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Stocks Rise Without Big Tech's Help

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Stocks rose Wednesday, without the help of big tech. The bullishness came even before positive news on a vaccine emerged.

The S&P 500 rose 0.1%, with the tech-heavy Nasdaq down 0.4%, underscoring value’s outperformance of growth Wednesday. The 10-Year Treasury yield rose to 0.68%.

Big tech was pressured, with the FAANG group posting down-moves.

Cyclical stocks outperformed the broader market, with value faring better than growth stocks, a sign investors are comfortable with the continuing economic recovery. Restaurant stocks and airlines stocks rose considerably, with the high-volatility airlines up more than 1%. Oil and bank stocks rose as well.

Digitally-native consumer discretionary stocks shined. Nike  (NKE) - Get NIKE, Inc. (NKE) Report beat revenue and earnings handily, posting more than $10 billion in revenue — for a 1% decline year-over-year against analysts estimates of a more than 10% decline — and beating earnings per share by almost double analysts estimates. 

Strength was seen in North America, where revenue beat estimates. While foot traffic was weak, digital sales rose 82% and direct-to-consumer sales were strong as well. Nike rose 11%. Lululemon  (LULU) - Get Lululemon Athletica Inc (LULU) Report, which has a similar business model to Nike’s, rose 5%. These stocks outperformed the high-beta and perviously beaten down “reopening” consumer discretionary stocks like airlines.

The consumer is clearly trading in the right direction — albeit newly upsetting virus trends may undermine that — and markets seem to be responding positively.

Stocks rose before Johnson and Johnson  (JNJ) - Get Johnson & Johnson (JNJ) Report said it is in late stage testing for its coronavirus vaccine, although that development didn’t hurt the market. The stock rose 1.8%. The country remains not close to fully reopened — Goldman Sachs consumer and tech analysts say the reopening is at a 4 out of 10 on their scale — but investors expect a vaccine to accelerate that trend. Fiscal stimulus is still needed to boost small businesses and jolt employment and consumer spend.

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