U.S tech Stocks gained higher as leading tech brands stocks that include Apple and Microsoft witnessed buying pressures significantly.
Apple and Microsoft shares rose 1% and 1.3%, respectively, to lead tech higher. Alphabet shares gained nearly 1% and Amazon advanced 0.7%. Netflix was up 0.5% and Facebook advanced 0.2%.
The Dow Jones gained 0.2%, to settle at 26,815.44. At its session low, the Dow was down 226 points. The S&P 500 rallied up by 0.3% to 3,246.59 and the Nasdaq composite advanced 0.4% to 10,672.27.
The bullish run, however, was kept in check, as first-time claims for state unemployment benefits totaled 870,000 for the week ended Sept. 19
While investors wait for the passage of the U.S stimulus package lingering at the U.S capitol, Stephen Innes, Chief Global Market Strategist at AxiCorp in a note to Nairametrics spoke on price movements in notable tech stocks, like Apple
“Before the street started to pick up on the more favorable stimulus overtones US equities had been climbing steadily since the open with Tech and pockets within Cyclicals/Value leading the way midday. Apple is again setting the tone for Tech. Defensives outperformed out of the gate, although the last leg up seems more Cyclical and Value-driven. Many folks think this market cannot run without Financials, so with Financials acting better and Tech finding support, one could easily make a case for a low-volume melt-up in the near term,” he said.
However, it’s critical to note that stock traders, global investors are having a tough time in September, with the major equity benchmarks falling momentarily as tech shares lose steam.
U.S dollar up, U.S GDP expands at record 33.1%
Investors selling out other G7 currencies and increasing their buying pressure on the U.S dollar.
The world’s safe-haven currency, the U.S dollar is enjoying a robust trading session, amid impressive data coming from the world’s largest economy, as investors are selling out other G7 currencies and increasing their buying pressure on the U.S dollar.
What we know
At the time of writing, the U.S dollar index – used to track the U.S dollar strength against 6 major currencies was up by 0.6%.
The world’s largest economy bounced incredibly well with a record – yet temporary surge of growth in Q3, as companies restarted and stimulus cash triggered more consumer spending – reversing fears coming from some quarters that the U.S economy was on the brink of collapsing amid surging COVID-19 crisis.
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- U.S GDP grew 7.4% from the prior period, a quarterly rise that equals an annualized pace of 33.1%, as seen from the U.S Commerce Department’s initial estimate released today.
- The data beat leading economists’ estimates for a 32% increase, which was already well above prediction three months ago for an 18% surge. Personal spending fueled the surge in growth, climbing an annualized 40.7% – also a record, while business investment and housing also posted strong increases.
The US Dollar Index tracks the American dollar against other major currencies such as the Japanese Yen, British Pound Sterling, Swedish Krona, the Euro, and more.
Individuals hoping to meet foreign exchange payment obligations, via dollar transactions to European countries, and Japan, would need fewer US dollars in meeting such obligations.
What they are saying
Stephen Innes, Chief Global Market Strategist at Axi, also spoke on key issues prevailing in the safe-haven currency market
“The US dollar is trading a bit firmer today as European and US equities fall on concerns over rising COVID-19 cases on both sides of the Atlantic.
“But it’s the laundry list of worries, be it pre-election caution, US Congress failure to launch (stimulus) or France and Germany lockdown concerns, risk aversion demand for the greenback is nothing new.
“Under these conditions, the US dollar tends to shine bright as the cleanest shirt in that dirty laundry list.”
Why the US dollar rallies higher
In spite of the world’s largest economy having a surge in COVID-19 caseloads, forex traders believe that the US recent data has now shown that the world’s largest economy is in good shape and recent price action showed an oversold signal in the past few days.
This means that any time the value of the safe-haven currency drops below the 93.00 support level, traders increase their long positions.
Why Microsoft shares dropped 2% amid rising earnings
Microsoft shares dropped about 2% after the tech juggernaut gave unimpressive revenue guidance.
The world’s software giant, Microsoft saw its shares drop about 1.66% of its value, immediately after the tech juggernaut gave unimpressive revenue guidance. That said, Microsoft printed impressive first-quarter earnings which exceeded estimates.
What you should know
- Microsoft’s stock price is falling on bearish comments coming from the company after it released impressive earning results, stating that its revenue guidance was weak and further hinted that it continued to face pressure from lower one-off sales of software due to the COVID-19 pandemic.
- Microsoft also revealed that operating profit margins were more likely to be affected in H1 2020 year. It increased its investments in its present cash cow business (cloud computing) while seeing a deep drop off in high-margin sales on its Windows operating system for Personal computers.
- It’s also important to note that the stock bears are hitting hard on the trillion-dollar market capitalized company on the bias that Microsoft further disclosed that for the final three months of 2020, its expected revenue would range between $39.6billion to $40.4billion; or a growth of 8% at the midpoint of the range, compared to global market forecasts of $40.4billion.
Here are some highlights of its most recent earnings;
- Revenue was $37.2 billion and increased by 12%.
- Operating income was $15.9 billion and increased by 25%.
- Net income was $13.9 billion and increased by 30%.
- Diluted earnings per share were $1.82 and increased by 32%.
Revenue in Productivity and Business Processes was $12.3 billion and increased 11%, with the following business highlights:
- Office Commercial products and cloud services revenue increased 9%, driven by Office 365 Commercial revenue growth of 21% (up 20% in constant currency).
- Office Consumer products and cloud services revenue increased by 13% and Microsoft 365 Consumer subscribers increased to 45.3 million.
- LinkedIn revenue increased by 16%.
- Dynamics products and cloud services revenue increased 19% (up 18% in constant currency), driven by Dynamics 365 revenue growth of 38% (up 37% in constant currency).
What they are saying
However, in its recent earnings call, Microsoft CEO, Satya Nadella, gave valuable insights into why Microsoft is heading in the right direction, with significant investments in its cloud businesses.
“The next decade of economic performance for every business will be defined by the speed of their digital transformation.
“We are innovating across our full modern tech stack to help our customers in every industry improve time to value, increase agility, and reduce costs.”
The C.F.O of Microsoft also buttressed the leading software maker’s long term investment.
“Demand for our cloud offerings drove a strong start to the fiscal year with our commercial cloud revenue-generating $15.2 billion, up 31% year over year.
“We continue to invest against the significant opportunity ahead of us to drive long-term growth,” said Amy Hood, Executive Vice President and Chief Financial Officer of Microsoft.
Why U.S biggest Bank, JP Morgan Chase is bullish on Bitcoin
America’s JPMorgan Chase has given valuable insights on why it believes the odds are with Bitcoin.
America’s biggest bank, JP Morgan Chase, recently released a rare statement on the world’s flagship crypto, where it said that Bitcoin has what it takes to challenge gold’s status as the go-to alternative financial asset.
When compared to other financial assets like gold and crude oil, Bitcoin looks relatively small, considering that it has a market capitalization of $242 billion, compared to the precious metal’s (Gold) $2.6 trillion market value. However, this means the crypto has more room for upside and can potentially compete with gold as the preferred alternative currency.
In a report credited to Business Insider, America’s most valuable bank, JPMorgan Chase, gave valuable insights on why it believes the odds are with Bitcoin to keep rising in value.
“Even a modest crowding out of gold as an ‘alternative’ currency over the longer term would imply doubling or tripling of the bitcoin price,” JPMorgan Chase said.
And over time, Bitcoin could be held for other reasons such as for making payments, not just for being a store of wealth as gold is, according to JPMorgan Chase.
“Cryptocurrencies derive value not only because they serve as stores of wealth but also due to their utility as a means of payment. The more economic agents accept cryptocurrencies as a means of payment in the future, the higher their utility and value,” JPMorgan Chase explained.
What you should know
It’s important to note that such a bullish call by an American elite bank is coming on macros that BTC has a circulating supply of 19 million coins and a max supply of 21 million coins, meaning there are about 2 million left to be mined.
- Taking into account that about 4 million Bitcoins have been lost forever as a result of BTCs’ owners dying, and their next of kin not having access to such cryptos, it is fair to say there are only about 15 million BTC presently in circulation to cater for over 7 billion people fighting to have a stake in Bitcoins. This means that as BTC becomes scarce and more popular, it is only a matter of time before crypto asset valuation will hit the roof.
- As the general economic law states, when demand is high and supply is limited, prices of such products usually go up.
- Another strong fundamental increasing the odds on the world’s most popular crypto is that it’s almost impossible to forge, and has strong durability characteristics.
- Thanks to its complexly designed decentralized blockchain network, it will take you more than a supercomputer to make such an attempt. Also, you have to confuse all players in the blockchain network, in accepting such forged digital coin.