Seriously, I would love to see an artist’s rendering of this. In a single image, it says so much about the 2020 bull market rally.
Nvidia, which cracks the top ten here, is up 6% in pre-market trading this morning, riding high on its deal to buy chipmaker Arm Ltd. That news is lifting tech stocks in general. (Oracle, which you cannot even make out in this chart, is up even higher in the pre-market).
And what of the other ~490 stocks? You can barely make out a bit of health care (Johnson & Johnson) and commerce (Mastercard), but the other big sectors are nowhere to be seen. No finance, no energy, no industrials or consumer discretionary stocks.
We’ve known for some time that Big Tech is carrying the water in this bull run. We’ve also learned that Big Tech has the power to take markets down with it once investors start rethinking valuations. The Nasdaq 100 has fallen 11%—yep, that qualifies as a markets correction—since its all-time highs, leading to a rough September.
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Good morning, Bull Sheeters. Upbeat vaccine news and a flurry of major tech deals have shaken equities out of a two-week rut.
Let’s see where investors are putting their money.
The major Asia indexes are in the green in afternoon trading, with Japan’s Nikkei up 0.6%.
Microsoft is out, and Oracle is in. That’s the major development, first reported by the Wall Street Journal, this morning in the TikTok U.S. sweepstakes.
SoftBank shares were up nearly 9% in Tokyo today on a string of huge headlines. It sold its semiconductor unit, Arm Ltd., to Nvidia for $40 billion in a record-breaking deal. It’s also getting serious about taking the firm private.
The European bourses were also higher at the open with Paris’s CAC leading the way, up 1%, before declining in late-morning trade.
AstraZeneca shares opened with a pop, before falling. That’s after the British drugmaker announced over the weekend it got the green-light to resume its COVID-19 vaccine trials in the U.K. The news also gave a boost to global equities in early trading on Monday.
The ECB has a currency problem. The euro is up again this morning, and its steady rise is undoing some of the intended effects of the stimulus measures unveiled by the central bank this spring.
U.S. futures—yes, tech futures too—point to a strong open. That’s after the Nasdaq fell 4% last week, its worst decline since March.
Nothing to see here, keep on trading. That’s more or less the consensus of Goldman Sachs and Deutsche Bank analysts who wrote in separate notes that the worst of the stocks skid is behind us.
The odds are ever slimmer that the Senate will pass a new fiscal stimulus bill, and so all eyes are on the Federal Reserve, which meets tomorrow and Wednesday, the last such meeting before Election Day.
Gold is flat, trading above $1,950/ounce.
The dollar is down.
Crude is down too with Brent trading below $40/barrel.
The S&P 10
The S&P 500 has had a rough September—two straight down weeks, including a dud last week, its worst since June.
So it’s little wonder the pros continue to look backwards to get some a glimpse of what lies ahead. And you don’t have to go too far back to see some warning signs. Take August. To recap: the S&P 500 surged an improbable 7.2%, the best August performance since 1986.
That August rally set a far more dubious record along the way. According to BofA Securities, more than 50% of the S&P 500’s August return came from a mere ten stocks. (No points awarded for guessing which ten).
To illustrate the lopsided concentration, BofA put all 500 stocks in the benchmark index into a single mash-up pie chart, ranking each holding by its August return. The result is this …read more