Tech Powered Rally Lifts Benchmark Indexes 2%

Barry Adams
29 Dec, 2022
New York City

Stocks retained upward bias and investors stepped up to search for bargains in beaten down tech stocks. 

Apple, Microsoft, Alphabet, Meta Platforms, Amazon and Netflix soared between 3% and 5%. 

Crude oil prices rebounded from the  2% drop on lingering worries that the end of zero-Covid policy in China may lead to the spread of highly infectious viruses around the world and spark another economic slowdown. 

Tensions were high after Italian health authorities found about half the passengers on two flights from Chia to Milan tested positive for Covid. on Wednesday. 

Italian authorities imposed mandatory testing for all arrivals from China on Thursday and the U.S. also imposed all passengers arriving directly from China to provide proof of a negative Covid test.   

Investors also reviewed the rise in weekly jobless claims and the continuing claims rose to the level last seen in February. 

 

Indexes In Review 

Tech stocks led the rebound on Wall Street and supported the advance in the S&P 500 index and the Nasdaq Composite. 

Investors set aside the worries of higher rates and earnings shortfall and stepped up to buy high growth stocks and search for bargains in the beaten down tech and energy stocks. 

Early in the week market indexes traded lower on the looming recession and earnings slowdown worries but  

The S&P 500 index increased 1.8% to 3,849.28 and the Nasdaq Composite index rose 2.6% to 10,478.09. 

Crude oil declined 60 cents to $78.35 a barrel and natural gas eased 9 cents to $4.58 a thermal unit. 

The yield on 2-year Treasury notes declined to 4.36%, 10-year Treasury notes eased to 3.82% and 30-year Treasury bonds edged lower to 3.92%. 

 

Weekly Jobless Claims 

Seasonally adjusted Initial jobless claims rose 9,000 to 225,000 in the week ending on December 25 and four-week average was little changed at 221,000, according to the latest data from the Department of Labor.

The previous week's average was revised down by 500 from 221,750 to  221,250.

Continuing claims increased to 1.71 million in the week ending on December 17th, the highest level since February. 

 

U.S. Stock Movers 

Tech stocks rally lifted Apple Inc 3.1% to $129.96 and Tesla Inc 8.8% to $122.65. 

General Electric Company increased 0.6% to $82.46 and the spinoff GE HealthCare Technologies will be added to the S&P 500 index after it begins trading as a separate company on January 4. 

Vornado Realty and RXO will be reassigned to different indexes after the GE HealthCare addition.  

Vornado Realty Trust advanced 1.9% to $21.30  after the real estate company was assigned from the S&P 500 index to the S&P MidCap 400 index.      

RXO Inc soared 6.4% to $17.40 after the logistics company will be moved to the S&P 600 index from the S&P 400 MidCap Index. 

Lockheed Martin increased 0.6% to $486.28 after the largest defense contractor's Sikorsky unit said it plans to challenge the recent U.S. Army $1.3 billion contract award to Textron. 

Textron Inc advanced 1.0% to  $70.61. 

Southwest Airlines Co increased 3.4% to $33.30 and the discount carrier remained in focus after the company canceled thousands of flights over the holiday weekend and struggled to resume its normal schedule. 

Cal-Maine Foods Inc plunged 11.9% to $54.75 after the egg producer's quarterly results were below analysts' expectations. 

The company has been struggling with egg production after the recent outbreak of avian flu and the egg company said there were no positive tests for avian flu at its manufacturing facilities. 

The USDA division of Animal and Plant Health Inspection Service reported on December 27, 2022, that approximately 43.3 million commercial layer hens and 1.0 million pullets have been "depopulated" due to HPAI or avian flu this year. 

Revenue in the fiscal second quarter ending in November soared 110% to $801.7 million from a year ago after egg prices soared. 

Net income in the quarter rose to $198.6 million from $1.2 million and diluted earnings per share increased to $4.07 from 2 cents a share a year ago. 

 

European Markets Rebounded Following Advances In New York 

European markets rebounded from morning losses after sentiment improved and investors overlooked rate worries and rapid rise of infections in China. 

Benchmark indexes in Germany, France and the U.K. recovered from morning weakness after investors shifted focus to earnings optimism for the current quarter and holiday sales. 

 

Euro Area Money Supply Growth Eased 

The European Central Bank said growth in money supply to the private sector and banks eased in November. 

The broad money supply M3 increase slowed to 4.8% in November from 5.1% in October.  

The narrower gauge Ma1 money supply slowed to 2.4% from 3.8% in the previous month. 

 

Italy to Test All Arrivals from China 

Investors were on the edge after the easing of zero-Covid policy in China and opening of borders is likely to spread Covid-variant infections around the world. 

The Chinese government has stopped releasing infection data as of last week and more Chinese are traveling to international destinations. 

The U.S. said Chinese visitors will require proof of a negative test and Italy said it would also test all passengers arriving directly from China.