With tech stocks stretching higher, it was the SP-500’s turn to touch the sky, setting a new record-extending the index into seven straight days of gains. The earnings miss from big blue briefly sent the Dow lower only to recover by the end of the day as the ravenous bulls continue to buy, buy, buy! Although the INTC and SNAP point sharply lower after disappointing earnings, the U.S. futures suggest new records may be set at today’s open. Can we extend the party as we head into the weekend? Your guess is as good as mine, but I would be more of a profit taker today rather than a buyer.
Asian markets closed mixed as Evergreade made a bond payment in the grace period to avert default. European indexes see nothing but green across the board this morning as Chinese property fears temporarily subside. Though somewhat muted, U.S. futures point to a bullish open in the Dow and SP-500, while the QQQ looks slightly lower after rallying off overnight lows.
We have a slightly lighter day on the Friday earnings calendar, with 37 companies listed. So let’s call it the calm before the next week's storm of giant tech reports. Notable reports include AXP, SAM, CLF, HCA, HON, RF, SLB, STX, & VFC.
New & Technicals’
The U.K. is seeing rampant Covid infections and a slowly increasing number of hospitalizations and deaths. The warnings come just as government officials have insisted that more restrictions on public life are not yet necessary. Making matters potentially worse, the U.K. is also monitoring a mutation of the delta variant. Evergrande has remitted the funds for a required interest payment due Sept. 23 — ahead of a 30-day grace period that ends tomorrow, according to the Chinese state media Securities Times. The $83.5 million interest payment on Evergrande’s March 2022 offshore bond had been closely watched by investors ever since the indebted property developer warned twice in September that it may default. Analysts say any easing by the People’s Bank of China may not come in overt moves, significantly as the U.S. tightens monetary policy. In addition, the PBOC needs to support a slowing economy while keeping inflation in check. On Thursday, Snap reported its third-quarter earnings, missing revenue expectations after Apple’s iPhone privacy changes disrupted its advertising business. The company also warned that global supply chain interruptions and labor shortages reduce the “short-term appetite to generate additional customer demand through advertising.” The 10-year Treasury yield traded higher to 1.6846%, and the 30-year fell slightly to 2.1257% in early Friday trading.
It was the SP-500’s turn to touch the sky, setting a new record as the bulls continued to buy up tech in anticipation of earnings. Unfortuntually, disappointing results from INTC and SNAP after the bell yesterday have the stock indicated to open sharply lower this morning. Other digital ad stocks are also taking a hit this morning as a result and adding a bit of uncertainty as we move next week's big tech earnings bonanza. That said, the ravenous bulls at this point seem undeterred, with U.S. futures pointing toward a new record open in the DIA and SPY. No price seems too high as we extend this bullish run keeping the T2122 indicator pegged in a short-term overbought condition. Today we turn our attention toward PMI with a lighter day of earnings reports. With the tech giants slated to report next week, the anticipation is very high, and it seems to me the risk is even higher with such elevated P/E ratios.