Monday September 14th

14-09-2020

Dow futures jump as Wall Street tries to recover from tech sell-off, Apple and Tesla rise

U.S. stock index futures rose early Monday after a sell-off in tech shares led to the market’s first back-to-back weekly declines in months. Dow Jones Industrial Average futures added 219 points, or 0.8%. The move implied a gain of more than 170 points at the open. S&P 500 futures were up 1%. Nasdaq-100 futures were up more than 1.4% as tech shares rebounded in premarket trading. Shares of Apple were higher by 2% in premarket trading. The market has been following in the footsteps of its rally leader. Apple shares are down 13% this month. Tesla shares rebounded by more than 2% in premarket trading. The once-surging stock is down more than 25% in September after it failed to gain entry into the benchmark S&P 500, something investors were anticipating. Tech sentiment was lifted by news of Nvidia buying chipmaker Arm Holdings from SoftBank for $40 billion. Nvidia will finance the deal through a combination of cash and common stock. Nvidia was up 6% in premarket trading. Other chipmakers also gained, including AMD, Micron and Skyworks. AstraZeneca resumed phase three trials for its coronavirus vaccine in the U.K. following a halt for safety concerns. ByteDance rejected Microsoft’s bid to buy TikTok’s U.S. operations. Instead, ByteDance has chosen Oracle to be TikTok’s U.S. technology partner, and Oracle will take a significant stake in the business, according to a person familiar with the discussions. Oracle shares were up 6% in premarket trading. Gilead said it will acquire Immunomedics to expand its cancer treatments. It was a $21 billion cash deal. Immunomedics shares doubled in premarket trading. Shares of Immunomedics surged more than 100% in premarket trading Monday. The iShares Nasdaq Biotechnology ETF was up 2% in premarket trading. The S&P 500 fell by 2.5% last week. It was the broader-market index’s worst one-week drop since June 26. That decline also marked the first time since May that the S&P 500 closed lower in two straight weeks. The benchmark is down 4.6% this month. Those losses were driven in large part by a steep drop in tech, the best-performing market sector year to date. The S&P 500 tech sector plunged more than 4% for its biggest weekly loss since March. The tech-heavy Nasdaq Composite was hit the hardest last week, down 4%. That was its worst week since March. “The excessive technology froth from August has been wiped away, but in its wake, clear and ominous topping patterns like … developed,” said Frank Cappelleri, executive director at Instinet, in a note. To be sure, Sean Darby of Jefferies thinks this decline in tech could be short-lived. “There is nothing untoward about the fundamentals nor earnings expectations. An upside surprise would come from further dollar weakness, while the emergence of a vaccine and/or a rise in long-term rates would curb performance,” said Darby, a global equity strategist at the firm. Investors are coming into the new week amid dwindling hope of lawmakers striking a deal on new fiscal stimulus. Senate Majority Leader Mitch McConnell, R-KY, said on Friday the chances of Republicans and Democrats reaching a deal don’t “look that good right now.” Earlier this month, House Speaker Nancy Pelosi, D-Calif., said Democrats and the White House had “serious differences” over coronavirus aid. Meanwhile, the number of U.S. coronavirus cases are growing by 5% or more in 11 states, according to a CNBC analysis of Johns Hopkins University data. Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said last week that recent coronavirus data was “disturbing.” Stocks in Asia Pacific rose on Monday, with investors watching shares of Japanese conglomerate SoftBank Group following an announcement of its sale of U.K. chip designer Arm. South Korea’s Kospi jumped 1.3% on the day to 2,427.91. In Japan, the Nikkei 225 rose 0.65% to close at 23,559.30 while the Topix index added 0.88% to end its trading day at 1,651.10. Mainland Chinese stocks were higher by their close, with the Shanghai composite up 0.57% to about 3,278.81 while the Shenzhen component also added 0.611% to around 13,021.99. Hong Kong’s Hang Seng index rose 0.77%, as of its final hour of trading. Oil prices slipped slightly on Monday amid concerns about a stalled global economic recovery and worries over renewed Libyan supply, but were supported by an impending storm which has disrupted U.S. oil production. Brent crude was down 11 cents, or 0.2%, at $39.72 a barrel while U.S. West Texas Intermediate (WTI) crude futures were down 12 cents, or 0.3%, at $37.21 a barrel. Gold edged higher on Monday, helped by a weaker dollar and expectations that the U.S. Federal Reserve will reiterate its dovish monetary policy stance this week. Spot gold was up by 0.1% at $1,943.58 per ounce. U.S. gold futures rose 0.1% to $1,950.10 per ounce.