Economic Stimulus and Earnings

EU recovery package negotiations drag into a 4th day
Stocks are coming off an inflection week
Fishing for value amid underperforming names
Stock Market Update for Traders

Stock Market Update for Traders

Last Week's  Close

E-mini S&P 500 Futures (September): Settled at 3214, up 19.50 on Friday and up 35.50 on the week

E-mini Nasdaq-100 Futures (September):  Settled at 10,622.50, up 110.75 on Friday and down 214.75 on the week

Stimulus is in the air and buoying U.S. benchmarks from their overnight lows.

While the European Union negotiations drag into a 4th day, Republican leaders are expected to meet at the White House to finalize their $1 trillion fiscal plan. The EU’s “frugal four” led by Dutch Prime Minister Rutte, have opposed the initial package providing € 500-billion as forgivable grants (of the €750 billion). Instead, they are pushing for only €350-billion as grants and developments are expected throughout the day. In Washington, Republican leaders are hoping to finalize a $1 trillion bill that counters the $3.5 trillion plan Democrats are rolling out. 

Amid earnings picking up, stocks are coming off an inflection week; some call it a rotation, some a reach for yield. Although in this environment we lean on a reach for yield, it’s certainly a bit of both. The big tech leaders cooled off; Apple, Amazon, Alphabet, Microsoft, and Facebook all finished lower. The Russell 2000 Index gained 3.5%. The Financial Select Sector SPDR ETF, which include the banking sector, gained 2%. Investors are rotating out of the strong leadership and trying to fish for value amid underperformers. The problem being many are underperforming for a reason. 

The economic calendar is light this week and the focus will be earnings. Haliburton reported mixed numbers ahead of the bell but headlined with strong adjusted earnings. The stock is up 5% pre-market. IBM, Steel Dynamics, and Logitech all report after the bell. Tesla, Microsoft, and Intel headline the week.

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