The S&P 500 just reclaimed a key technical level that paves the way for a year-end rally, Fundstrat says

NYSE trader
  • The S&P 500 closed above its 50-day moving average on Friday, signaling that stocks will continue to rise.
  • “This is a sign of the resumption of the uptrend. And given the following constellation of factors, we see stocks surging into year-end,” Fundstrat said Monday.
  • With the S&P 500 back above its 50-day moving average, the next level to watch is its record high.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

The S&P 500 reclaimed a key technical resistance level on Friday when it decisively closed above its rising 50-day moving average.

The near-1% surge on Friday ended an almost three-week consolidation period that sent the S&P 500 below its 50-day moving average amid a period of weak seasonality for the index. And while stocks opened lower Monday, the S&P 500 held above that key support level.

Now the only remaining resistance level for the S&P 500 is its prior record high, representing potential upside of about 2% from Friday’s close.

Fundstrat’s Tom Lee thinks the stock market can rise even higher into year-end as a number of bullish factors begin to line up.

“The S&P 500 managed to close [above] its 50-day moving average last Friday. This is a sign of the resumption of the uptrend. And given the following constellation of factors, we see stocks surging into year-end,” Lee said in a Monday note.

Those factors include third quarter earnings showing continued margin growth, supply-chain disruptions easing, technicals improving, COVID-19 cases falling, and the Federal Reserve remaining supportive of risk assets via its monthly bond purchases and near-zero interest rates, according to the note. The Fed has signaled it will start tapering bond buys this year though the process will last into next year.

And the move higher in stocks comes despite ongoing bearish positioning among investors and the nonstop tendency for pundits to call a top in the stock market this year, according to Lee. “For basically all of 2021, the S&P 500 has risen in the face of deep skepticism, particularly from market pundits.”

Those worries that made some think stocks would continue to fall included higher oil prices, the third wave of COVID-19, soaring commodity prices like lumber, and a surge in interest rates, among others. But the stock market has a tendency to climb a wall of worry, which was no doubt in place in 2021.

Lee previously has put a 4,700 year-end price target for the S&P 500, representing potential upside of 5% from Friday’s close.

S&P 500 price chart
Read the original article on Business Insider

US stocks slip as China growth slowdown, energy crisis dampen bullishness

Traders work on the floor of the New York Stock Exchange (NYSE)
Traders work on the floor of the New York Stock Exchange.

US stocks slipped on Monday as a slowdown in China’s growth and a continuing energy crisis dampened investors’ sentiment.

The Dow Jones Industrial Average fell at the start of the trading week, so did the other two major indexes. Among the biggest drags is the mega-cap tech giant Apple.

Here’s where US indexes stood at the 9:30 a.m. ET open on Monday:

While China’s economy expanded by 4.9% in the third quarter, according to data from the National Bureau of Statistics, the growth was slower than the 7.9% rise the country tacked on in the previous quarter and was the nation’s weakest pace since the third quarter of 2020.

Industrial output posted its worst performance since the start of the pandemic, made worse by power shortages, supply-chain woes, and debt problems in its property sector.

Outside of China, the crises in commodities continued to hound global markets, particularly the ongoing energy crunch.

“There is also much discussion on how long-term forward-looking inflation expectations are now spiking,” Hans Mikkelsen, Bank of America Credit Strategist, said in a Monday note. “Obviously, there are many drivers in inflation – such as reopening related bottlenecks that also leave labor unions with more bargaining power, higher energy prices.”

Mikkelsen said the economy is now looking at a “high growth, high inflation environment, in which reopening trades and cyclicals outperform.”

Previously, Francisco Blanch, Bank of America Global Commodities and Derivatives Research Head, provided Insider with four possible paths he sees through early 2022 from an economic crash to an interest rate hike.

Oil prices rose Monday. West Texas Intermediate crude tacked on 1.59% at $83.59 per barrel. Brent oil, the international benchmark, added on 1.10% to $85.79 after notching its eighth consecutive week of gains last week in what is so far its longest streak since a 10-week period through April 1999.

Gold dropped 0.46% to $1,762.79 per ounce.

The 10-year Treasury note yield edged up to 1.619% from Friday’s 1.574%. Yields rise when prices fall.

In cryptocurrencies, bitcoin surged 5.5% to $62,667 ahead of an imminent exchange-traded fund approval this week. Bitcoin’s rally has pushed the entire cryptocurrency market capitalization above $2.6 trillion over the weekend for the first time since May.

Meanwhile, Square CEO Jack Dorsey said his digital payments company is weighing up whether to create a simple-to-use bitcoin mining rig and laid out how it could help the industry.

Read the original article on Business Insider

2022 is shaping up to be a bad year for the stock market as investors grapple with these 3 ‘shocks,’ BofA says

Trader nyse stock market
  • The stock market’s strong gains so far this year are unlikely to see a repeat in 2022, BofA said in a note on Friday.
  • Rising interest rates represent the third “shock” that will cause a surge in volatility and ding stock prices, according to the note.
  • “We are on the cusp of a policy pivot from pro-growth to anti-inflation,” BofA said.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

2022 is shaping up to be a difficult year for the stock market as the Federal Reserve prepares to make a policy pivot, Bank of America said in a note on Friday.

Investors shouldn’t expect the near 20% year-to-date gains in stocks repeat next year due to a “rates shock” that will occur when the Fed is forced to raise interest rates sooner than expected, according to the note.

Rising interest rates will represent the third “shock” investors have had to deal with over the past three years. While a growth shock turned stocks into winners in 2020, an inflation shock this year led to a surge in commodity prices, which will make it even more difficult for the Fed to avoid making a policy change next year, according to BofA.

“Bear case is pandemic ending and so is $30 trillion of emergency policy stimulus,” BofA said, referencing the liquidity provided by global central banks since the pandemic began. The bank pointed to three catalysts that give it confidence the Fed will raise interest rates next year instead of waiting until 2023 like most investors expect.

1. “Powell re-nomination triggers more hawkish Fed rhetoric.” Jerome Powell’s current term as Fed Chairman ends in February.

2. “Payroll recovers,” meaning the economy no longer needs near-zero interest rates as stimulus.

3. “Wage and rent inflation remains elevated,” which can be combated with higher interest rates.

“We are on the cusp of a policy pivot from pro-growth to anti-inflation, [and a] policy mistake has already happened,” BofA said, inferring that the Fed is behind the curve and should have already been reducing its stimulus programs.

The Fed has signaled that it plans to end its $120 billion monthly bond buying program by the middle of next year with a monthly tapering.

But despite the bleak outlook for 2022, investors shouldn’t sell their stocks just yet.

Instead, investors should wait to sell stock after an expected year-end rally due to already bearish investor positioning. “More bearish Wall St positioning reflects concerns [about] inflation and China, [which] supports a typical year-end rally. We say sell it,” BofA said.

Read more: ‘History repeats itself’: The manager of an inflation-focused ETF breaks down why she thinks stagflation is the ‘biggest threat’ to investors – despite Wall Street saying fears are overhyped

Read the original article on Business Insider

Dow spikes 534 points as earnings season opens with a series of strong performances

Trader NYSE green
  • US stocks soared nearly 2% on Thursday as third-quarter earnings season started off strong.
  • Earnings reports from banks including Bank of America, Morgan Stanley, and Citigroup were ahead of expectations.
  • Weekly jobless claims fell to a pandemic-era low, also helping boost investor sentiment.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

US stocks jumped nearly 2% on Thursday as investors reacted positively to strong third-quarter earnings beats from banks including Bank of America, Morgan Stanley, and Citigroup.

The bank stocks soared as much a 4% as a continued drop in provisions for credit losses and strength in the investment banking and wealth management sectors drove growth.

Also boosting investor sentiments on Thursday was a strong weekly jobless claim reading of 293,000, representing a pandemic-era low and beating economist estimates. Continuing claims fell to 2.59 million, besting forecasts as well.

The Dow Jones Industrial Average jumped over 500 points while the tech-heavy Nasdaq 100 led markets higher.

Here’s where US indexes stood at the 4:00 p.m. ET close on Thursday:

Cathie Wood’s Ark Invest put its name behind a bitcoin futures ETF that was filed with the SEC on Wednesday, signalling that the futures-based crypto ETF may be eventually approved by the regulatory agency.

Coding platform GitHub soared more than 20% in its IPO debut on Thursday, sporting a valuation of more than $11 billion. The company, which has seen a surge in growth amid the work-from-home trend, priced its IPO at $77 per share.

Chinese brokerage firms fell sharply in Thursday trades as it became apparent that a new data privacy law in China will likely hamper the companies’ ability to service mainland China investors unless they quickly adapt to the new rules.

Citigroup saw its profits surge 48% in the third-quarter following the release of loss reserves and a strong period for equity and fixed income trading.

Bank of America beat its earning estimates for the third-quarter, as record-high advisory fees and a $1.1 billion reserve release helped boost profits.

Morgan Stanley posted a strong third-quarter earnings report as growth in its investment banking and wealth management divisions bested estimates.

West Texas Intermediate crude oil rose as much as 1.16%, to $81.37 per barrel. Brent crude, oil’s international benchmark, jumped 1.14%, to $84.13 per barrel.

Gold jumped as much as 0.23%, to $1,798.80 per ounce.

Read the original article on Business Insider

Beijing expands regulatory crackdown to brokerages that give Chinese investors access to US stocks

china chinese stock market traders investors screen
  • Beijing’s regulatory crackdown that began last year is now spreading to Chinese brokerage firms.
  • China’s personal data privacy law that takes effect on November 1 could lead to violations and compliance risks for brokerages.
  • Shares of UP Fintech and Futu Holdings fell 24% and 15%, respectively, in Thursday trades.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

The year-long regulatory crackdown from Beijing has now spread to Chinese brokerage firms that give mainland investors access to trade US stocks.

The state-run People’s Daily newspaper said Chinese online brokerages could face violations and compliance risks once a new data privacy law takes effect on November 1, according to Reuters. They give Chinese investors access to securities that trade in other markets like the US and Hong Kong.

This latest regulatory crackdown follows an ongoing trend of Chinese authorities going after different industries, from Jack Ma’s Alibaba and Ant Group, to private tutoring companies and video game firms.

The new data privacy rule will regulate the export of personal information, which would make compliance difficult for online brokerage firms that offer cross-border trading services.

Shares of UP Fintech and Futu Holdings fell as much as 24% and 15%, respectively, in Thursday trades. These Chinese brokerages don’t have licenses in mainland China, but allow Chinese citizens to open up accounts after submitting personal information derived from IDs, tax records, and bank statements.

The People’s Daily asked, “after personal information is collected, where does it go?”

If brokerage firms are unable to comply or adapt to the new privacy data law taking effect next month, they could be forced to cut off mainland Chinese investors’ access to trading US and other foreign stocks.

Read the original article on Business Insider

Dow soars 403 points as jobless claims hit pandemic low and banks deliver strong results

trader, NYSE

US stocks surged on Thursday after weekly jobless claims hit a pandemic-era low and third-quarter earnings results from banks beat expectations. The Dow Jones Industrial Average jumped by about 400 points.

Last week’s jobless claims hits 293,000, representing the lowest level since March 2020 and beating economist expectations of 319,000. Continuing claims fell to 2.59 million, besting forecasts as well.

Strong bank earnings results from Morgan Stanley, Bank of America, and Citigroup beat analyst expectations and suggested consumers remain on solid footing as provisions for credit losses continued to fall from their pandemic heights. The banks were trading higher by about 2% early Thursday.

Here’s where US indexes stood shortly after the 9:30 a.m. ET open on Thursday:

Cathie Wood’s Ark Invest put its name behind a bitcoin futures ETF that was filed with the SEC on Wednesday, signalling that the futures-based crypto ETF may be eventually approved by the regulatory agency.

Citigroup saw its profits surge 48% in the third-quarter following the release of loss reserves and a strong period for equity and fixed income trading.

Bank of America beat its earning estimates for the third-quarter, as record-high advisory fees and a $1.1 billion reserve release helped boost profits.

Morgan Stanley posted a strong third-quarter earnings report as growth in its investment banking and wealth management divisions bested estimates.

West Texas Intermediate crude oil rose as much as 0.92%, to $81.18 per barrel. Brent crude, oil’s international benchmark, jumped 1.13%, to $84.12 per barrel.

Gold jumped as much as 0.23%, to $1,798.80 per ounce.

Read the original article on Business Insider

US stocks rise as investors digest Fed minutes showing tapering on track for November

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., October 12, 2021.

US stocks ended higher on Wednesday as investors digested minutes from the Federal Open Market Committee’s meeting in September, which showed central bank officials broadly agreeing to begin tapering assets as soon as November, scaling back pandemic-era support for the economy.

“Participants generally assessed that, provided that the economic recovery remained broadly on track, a gradual tapering process that concluded around the middle of next year would likely be appropriate,” minutes from the September 21-22 meeting said.

The tech-heavy Nasdaq outpaced the S&P 500 and the Dow, led by mega-cap tech companies such as Amazon and Microsoft as the yield on the 10-year Treasury slipped to 1.545%.

Here’s where US indexes stood at the 4:00 p.m. ET close on Wednesday:

The minutes released were a confirmation on Fed plans but conveyed nothing unexpected, said Lawrence Gillum, fixed income strategist for LPL Financial, in a note.

“There wasn’t much new information to move markets,” he said. “The tapering process could start in either mid-November or mid-December-we still think November but one month isn’t going to matter to markets at this point. There was some interesting discussion on lift-off though and it looks like the Committee remains divided.”

The Consumer Price Index – a commonly used measure of US inflation – rose 0.4% in September, exceeding the median forecast of a 0.3% gain from economists surveyed by Bloomberg. The print shows price growth unexpectedly picking up from the 0.3% jump seen through August.

Koss surged 43% in two days after meme stock fans cheered the headphone-maker’s patent victory over Apple. Another occasional meme stock, Plug Power, climbed 13% after the hydrogen fuel-cell developer said it inked partnerships with Airbus and Phillips 66.

In cryptocurrencies, Bank of England Deputy Governor Jon Cunliffe said a collapse in the crypto market is “plausible,” and regulatory action is urgently needed.

Meanwhile, the US has unseated China as the world’s biggest bitcoin miner, accounting for a third of the global hash rate after Beijing banned all cryptocurrency transactions, data from the Cambridge Center for Alternative Finance published on Wednesday showed.

Oil prices slipped. West Texas Intermediate crude slipped 0.14% to $80.53 per barrel. Brent oil, the international benchmark, turned lower, down 0.19% to $83.26.

Russian President Vladimir Putin told CNBC the price of oil could reach $100 a barrel as global energy demand for the commodity skyrockets while supply continues to remain tight.

Gold rose 0.89% to $1,776.08 per ounce.

Read the original article on Business Insider

Plug Power jumps 13% after it partners with Airbus to study and develop hydrogen-powered air travel

Plug Power
Plug Power forklift system.

  • Plug Power surged 13% on Wednesday after the company inked hydrogen partnerships with Airbus and Phillips 66.
  • The hydrogen fuel-cell developer will work with Airbus on a hydrogen-powered airport feasibility study.
  • Plug Power also said it signed a MOU with Phillips 66 to collaborate on hydrogen business opportunities.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Plug Power surged as much as 13% on Wednesday after the hydrogen fuel-cell developer said it inked partnerships with Airbus and Phillips 66.

The Latham, NY-based company partnered with Airbus to conduct a feasibility study of bringing hydrogen to future aircraft and airports. Airbus is working towards a goal of bringing zero-emission aircraft to market by 2035, and it thinks hydrogen could play a role in that goal.

Airbus will work closely with Plug Power to develop a joint study and roadmap that could deliver hydrogen to aircraft and the airport ecosystem in the future. Plug Power will build deployment scenarios for green hydrogen infrastructure at airports, while Airbus will provide insight on hydrogen aircraft characteristics.

“This partnership with Plug Power will enable us to leverage their expertise to decarbonize airports while preparing them for the arrival of hydrogen aircraft by 2035,” Airbus Vice-President Glenn Llewellyn said.

Separately, Plug Power signed a memorandum of understanding to collaborate on the development of hydrogen-based business opportunities with Phillips 66, a diversified oil refiner that also operates retail gas stations.

The companies will explore how to deploy Plug Power’s technology within Phillips 66’s operations, including scaling hydrogen into the industrial sector, advancing hydrogen fueling opportunities, and developing hydrogen-related infrastructure.

Also aiding to a boost in Plug Power’s stock on Wednesday is an upgrade from Morgan Stanley. The bank raised its price target on Plug Power to $40 from $35, representing potential upside of 34%, and upgraded it to “Overweight” from “Equal-weight.”

Plug Power stock price
Read the original article on Business Insider

SEC rule meant to protect retail investors from pump-and-dump schemes ended up giving an edge to professionals

nyse trader
  • A new SEC rule meant to protect retail investors from pump-and-dump schemes has also blocked access to thousands of over-the-counter stocks.
  • The new rule prevents brokers from providing price quotations on OTC stocks that don’t release up-to-date financials.
  • But the rule has also restricted individual investors’ ability to buy stocks of sound companies, giving professional investors an edge.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

A new SEC rule created to protect investors from pump-and-dump schemes has had the unintended consequence of giving professional investors an edge over individual investors since it went into effect at the end of September.

As most pump-and-dump operations take advantage of illiquid, over-the-counter securities that don’t provide current financial information, the rule sought to prevent brokers from providing price quotations on securities that don’t have up-to-date financials.

Technological advancements related to the rule change “enable us to require that information in the OTC market be more timely, enabling investors to make better informed investment decisions, and reducing fraud in these markets where retail presence is significant and, unfortunately, pump-and-dump and other frauds are too common,” former SEC Chairman Jay Clayton said last year.

Of the more than 12,000 securities that trade on the OTC Markets, more than 2,000 of them are currently subject to the price-quotation limitation.

But while the rule change might make it harder for schemers to inflate stock prices with false or misleading information and then dump shares on unwitting investors, it also makes it nearly impossible for retail investors to buy OTC securities of profitable, dividend-paying businesses that don’t post updated financials.

That has led to a drop in demand for many OTC securities, resulting in sharp declines in stock prices. Retail investors that hold an OTC stock that now falls under the new SEC rule are only left with the option of selling their security, not buying more.

One OTC security that saw a big drop after the rule went into effect was Canandaigua National, an upstate New York community bank that is profitable and offers a 4% dividend yield. The stock, which barely traded hands even before the rule change, saw its price fall 27% virtually over night.

“We find ourselves in a situation where there are real opportunities sitting in front of us, but we can’t take advantage of them!” retired investor Dave Wetzel told The Wall Street Journal.

But professional investors can still buy OTC stocks that fall under the SEC rule, which is meant to protect individual investors who may have access to less information.

And David Waters of Alluvial Capital Management is doing just that. “It’s created an opportunity for professionals at the expense of retail investors. It’s an unfair transfer of value,” Waters told The Wall Street Journal.

Read the original article on Business Insider

An SEC rule meant to protect retail investors from pump-and-dump schemes ended up restricting access to markets, giving an edge to professionals

nyse trader
  • A new SEC rule meant to protect retail investors from pump-and-dump schemes has also blocked access to thousands of over-the-counter stocks.
  • The new rule prevents brokers from providing price quotations on OTC stocks that don’t release up-to-date financials.
  • But the rule has also restricted individual investors’ ability to buy stocks of sound companies, giving professional investors an edge.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

A new SEC rule created to protect investors from pump-and-dump schemes has had the unintended consequence of giving professional investors an edge over individual investors since it went into effect at the end of September.

As most pump-and-dump operations take advantage of illiquid, over-the-counter securities that don’t provide current financial information, the rule sought to prevent brokers from providing price quotations on securities that don’t have up-to-date financials.

Technological advancements related to the rule change “enable us to require that information in the OTC market be more timely, enabling investors to make better informed investment decisions, and reducing fraud in these markets where retail presence is significant and, unfortunately, pump-and-dump and other frauds are too common,” former SEC Chairman Jay Clayton said last year.

Of the more than 12,000 securities that trade on the OTC Markets, more than 2,000 of them are currently subject to the price-quotation limitation.

But while the rule change might make it harder for schemers to inflate stock prices with false or misleading information and then dump shares on unwitting investors, it also makes it nearly impossible for retail investors to buy OTC securities of profitable, dividend-paying businesses that don’t post updated financials.

That has led to a drop in demand for many OTC securities, resulting in sharp declines in stock prices. Retail investors that hold an OTC stock that now falls under the new SEC rule are only left with the option of selling their security, not buying more.

One OTC security that saw a big drop after the rule went into effect was Canandaigua National, an upstate New York community bank that is profitable and offers a 4% dividend yield. The stock, which barely traded hands even before the rule change, saw its price fall 27% virtually over night.

“We find ourselves in a situation where there are real opportunities sitting in front of us, but we can’t take advantage of them!” retired investor Dave Wetzel told The Wall Street Journal.

But professional investors can still buy OTC stocks that fall under the SEC rule, which is meant to protect individual investors who may have access to less information.

And David Waters of Alluvial Capital Management is doing just that. “It’s created an opportunity for professionals at the expense of retail investors. It’s an unfair transfer of value,” Waters told The Wall Street Journal.

Read the original article on Business Insider