Stocks continued to rebound Monday with outsized gains for tech. The Nasdaq gained 1.2% while the S&P 500 and Dow added 0.70% and 0.3% respectively, notes Jon Markman of Pivotal Point.
Tech stocks have outperformed the past two sessions as banks, industrials, and consumer discretion issues catch their breath following big gains during since January.
Key support at 3,900 for the benchmark S&P 500 is holding firm. Barring a break, it’s hard not to be bullish for the near term. The path of least resistance is higher, though I suspect we will see some backing and filling before the next leg higher.
Leading the way for tech and consumer discretionary was electric car maker Tesla (TSLA), which climbed on a $3,000-per-share price target from the popular investment firm behind the ARKK exchange-traded fund.
Breadth favored decliners over advancers, and there were 247 new highs vs. 74 new lows. Topping the new highs list were Intel (INTC), Cisco (CSCO), Lowe’s (LOW), Altria Group (MO), Norfolk Southern Corp (NSC), and Keurig Dr. Pepper (KDP). None of the cool-kid stocks have made it back to highs; that's an opportunity as they will rip back to the vanguard at some point sooner than later.
The 10-year US Treasury yield declined to 1.69% from Friday's 14-month high of 1.73%.
Tesla closed 2.3% higher after Ark Investment Management boss Cathie Wood said she sees the stock rising to $3,000 by 2025. Ark also expects the company's annual unit sales to reach 5 million to 10 million vehicles in 2025, assuming an increase in capital efficiency. The $3,000 price target is well beyond that of brokerage analysts whose targets on the stock peak at $1,200, Bloomberg reported. Wood has been right on with her view of Tesla for years in the face of brokers' skepticism.
The pace of US existing home sales fell to a 6.22 million seasonally adjusted annual rate in February from a revised 6.66 million in January, trailing expectations for a 6.4 million rate in a survey of analysts by Bloomberg. Realtors’ economist Lawrence Yun noted last month was the coldest February in decades, which likely affected the pace of home sales.
Shares of Kansas City Southern (KSU) were 11% higher, leading the S&P 500 (SPX), after the railroad agreed to a $29 billion takeover by Canadian Pacific (CP). AstraZeneca (AZN) said it would seek emergency use approval from US drug regulators for its COVID-19 vaccine after it was 100% effective in preventing severe cases and hospitalizations in a trial. Shares jumped 4%. JPMorgan (JPM) and Goldman Sachs (GS) were among the steepest decliners on the Dow.
Learn more about Jon Markman at Pivotal Point.
