Stocks Gain Momentum: Tech Leads
3:13 pm Thursday, June 02nd, 2022
Wall Street rallied on Thursday, led by Tesla, Nvidia and other megacap growth stocks in a choppy session ahead of a key jobs report due on Friday.
That sporadic start was the byproduct of a fiscal Q4 earnings warning from Microsoft (MSFT), some mixed economic data, a halting observation from Fed Governor Brainard (FOMC voter) that it is very hard for her to a see a case for a pause in the Fed’s rate hikes in September, and some volatility in the oil market.
The latter stemmed initially from an FT report suggesting Saudi Arabia is ready to boost its production in the event there is a significant cut in output from Russia due to the EU’s sanctions. That news took WTI crude futures below $112.00/bbl. They soon reversed course, however, when OPEC+ announced an underwhelming change in its monthly output targets for July and August.
Specifically, OPEC+ is planning to raise its increased production goal from 0.432 mb/d to 0.648 mb/d. An increase is an increase, but market participants don’t appear to be convinced that it will be enough to satisfy demand. WTI crude futures are currently up 1.8% to $117.30/bbl.
That bump in prices and Microsoft’s warning, however, have not deterred a rebound-minded market. In fact, Microsoft’s warning turned into a de facto, upside catalyst on two counts. First, it was blamed on the impact of currency changes, meaning it was not an operational issue. Secondly, the market never really buckled following the warning, and that resilience empowered participants to step in and buy this week’s dip.
Better-than-expected earnings results from NetApp (NTAP), MongoDB (MDB), Elastic (ESTC), Chewy (CHWY), and PVH Corp. (PVH) also provided a measure of support.
The biggest influence and source of support, though, has been the mega-cap stocks. Microsoft might be soft, but others, like Tesla (TSLA) and Meta Platforms (FB), which heard COO Sheryl Sandberg announce her resignation, are definitely not. The Vanguard Mega-Cap Growth ETF (MGK) is up 2.1%.
