Thought Wednesday had a lot of volatility? Just get a look at Thursday, where the Nasdaq went from up almost 2% to a 1% loss in the afternoon. Wednesday was tough, but it was an even more irritating session in the stock market today.
Short-sellers were stopped out in the morning after many of them sold into Wednesday’s Fed-induced volatility. U.S. equities were putting together a robust rally on Thursday.
Then, President Trump sent a shock through the market.
Trade News Heats Up
He is indeed a “Tariff Man,” saying Thursday afternoon that, “the U.S. will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country. This does not include the 250 Billion Dollars already Tariffed at 25%.”
Although he ended it a bit more positively by saying, “We look forward to continuing our positive dialogue with China on a comprehensive Trade Deal, and feel that the future between our two countries will be a very bright one!”
On Wednesday investors were critical of the Fed. Not for what it is doing policy-wise, but for how chairman Jerome Powell continues to lack the communication prowess to effectively talk to Wall Street. However, numerous times throughout the Q&A session he cited concerns on the global economy and for an escalating trade war.
In the President’s defense, China has not really been playing fair, and with neither side really backing down, this is the unfortunate path we find ourselves on. Some are hopeful that the market can brush this news off. Others worry that we’ll get another meltdown like we did in May, where major U.S. indices are hammered lower to account for the new risk. Considering we’re so close to all-time highs, it is possible.
Oh! And did I forget to mention that we’ll get the non-farm labor report for July on Friday morning?
Good News in the Stock Market Today
Believe it or not, there was still some good news in the stock market today. For one, look no further than Alteryx (NASDAQ:AYX). This company is in the midst of the data revolution, helping to make sense of the exponentially growing collection of information. It’s one reason we named it 1 of 7 top mid-cap stock picks in March, before it rallied 65%.
If you followed just this one stock today, you may have thought there was robust rally on Wall Street. AYX climbed almost 12% on the day, ending a bit off its highs and not showing an ounce of regard for the growing volatility in the market. The company beat on earnings and revenue estimates, and raised its outlook.
Another company that delivered? Shopify (NASDAQ:SHOP). Shares ended higher by more than 7%, but not at its highs when it was up more than 10%. Still, it was a robust showing considering the state of the overall market. Like Alteryx, SHOP beat on earnings and revenue estimates and raised its outlook.
Occidental Petroleum (NYSE:OXY) jumped more than 3.5% on Thursday. Even though the company beat on earnings and revenue expectations, some may be surprised at its strength. That’s as crude oil plunged in the session, falling 7% on the day.
Electronic Arts (NASDAQ:EA) was somewhat mixed on Wednesday after reporting earnings. However, EA and Activision Blizzard (NASDAQ:ATVI) didn’t have reservations about rallying on Thursday. Shares climbed 2.3% and 3%, respectively. Let’s see if they can continue that momentum.
Other stocks with strength to watch? Microsoft (NASDAQ:MSFT), Square (NYSE:SQ), Etsy (NASDAQ:ETSY), Bristol-Myers Squibb (NYSE:BMY) and International Business Machines (NYSE:IBM) all moved well on the day.
Some of the losers included energy, financials, retail, industrial and small caps.
Trading the Markets
The former looked like a lock on Thursday with equities bursting higher.
Let’s look at just the SPY right now. With a small gap to fill near $293 and the 50-day moving average down at $291.73, the SPY might as well just get it over with and test this level. If it holds, the bulls can regroup and look to push higher off this mark. If it fails as support, we could be walking into another volatile summer period.
Keep in mind, the 50-day is less than 3.5% off the all-time highs, so it’s far from a doomsday situation out there. An 8.5% fall gets us to the 38.2% retracement down near $276. The 200-day moving average is near there too, but is currently trending higher.
Just remember to take it one level at a time and don’t feel like you have to trade every zig and zag.