Stocks - Wall Street Opens Higher on Tech Frenzy; Dow up 200 Pts
Investing.com
Published Jul 21, 2020 09:31AM ET
By Geoffrey Smith
Investing.com -- U.S. stock markets opened with another bang on Tuesday, the Nasdaq Composite hitting yet another all-time high as policymakers on Capitol Hill prepare proposals for a fifth stimulus package.
By 9:35 AM ET (1335 GMT), the Nasdaq was up 48 points, or 0.5%, at 10,813, while the Dow Jones Industrial Average was up 208 points, or 0.8% at 26,889 points and the S&P 500 was up 0.6%.
The Nasdaq had been lifted to new records on Monday by some sharp upward revisions to Wall Street price targets for such mega-caps as Amazon. Economist Charles Barraud pointed out that the market capitalization of Apple (NASDAQ:AAPL), Amazon, Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) together was now greater than that of the entire Tokyo Stock Exchange.
He also hinted that prices are looking increasingly overbought in the tech space: the Nasdaq 100 is trading at 21% over its average for the last 100 days, a level last seen at the height of the tech bubble in March 2000.
The biggest movers of Monday cooled off slightly in early trade. Amazon (NASDAQ:AMZN) fell 1.8%, while Tesla (NASDAQ:TSLA) - still buzzing with speculation about its possible inclusion in the S&P 500 - edged down by 0.6%. However, BioNTech (NASDAQ:BNTX) stock rose another 8.4% on the back of the test results for the Covid-19 treatment that it is developing together with Pfizer Inc (NYSE:PFE). Moderna, whose experimental drug produced less convincing results in comparable tests, fell 1.9%..
Markets were cheered before the open by better-than-expected earnings from companies such as IBM (NYSE:IBM), Coca-Cola (NYSE:KO) and Lockheed Martin (NYSE:LMT), even though neither was confident enough to update its outlook for the full year in any detail.
IBM stock was up 2.3% while Coca-Cola stock was up 3.2%, despite both companies reporting sharp falls in earnings and providing little in the way of guidance for the full year. FactSet analyst John Butters noted in a blog post that the blended profit margins of S&P 500 companies to have released earnings for the quarter through June was around 7.1%, the lowest since 2009.
Many participants appear to have written the quarter off, however. In IBM's case, the upward move was due largely to the 30% gain in bookings at the cloud computing unit (a number that is still flattered by last year's acquisition of Red Hat).
In other markets, Gold Futures and Silver Futures both surged to fresh multi-year highs on the perception that real interest rates will stay low or negative for the foreseeable future.
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