The S&P 500 (SPX) and the Nasdaq 100 (NDX) both closed at new, all-time highs today. Tech stocks outperformed others as Invesco's Nasdaq 100-tracking ETF (QQQ) rose nearly 1% today. By comparison, the S&P 500 closed just over 0.5% higher. The Dow Jones Industrial Average (DJX) and the Russell 2000 (RUT) small-cap index moved higher as well, although neither of them broke above their all-time high prices.
After hours, Alphabet Inc. (GOOGL) reported earnings featuring a number that beat top-line estimates but missed on profits, suggesting that today's rally may be tested tomorrow.
Tech Stocks Lead the Way
Within the Nasdaq 100, several semiconductor stocks moved higher today, including Intel Corporation (INTC), Lam Research Corporation (LRCX), Applied Materials, Inc. (AMAT), and others, along with Microsoft Corporation (MSFT), which gapped higher on news that the company had won a contract from the U.S. Department of Defense for cloud computing solutions.
On Alphabet's mixed news, investors had sold the stock down as much as 5%; however, during the company's conference call, the stock price recovered most of that drop. With that in mind, investors will likely shrug off the news tomorrow as they wait for the Fed announcement on rates the following day.
Apple's Investors May Have Gotten Ahead of Themselves
Shares of Apple Inc. (AAPL) have had a stunning rise since the stock initially dropped after the last earnings announcement. It may be possible that investors could be in for a similar dynamic later this week. The stock has risen over 20% in the quarter. It's not impossible that the response to the newly released iPhone 11 will lead the company to beat earnings estimates; however, it is unlikely that the numbers will represent much more than a 20% increase in sales over the best numbers in the company's history.
However, the company's other initiatives, Apple TV and Apple Card, will show some impact this quarter, and perhaps investors anticipate that these services will perform beyond expectations. This or other outcomes are certainly possible; however, considering the mixed news from other companies so far, it would make Apple a significant outlier, and this means that investors may be expecting too much from the report on Thursday.
The Bottom Line
Stocks reached new all-time highs, with technology stocks leading the way. Alphabet's earnings were only a bit uninspiring, so the market may not give back its high-water mark tomorrow. If neither the Fed nor Apple provide significant disappointment in their scheduled reports later this week, the market could continue higher.
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