despite the latest controversy, with the stock already in breakout mode and trading just below the all-time high. Accumulation-distribution indicators have actually surged to new highs in the last week, generating a bullish divergence that predicts price will soon follow. The sky’s the limit given these technical tailwinds, with Wall Street’s lofty $300 target easily attainable in the next one to three months.

 

U.S. Stocks Set To Open Lower As Traders Take Profits After The Recent Upside Move

With No Important Economic Reports Scheduled To Be Released Today, Traders Focus On The Spread Of The Virus

S&P 500 futures are losing ground in premarket trading as the stock market shifts its attention to virus data.

Yesterday, stocks were boosted by better-than-expected U.S. Services PMI and Composite PMI reports. There are no major economic reports scheduled to be released until Thursday when the market will digest the new data on Initial Jobless Claims and Continuing Jobless Claims.

In this environment, traders’ attention naturally turns to the developments on the coronavirus front. The situation does not look good as the pandemic shows no signs of a slowdown.

According to data from Johns Hopkins University, more than 11.6 million cases of coronavirus have been recorded since the beginning of the pandemic. In recent days, the world has recorded more than 200,000 new cases per day which is the all-time high.

U.S. May Ban Social Media Apps From China

The U.S. is set for another round of tensions with China as it may ban the country’s social media apps as they may share information with the Chinese government.

Meanwhile, companies like Facebook and Twitter have announced that they would not take requests for user data from Hong Kong’s government due to the new security law.

China will likely try to retaliate against any restrictive measures so U.S. – China relations will continue to follow their downside trend.

European Commission Revises Its Economic Forecast To The Downside

While stocks trade as if there is no pandemic at all, the situation is challenging for the real economy. According to the new forecast from the European Commission, Euro Area’s economy will decline by 8.7% in 2020 and rebound by 6.1% in 2021.

The previous forecast called for a decline of 7.7% in 2020 and growth of 6.3% in 2021. The reopening of the economy is not proceeding as fast as previously expected as governments have to balance their economic priorities with virus containment measures.

The slowdown in the EU will directly impact U.S. multinationals. At the same time, it also raises questions regarding the recent optimism about the rebound of the U.S. economy which currently faces a surge in the number of virus cases.

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

Concerned on Parts of Tech Sector, But Sees Continued Growth Tied to Two Megatrends: Fidelity

The recent recovery in stock markets has been at odds with economists maintaining a gloomier global economic outlook. The rally is largely driven by the optimism of economic recovery and a much stronger recovery in the technology sector.

The S&P 500 information technology sector has returned about 10% in 2020, including reinvested dividends. Although during the tech bubble of 1990s the sector has never booked over 14% of the S&P 500’s earnings, its profit contribution surged to more than 20% of S&P 500 net income in recent years.

It is likely that technology will play a significant role across different countries and cultures in future, generating better returns in the long run for these tech companies.

“I remain concerned about the impact of recession on parts of the tech sector, but I see continued growth driven by 2 megatrends: the shift to digital experiences and the shift to cloud computing,” wrote Nidhi Gupta, information technology sector leader and portfolio manager of Fidelity Select Technology Portfolio.

Gupta said she believes in companies that are moving traditional offline experiences online, and firms that are helping these companies to make better business decisions with their data, Fidelity added.

Socialising online and doing some of the things, like watching a movie and shopping with friends, virtually is a long-term megatrend that is expected to remain for years, regardless of global economic conditions amid the COVID-19 crisis. That’s why companies like Netflix, Facebook, Amazon.com, and Latin American e-commerce provider MercadoLibre are favoured.

“A related megatrend is that digital businesses with this treasure trove of data are increasingly looking to cloud computing to draw data-driven insights to improve their businesses. This is happening, via cloud services being offered at all levels of the information technology stack—infrastructure, platform, and software,” the American multinational financial services corporation added.

“Many companies are shedding their hardware and becoming software-led in every way,” Gupta adds. Companies that provide the cloud services to help their customers make better business decisions, which include HubSpot, Microsoft, Salesforce.com, Elastic, and MongoDB – all overweighted fund positions as of May 31.

According to Tipranks’ analyst consensus by sector, 148 technology stocks out of 595 were rated “Strong Buy”, 306 were rated “Moderate Buy”, 122 were rated “Hold”, 19 were rated “Moderate Sell” while none were rated “Strong Sell”.

E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Underpinned by Fed Stimulus Hopes

September E-mini NASDAQ-100 Index futures are inching higher during the pre-market session on Tuesday as investors clung to hopes of a stimulus-backed economic rebound. The index was boosted by a rise in Apple Inc and a strong recovery in shares of Facebook.

The rise in the number of new COVID-19 cases at hot spots throughout the country has been largely ignored by investors with most expecting the U.S. Federal Reserve to step in with additional monetary easing if economic conditions get really bad.

At 06:08 GMT, September E-mini NASDAQ-100 Index futures are trading 9978.50, up 4.75 or +0.05%.

In other news, data on Monday showed contracts to buy previously owned homes rebounded by the most on record in May, suggesting the housing market was turning around. Later this week, investors will focus on employment and consumer confidence data for June.

Daily September E-mini NASDAQ-100 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through 10296.25 will signal a resumption of the uptrend. A move through 9368.25 will change the main trend to down.

The minor trend is down. This is controlling the momentum. The minor trend changes to up on a move through 10120.50. A trade through 9728.75 will indicate the selling pressure is getting stronger.

The first minor range is 10296.25 to 9728.75. Its 50% level at 10012.50 is potential resistance.

The second minor range is 9368.25 to 10296.25. Its 50% level at 9832.25 is potential support.

The short-term range is 8841.00 to 10296.25. Its retracement zone at 9568.50 to 9397.00 is a key support zone.

Daily Swing Chart Technical Forecast

Based on the early trade, the direction of the September E-mini NASDAQ-100 Index on Tuesday is likely to be determined by trader reaction to the 50% level at 10012.50.

Bullish Scenario

A sustained move over 10012.50 will indicate the presence of buyers. This could trigger a quick move into the minor top at 10120.50. Taking out this level could trigger an acceleration into the contract high at 10296.25.

Bearish Scenario

A sustained move under 10012.50 will signal the presence of sellers. If this created enough downside momentum then look for the selling to extend into 9832.25. If this level fails then look for further selling pressure into 9728.75, Monday’s low.

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

Facebook’s Advertiser Diversification to Cushion Boycott Impact; Buy on Weakness: Morgan Stanley

Aiming to pressurize Facebook, an American social media conglomerate corporation based in California, to crack down on fake news and hate speech has prompted several corporate advertisers to pull out their advertising from the biggest social media site platform.

Over the past week, several companies, including Unilever, Starbucks, Coca-Cola, Honda and others, have signed for an advertising boycott of social media platforms including Facebook and Twitter.

Ben & Jerry’s, Verizon Wireless and Eddie Bauer have also joined the race to pause advertisements for July. Following this, Facebook’s shares plunged over 10% from high of $245.18 on June 23.

Morgan Stanley: “We’d buy on weakness”

“Key points that could minimize any material Facebook impact: In our view, it is important to remember that 1) Facebook’s advertising dollar base is highly diversified, as on its 1Q 2019 earnings call, the company said that ‘our top 100 advertisers represented less than 20% of our total ad revenue. “Facebook’s advertiser base likely has grown by more than 10% since then, meaning their ad base could be even more diversified. 2) Facebook has an incredibly strong direct-response transaction-driven ad product most recently seen in 1Q results that DR advertisers will step in and bid with if/when pricing drops. The ability for DR advertisers to spend more is likely very strong right now given the current macro strength in e-commerce,” said Brian Nowak, equity analyst at Morgan Stanley in a note to clients.

“While the current boycott cancellations don’t look troubling, uncertainty around the breadth and duration of this boycott could create tactical pressure on Facebook. We intend to lean on the above math as our proxy as we try to gauge the impact on Facebook’s ad business…and are buyers on weakness when near-term sentiment on this scaling platform becomes overly bearish and valuation gets depressed.”

Brian Nowak, equity analyst at Morgan Stanley further wrote that “we are positive on Facebook’s monetization roll-out of Instagram as well as Facebook’s ability to continue to innovate and improve its monetization. Combined with high and growing engagement we see monetization upside going forward. We see the monetization of Instagram adding $4 billion of incremental ad revenue in 2021.”

“Investing from a position of strength to drive faster long-term growth: We are modelling 11% GAAP opex (excluding one-time items) growth in 2020, implying an incremental $5 billion in opex. Our base case model implies opex per employee moderates in ’20 while Facebook hiring remains roughly flat on an absolute basis. We believe Facebook will grow EPS at a 14% CAGR (2019-2022),” Morgan Stanley’s Nowak added.

Facebook target price

Morgan Stanley target price is $230 with a high of $280 under a bull scenario and $160 under the worst-case scenario. Thirty-two analysts forecast the average price in 12 months at $248.21 with a high of $300.00 and a low of $185.00. The average price target represents a 12.50% increase from Monday’s price of $220.64, according to Tipranks. From those 32, 29 analysts rated ‘Buy’, three rated ‘Hold’ and none rated ‘Sell’.

U.S. Stocks Set To Open Higher As Traders Buy Stocks After The Recent Pullback

Coronavirus Continues To Spread Actively Across The World

According to data from Johns Hopkins University, more than 10 million coronavirus cases have been registered in the world since the beginning of the pandemic. The U.S. is at the top of the list with more than 2.5 million cases.

Lately, the increase in the number of new cases has pushed Texas, Florida and California to close bars which are believed to play a big role in the spread of the virus. As reopenings lead to the increase in the number of new cases in some parts of the world, the pace of additional reopenings is unclear.

Nevertheless, S&P 500 futures were able to shrug off virus worries during the premarket trading session and are pointing to a higher open as traders rush to buy stocks after the recent pullback.

Facebook In Spotlight As More Advertisers Join The Boycott Campaign

Shares of Facebook have suffered an 8% loss on Friday as the company found itself under pressure due to a boycott campaign aimed at improving the moderation process and removing hate speech from the platform.

Many companies have already joined this campaign and refused to buy ads from Facebook, and new names are added every day. According to a FOX Business Network report, Pepsi has joined the campaign over the weekend.

Facebook shares have already fully recovered from the losses they incurred during the acute phase of the coronavirus crisis and are up 5% year-to-date even after the recent sell-off.

However, the stock looks set to continue the current downside move as it is already losing ground in the premarket trading session.

Traders Await Key Employment Reports

On Wednesday, the U.S. will provide ADP Employment Change report for June. On Thursday, the market will have to digest new data on Initial Jobless Claims, Continuing Jobless Claims and Non Farm Payrolls.

These reports will likely have a major impact on market sentiment. At this point, the market is worried about the spread of coronavirus but these worries are offset by optimism about the economic recovery.

Currently, global markets are undecided about future direction. The U.S. dollar, which serves as the safe haven asset of last resort, is losing ground, while the other safe haven asset, gold, continues its upside move.

The release of the employment reports should provide traders with more data on the health of the economy and set the trend for the next few weeks.

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

 

E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Minor Trend Changed to Down, Shifting Momentum

September E-mini NASDAQ-100 Index futures are trading sharply lower shortly before the cash market close. The selling is being primarily driven by a report that the U.S. intervention in Chinese interests could risk the Phase 1 trade deal.

After opening lower due to worries over a surge in coronavirus cases, the index accelerated to the downside in reaction to a report from The Wall Street Journal that said U.S. ‘meddling’ in Hong Kong, Taiwan and other matters put the trade deal at risk.

At 19:30 GMT, September E-mini NASDAQ-100 Index futures are trading 9873.75, down 223.75 or -2.32%.

Also weighing on the technology-based index was a steep drop in shares of Facebook. The social media giant was down nearly 8.0% late in the session after Verizon Communications Inc. and Unilever joined an advertising boycott that called out Facebook for not doing enough to stop hate speech on its platforms.

Daily September E-mini NASDAQ-100 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has shifted to the downside. A trade through 10296.25 will signal a resumption of the uptrend. The main trend will change to down on a move through the nearest main bottom at 9368.25.

The minor trend is down. It turned down on Friday when sellers took out 9843.50, shifting momentum to the downside.

The minor range is 9368.25 to 10296.25. Its 50% level at 9832.25 is controlling the near-term direction of the index.

The short-term range is 8841.00 to 10296.25. If the minor trend changes to down then look for the selling to possibly extend into the short-term retracement zone at 9568.50 to 9397.00.

Short-Term Outlook

The minor 50% level at 9832.25 is a potential trigger point for a break into at least 9568.50. This is followed by a support cluster at 9397.00 to 9368.25.

We’re not too worried about this break because it would be a normal 50% to 61.8% correction.

However, we are going to start focusing on the short-side if 9368.25 fails as support because this would break the bullish uptrend pattern of a series of higher-tops and higher-bottoms.

Furthermore, if short-sellers are able to take out 9368.25 with major volume then we could see an eventual break into 8841.00, followed by 8547.00 and the major 50% level at 8461.00.

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

Unilever Latest Advertiser to Jump Ship on Facebook, Twitter Amid ‘Polarized Atmosphere’ in US

The two major social media stocks – Facebook and Twitter – are both under pressure on Friday, falling 9% and 7% respectively, as more advertisers joined the list of more than 90 marketers pausing their ad spending during the month of July for social media giant Facebook. Twitter shares fell in sympathy with Facebook as investors anticipate the other shoe to drop on its platform as well.

At 17:02 GMT, Facebook is trading $216.93, down $18.75 or -7.96% and Twitter is at $29.12, down $2.25 or -7.17%.

Growing List of Major Advertisers Shunning Facebook

CNBC wrote, “In the week since a group of organizations called on Facebook advertisers to pause their ad spending during the month of July, more than 90 marketers including Verizon, Patagonia, REI, Lending Club, The North Face, Ben & Jerry’s have announced their intention to join, according to a running list from Sleeping Giants. The group of organizations includes the Anti-Defamation League, the NAACP, Sleeping Giants, Color of Change, Free Press and Common Sense.”

“The organizations said they’re asking Facebook to more stringently police hate speech and disinformation by taking a number of actions, including creating a ‘separate moderation pipeline’ for users who say they’ve been targeted because of their race or religion, or to let advertisers see how frequently their ads appeared near to content that was later removed for misinformation or hate, and allow them refunds for those advertisements.”

Daily Facebook

No Response from Facebook Yet

Last year, Facebook brought in $69.7 billion in ad revenue globally through its millions of advertisers. The platform said earlier this year it has more than 8 million advertisers, CNBC said.

In a recent memo to advertisers obtained by CNBC, the company’s VP of global marketing solutions Carolyn Everson said “boycotting in general is not the way for us to make progress together.”

“I also really hope by now you know that we do not make policy changes tied to revenue pressure,” she said in the memo. “We set our policies based on principles rather than business interests.”

Unilever Pauses Facebook and Twitter Advertising for Rest of 2020

Unilever on Friday said it would be pausing brand advertising on Facebook, Instagram and Twitter in the U.S. “through at least the end of the year.”

“Given our Responsibility Framework and the polarized atmosphere in the U.S., we have decided that starting now through at least the end of the year, we will not run brand advertising in social media newsfeed platforms Facebook, Instagram and Twitter in the U.S.,” the company said in an emailed statement it attributed to Luis Di Como, the company’s EVP of Global Media.

“Continuing to advertise on these platforms at this time would not add value to people and society. We will be monitoring ongoing and will revisit our current position if necessary.”

Daily Twitter

Twitter’s Response

Twitter’s VP of Global Client Solutions Sarah Personette responded to the move from Unilever in a statement.

“We have developed policies and platform capabilities designed to protect and serve the public conversation, and as always, are committed to amplifying voices from underrepresented communities and marginalized groups,” she said. “We are respectful of our partners’ decisions and will continue to work and communicate closely with them during this time.”

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

Zoom Surges 13% Ahead Of Earnings

Zoom Video Communications (ZM) shares surged past $200 on June 1 to end the day with a 13% gain. The latest price action came as a result of the optimism surrounding the first-quarter earnings of the company which would be released after the market close on June 2.

Investors never really paid attention to Zoom before the pandemic, but the company emerged as the go-to video conferencing platform for stay-at-home professionals and students in the last few months. This virus-proof nature of the company has helped shares soar 200% in 2020 so far.

Even as shares continue to rise, some analysts are questioning the ability of Zoom to remain relevant in the long run as billion-dollar tech giants such as Facebook Inc. (FB) and Alphabet Inc. (GOOG) have unveiled plans to grab market share in the booming video conferencing industry.

Zoom Has A History Of Beating Estimates

Empirical evidence suggests that Zoom is likely to beat estimates for the first quarter. Since its IPO in April 2019, Zoom has beaten earnings and revenue estimates 100% of the time, and the same thing could happen later today as well. However, this is not a guarantee for a surge in the stock price. For instance, shares dropped by 10% following a strong earnings report in the previous quarter.

Latest Analyst Actions

Rosenblatt boosted its target price for Zoom from $95 to $150 on June 1, and the research firm now has the highest price target among Wall Street analysts for Zoom. However, even this revised target represents a downside of over 25% from the current market price of $204.

Even though daily active users have surged since March, some analysts have cast doubt over the ability of Zoom to monetize these users as the majority are non-paying subscribers who do not plan to pay for a video communication platform ever. The reopening of the economy, in any case, will lead to a decline in active users as well. Morgan Stanley analyst Meta Marshall recently wrote, “In order for us to get more positive on Zoom, we would need to see evidence that the monetization is higher than expected, meaning the installed base to sell additional services into is larger.”

Analysts unanimously agree that Zoom is overvalued from many perspectives.

Profit-Taking Seems To Be A Rational Decision

Zoom has many things going right for them, but at an EV/sales multiple of 80, shares are overvalued. As the global economy slowly returns to normalcy, Zoom will see a gradual decline in its daily active users, which would not be taken lightly by market participants. The company has a plethora of security and privacy issues to address as well. Booking profits now and waiting for a better opportunity seems to be the rational move.

US ‘Re-Opening Stocks’ Attracting Buyers; Amazon, Facebook Hit Record Highs

The three major U.S. stock indexes posted their fourth gain in five sessions on Wednesday as investors continued to bet on a swift economic recovery from coronavirus-driven lockdowns and the potential for more stimulus measures from the Federal Reserve. The move took place despite a medical watchdog group downplaying the upbeat coronavirus results from Moderna Inc. that earlier in the week was a catalyst by a spectacular rally.

In the cash market, the benchmark S&P 500 Index settled at 2971.61, up 48.67 or +1.85%, the blue chip Dow Jones Industrial Average finished at 24575.90, up 369.04 or +1.65% and the technology-based NASDAQ Composite closed at 9375.78, up 190.68 or +2.45%.

The Internals

Gains were broad-based, with each of the 11 major S&P sectors on the plus side. The small-cap Russell 2000 Index, which usually leads gains out of a recession, outperformed the large-cap indexes, according to Reuters.

Advancing issues outnumbered declining ones on the NYSE by a 4.05-to-1 ratio; on the NASDAQ Composite, a 3.53-to-1 ratio favored advancers.

The S&P 500 posted 13 new 52-week highs and no new lows; the NASDAQ Composite recorded 74 new highs and nine new lows.

Money Moving into Growth, ‘Re-Opening Stocks’

Since the markets bottomed in late March, technology sector growth stocks have been the catalysts leading the rally. We are now seeing demand for the stocks of companies expected to benefit from the economy re-opening.

Amazon rose 1.98% to hit an all-time high to lead the market higher. Facebook gained 6.04% and reached record levels as well. Stocks that would benefit from the economy reopening also advanced Wednesday. MGM Resorts closed 8.84 higher while United Airlines rose 5.19%.

As states across the country begin to loosen restrictions, hopes for an economic rebound have grown. The NYSE Arca airlines index jumped 5.35% as Delta Air Lines Inc.’s chief executive officer said he was confident travel will return in the next 12 to 18 months.

Moderna Responds to Criticism of Its Coronavirus Results

Moderna would never put out data on its potential vaccine for the coronavirus that was different from “reality,” the biotech firm’s chairman told CNBC on Wednesday.

The comment came a day after health-care publication STAT News reported that some vaccine experts were skeptical of Moderna’s new vaccine data, saying it did not provide critical information to assess its effectiveness. The report sent Moderna’’ stock and the broader U.S. market lower.