Major Disconnect Between Economy and Stocks

Here is a daily recap of the S&P 500 broken down by sector followed by sector heat map as there is a major disconnect between economy and stocks. Stocks in heat map are based on the top 10 holdings of each sector ETF. Click on each picture to zoom in. Below is a summary of today’s action on Wall Street provided by CNBC:

Stock futures rise slightly after Fed rate decision, Big Tech earnings loom

U.S. stock futures rose on Wednesday night following a session in which the major averages posted solid gains as the Federal Reserve pledged to maintain current stimulative measures. Dow Jones Industrial Average futures climbed 18 points, or 0.1%. S&P 500 futures gained 0.1% and Nasdaq 100 futures advanced 0.2%.

The S&P 500 (SPY) slipped -0.38% today. Sector decliners led advancers 7 to 4 as shown below in the sector graph. Losses ranged from -3.93% to less than 1%. 4 sectors enjoyed minor gains of less than 1%, check the sector graph for specifics.

The Dow Jones index dropped -225 points (-0.85%) to close at 26,313. The Nasdaq gained +44 points (+0.43%) to settle at 10,587.

Major Disconnect Between Economy and Stocks

Stocks finished mixed on Thursday as tech shares rose despite a historic drop in GDP and a rise in weekly jobless claims.

Data from the U.S. government released Thursday showed gross domestic product plunged by a record 32.9% in the second quarter. The number was not as bad as feared, however, as economists surveyed by Dow Jones had expected a 34.7% decline.

Meanwhile, U.S. weekly jobless claims came in at 1.434 million, roughly in line with estimates. However, continuing claims, or those who have been collecting for at least two weeks, totaled 17.018 million, up from about 16 million last week.

“The stock market has to look forward and most economic data looks backwards,” said David Bahnsen, chief investment officer of The Bahnsen Group. “Investors should be prepared for a choppy process of data digestion, but not be surprised that the market feels the future is better than the present and that unprecedented stimulus and liquidity exist to drive valuations.”

Stimulus Update

Democrats and Republicans have made little progress toward a new coronavirus relief package as a weekly benefit $600 for those unemployed due to the pandemic is set to expire on Friday.

Key Takeaways…

Amazon to report earnings after market close

Amazon will report its fiscal second-quarter earnings after market close on Thursday. Here are Wall Street’s expectations for Amazon: Earnings: $1.46 per share expected, according to analysts surveyed by Refinitiv Revenue: $81.56 billion expected, according to analysts surveyed by Refinitiv The company’s earnings will be impacted significantly by its coronavirus-related investments.

Apple is set to report earnings after the bell

Apple is set to report fiscal third-quarter earnings after the bell Thursday, offering a crucial update on the company’s standings amid the coronavirus pandemic. Despite widespread retail closures during the quarter, especially in the United States, Apple previously touted both work-from-home trends and strong online sales as delivering a boost to overall operations.

Alphabet to report Q2 earnings after the bell

Google parent-company Alphabet is set to report second quarter financials after the bell Thursday, and it’s the first full quarter since the Covid-19 pandemic hit. Executives predicted it would be “a difficult one.”

Facebook beats top and bottom line in Q2

CNBC’s Julia Boorstin reports Facebook’s second quarter earnings report. The company reports 11% revenue growth even amid the coronavirus pandemic slowdown.

Notable S&P 500 Movers…

Below I’ve highlighted some notable S&P 500 movers (both winners & losers).

Credit: Sector Graph provided by Sector SPDR app. Sector breakdown provided by Charles Schwab. Sector heat map provided by finviz. Information Credit: News Headlines and quotes were taken from CNBC in the writing of this post.

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7/30/20

S&P 500 Sector Graph

Major Disconnect Between Economy and Stocks

S&P 500 (SPY)

Major Disconnect Between Economy and Stocks

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S&P 500 Sector Heat Map

 

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