NASDAQ Takes Center Stage Thanks to Strong Dollar

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On Monday, stocks gained from the impact of corporate deals, and better earnings. The Dow Jones Industrial Average gained 0.4%, the S&P 500 rose 0.5%, and the Nasdaq was up 1%.

The mergers and acquisitions of big-cap companies always make news, and there were several on Monday that moved the market: Rockwell Collins, Inc. (NYSE:COL) agreed to buy B/E Aerospace Inc (NASDAQ:BEAV), which jumped 16%; AT&T Inc. (NYSE:T) and Time Warner Inc (NYSE:TWX) announced a merger on Saturday; and TD Ameritrade Holding Corp. (NASDAQ:AMTD) fell 4.4% following its agreement to buy Scottrade Financial Services for $4 billion.

Last week, Microsoft Corporation (NASDAQ:MSFT) surprised almost all analysts with a jump in earnings and revenues, and yesterday the stocks gained 2.3%, up 6.6% since the announcement. Amazon.com, Inc. (NASDAQ:AMZN) gained 2.3% after Goldman Sachs raised its price target on the stock to $1,050 from $920.

Crude oil (WTI) fell 0.7% to $50.52 per barrel after Iraq said that it would be out of any deal to cap or reduce production. But crude oil may stabilize following a reported meeting between the Saudi oil minister and his Russian counterpart.

At the close, the Dow Jones Industrial Average rose 77 points to close at 18,223, the S&P 500 gained 10 at 2,151, the Nasdaq rose 52 points to 5,310, and the Russell 2000 closed at 1,226, up 8 points. The NYSE’s primary exchange traded 797 million shares with total volume of 3.3 billion shares. The Nasdaq crossed 1.5 billion shares. On both the Big Board and the Nasdaq, advancers led decliners by 1.5-to-1. Blocks on the NYSE fell to 5,100 from 5,472 on Friday.

Nasdaq attacks Sep cl
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NASDAQ Takes Center Stage Thanks to Strong Dollar

As noted on Monday’s DTA, “For small-caps who do most of their business in the U.S. and import many of their parts from overseas, the strong dollar is a windfall.” And yesterday’s powerful jump by a full percent illustrated that the small-caps are better investments, for now, than the big-caps. The Nasdaq held at the support line at 5,160 last week and used that line to catapult through its 50-day moving average at 5,252, closing at near its high of the day at 5,309 (high was 5,311).

Conclusion: Small-cap and mid-cap suppliers using foreign-made parts for assembly in the U.S. are the big winners of higher interest rates. The big-caps, however, could have a rough year in 2017. Most financials, obviously, could also benefit from wider spreads. Plan, therefore, before the end of this year to lighten up on big-cap losses that you already own and position your portfolio to benefit from higher interest rates.

I’ll be addressing this issue shortly by daily charts focused on sectors and stocks that could benefit most from rising rates.

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here.

For a list of this week’s economic reports due out, click here.


Article printed from InvestorPlace Media, https://investorplace.com/2016/10/nasdaq-center-stage/.

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