Will Tech Stocks Take Off This Summer?

Among the major U.S. equity-based exchange-traded funds (ETFs), 2019 has largely been a battle for dominance between small-caps and tech. In January, small-caps jumped out to a big lead, as the iShares Russell 2000 ETF () began racking up outsized gains relative to the benchmark SPDR S&P 500 ETF (NYSE:). That small-cap dominance persisted through mid-March, when the tables turned — and suddenly, the tech-loaded Invesco QQQ Trust (NASDAQ:) broke away from its tight relationship with SPY to surge higher, just as IWM cooled its jets.

All three of these equity ETFs have pulled back during the month of May, but QQQ is maintaining its year-to-date lead over IWM and SPY by a few percentage points, as of this writing. However, as we draw closer to the unofficial start of summer trading, the last decade’s worth of seasonality data suggests that this year’s ongoing IWM vs. QQQ power struggle is far from over.

spy iwm qqq ytd returns 2019

spy iwm qqq ytd returns 2019

Small-Caps Stand Out During June

Historical monthly returns compiled by Schaeffer’s Senior Quantitative Analyst Rocky White suggest that June could be a lackluster month for the stock market, if the last 10 years are any indication. Both SPY and QQQ have averaged negative returns in June over the last decade, with only 40% positive returns during the month. In fact, both ETFs tend to record their worst average monthly returns of the calendar year during June — down 0.76% for SPY, and 0.91% for QQQ.

On the other hand, IWM manages a 0.54% gain, on average, during the month of June. The Russell 2000 tracker is positive 60% of the time during the final month of the second quarter. This seasonality quirk could give the small-caps an edge over tech stocks in the immediate post-Memorial Day period.

But QQQ Bats 1,000 in July

Having said that, it’s hard not to be impressed by QQQ’s midsummer track record. Over the past 10 years, the ETF has ended the month of July higher 100% of the time, with a robust average return of 4.44%.

avg monthly summer etf returns 10 yrs

avg monthly summer etf returns 10 yrs

That easily outshines SPY’s average July return of 2.90% (80% positive), and it nearly triples IWM’s mean July performance — up 1.59%, with only 60% positive returns.

Of course, this spotless 10-year streak doesn’t guarantee that QQQ will rally again in July 2019. But it does confirm that the tech sector has regularly left small-caps in the dust during the month of July, which generally features a glut of high-profile earnings reports.

Within the tech space, traders may want to keep a particularly close eye on the internet group — namely, the First Trust Jones Internet Index Fund (FDN). According to White’s historical data, FDN is one of the top-performing sector ETFs of the last decade during the period from Memorial Day to Labor Day, with an average return of about 6% over this time frame.

IWM Takes a Turn for the Worse in August

While SPY and QQQ both tend to get their worst month of the year out of the way in June, it comes for IWM in August. The ETF averages a drop of 0.97% this month, with 50% positive returns. Likewise, SPY goes negative in August — though not quite as drastically as IWM, with a 10-year average return of 0.53% for the month, and 60% positive returns.

Conversely, QQQ tends to coast through August on its bullish July momentum. The ETF ends August higher 60% of the time, with a narrowly positive average return of 0.32% — showing up both SPY and IWM.

Tech Stocks Could Have the Edge This Summer

On balance, it looks like the deck is stacked toward a continuation of QQQ outperformance over the summer — but remember, that’s purely from a seasonality perspective. While this data provides some useful historical context, it should be paired with the usual technical, fundamental, and investor sentiment analysis to provide a holistic basis for your warm-weather investing decisions.

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Intel, Other Chipmakers, Under Pressure Amid Huawei Fallout

Investors are starting their week off confronted by continuing tensions between the U.S. and China, as the trade dispute lingers and fallout from President Trump’s blacklisting of Chinese telecom giant Huawei widens.

Google parent Alphabet Inc (NASDAQ: GOOG) has suspended some business with the Chinese telecom company. GOOG’s shares were down more than 1%. And Bloomberg reported that chipmakers including Intel Corporation (NASDAQ: INTC), Qualcomm, Inc. (NASDAQ: QCOM), Xilinx, Inc. (NASDAQ: XLNX), and Broadcom Inc (NASDAQ: AVGO) told employees they won’t supply Huawei until further notice. Shares of those companies were down between 2% and 5% in pre-market trading this morning.

The news comes after tensions with China ratcheted up last week after President Trump signed an executive order saying U.S. firms can’t use telecom equipment from companies that pose a national security risk, a move broadly seen as targeting Huawei. And the Commerce Department added Huawei to a list requiring the company get government approval to acquire components and technology from U.S. firms.

The Huawei fallout creates a wild card that that market isn’t loving as it seems like Trump’s blacklisting of the company is beyond a bargaining chip in the wider trade war. It seems likely that any deal that might get struck won’t come soon, like many in the market had been thinking. 

This morning’s stock market action comes after CNBC reported late in the trading session on Friday that trade talks between the United States and China have stalled. The news comes after the United States raised tariffs on $200 billion of Chinese goods, and China, in retaliation, announced increased tariffs on U.S. goods that are scheduled to start in June.

Still, swings in the market seem to be getting smaller, perhaps a sign that the new normal of prolonged uncertainty about a trade deal between the world’s two biggest economies has generally been priced into the market. 

It could also mean that investors are getting tariffed out. That fatigue could be a double-edged sword as on the one hand market participants may be paying more attention to company fundamentals, such as earnings. But, on the other hand, not paying enough attention to a big issue like the trade war could lead the market to get taken by surprise, which tends to be a negative for stocks. 

Data and Earnings Week for Homebuilding and Retail

Looking ahead, the economic calendar is relatively light this week. But there are still some data on tap during the week that will likely be of interest to investors and traders.

Existing home sales for April are due out on Tuesday, while new home sales data for the month are scheduled for Thursday. And durable goods orders for April are on the calendar for Friday. 

Fed minutes are also scheduled for release this week, and investors may want to parse through them to try to glean more insight into the central bank’s thoughts on the economy.

While earnings season is almost over, this week still has plenty to offer in terms of corporate reports. 

A bevy of clothing and footwear retailers is expected to report earnings this week, including J.C. Penney Company Inc (NYSE: JCP), Kohl’s Corporation (NYSE: KSS), TJX Companies Inc (NYSE: TJX), Nordstrom, Inc. (NYSE: JWN), L Brands Inc (NYSE: LB), Ross Stores, Inc. (NASDAQ: ROST), and Foot Locker, Inc. (NYSE: FL). (See more on retailers below.)

Those companies fall under the Consumer Discretionary sector. So their results and comments from their executives could help paint a clearer pictures of what kind of mood the U.S. shopper is in. It could also shed more light into the shift from traditional brick-and-mortar business to online retailers and let us know how some of these companies are competing with Amazon.com, Inc. (NASDAQ: AMZN).

Home Depot Inc (NYSE: HD), Lowe’s Companies Inc (NYSE: LOW), and Toll Brothers Inc (NYSE: TOL) are also expected to report, and these businesses could give us a glimpse into the housing market in addition to the existing and new home sales data.

Meanwhile, Target Corporation (NYSE: TGT) is also expected to report earnings this week. While you can certainly shop for clothes at Target stores, the company also sells a host of goods that put it in the Consumer Staples category. This slightly different sector of the economy tends to be viewed as a defensive play because companies in it can often still do well even in an economic downturn because people need their household goods regardless of how the economy is doing.

2019-05-20-chart.jpg

Figure 1: Gold Dulls: Gold prices (candlestick chart) retreated on Friday as strong consumer sentiment data (see below) boosted the U.S. dollar (line chart). A stronger dollar can dampen demand for dollar-denominated gold by making it more expensive for buyers holding other currencies. The U.S.-China trade tensions have also been helping the dollar. Data Source: Chart source: The thinkorswim® platform from TD AmeritradeFor illustrative purposes only. Past performance does not guarantee future results.  

Consumer Sentiment: On Friday, trade tensions outweighed some positive U.S. economic data. The University of Michigan’s consumer sentiment index for early May came in at 102.4, well above the 96.9 expected in a Briefing.com consensus estimate. That was the highest reading in 15 years. “Consumers viewed prospects for the overall economy much more favorably, with the economic outlook for the near and longer term reaching their highest levels since 2004,” the university said. However, the increase in the index was mostly recorded before the U.S.-China trade talks collapsed and China responded by announcing its own increased tariffs. We’ll have to wait until May 31 for the release of final May data to see if the developments have weighed on consumer sentiment. 

Retailers and Tariffs: The same University of Michigan report also noted that even aside from the direct impact that tariffs have on prices, increased tariffs “could cause a more general loss of confidence which could further diminish the pace of consumer spending.” Goldman Sachs Group Inc (NYSE: GS) analysts said recently in a note that U.S businesses and households have born the entirety of the costs of tariffs. And a Walmart Inc (NYSE: WMT) executive said rising tariffs will make goods more expensive for shoppers, while a Macy’s Inc (NYSE: M) executive warned that another round of U.S. tariff hikes would impact apparel and accessories categories. If Trump does impose tariffs on a $300 billion swath of goods, as he has threatened, that round of duties would cover clothing, shoes and other consumer items. This comes at a time when brick-and-mortar retailers are already getting squeezed by AMZN, and it remains to be seen how much of the increased costs these businesses would be able to pass on to their consumers. With the threat of the pain getting spread around, it may be worth listening in this week to see if more retail executives discuss the tariff issue. 

Japan’s GDP Surprise: In a counterpoint to the doom-and-gloom investors have been worrying about with the world’s two largest economies, its third largest appears to be doing surprisingly well. Japan’s gross domestic product rose at an annual rate of 2.1% in the first quarter. That handily beat the median estimate of a contraction of 0.2% expected in a Reuters poll. Still, the surprise surge may not worth getting really excited about. It comes as imports fell faster than exports, which isn’t a good sign for domestic demand. It’s also not a great sign for exports; it just happens that they didn’t fall as much as imports.

Information from TDA is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade.

Minnesotans lament China trade war: 'We're about to get hammered again'

Michael Minsberg is looking at his business prospects as the Trump administration ups the ante in the trade war with China, and it doesn’t look pretty.

“We got hammered in round one, and we’re about to get hammered again,” said Minsberg, president of Creative Lighting in St. Paul.

Minsberg has spent the past year working with vendors and some of his biggest customers to share the cost of what he calls round one of tariffs on Chinese imports. This time, with the tariff rising from 10% to 25%, customers will feel it.

US stock futures lower on China trade tensions

U.S. stock futures pointed sharply lower Friday as Wall Street investors worried about possible consequences of President Trump’s executive order aimed at banning Huawei equipment from U.S. networks.

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China has threatened to retaliate against the U.S. for the order, which took effect Thursday and also subjects the Chinese telecommunications giant to strict export controls.

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The intensifying brinkmanship trade conflict depressed investor sentiment.

Shane Oliver of AMP Capital said in a commentary that the trade issue “could still get worse before it gets better, but our view remains that a deal will ultimately be reached to resolve the issue given the economic (and in Trump’s case political) damage that would be caused if a deal is not reached,” according to The Associated Press.

Ticker Security Last Change %Chg
I:DJI DOW JONES AVERAGES 25862.68 +214.66 +0.84%
SP500 S&P 500 2876.32 +25.36 +0.89%
I:COMP NASDAQ COMPOSITE INDEX 7898.0455 +75.90 +0.97%

Declines in U.S. stock futures worsened in the runup to the opening bell. Dow Jones Industrial Average was down 0.76 percent, the S&P 500 was 0.74 percent lower and the Nasdaq Composite was off 0.98 percent.

The Bank of America analysts said Friday the trade war standoff is not just weighing on investor sentiment; it is hurting the U.S. economy.

“We think the latest brinkmanship around trade will slice 0.1pp from GDP growth this year, prompting us to lower our forecast to 2.5%. It will slightly boost core goods inflation, albeit on the margin,” the bank’s analysts said.

The yield on the 10-year Treasury was 2.37 percent.

Crude oil prices rose more than 1 percent to $63.53 per barrel.

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China’s Shanghai Composite closed down 2.43 percent, the Hang Seng ended off 1.16 percent and Japan’s Nikkei 225 closed up 0.86 percent.

Britain’s FTSE 100 slipped 0.30 percent, France’s CAC 40 was down 0.44 percent and Germany’s DAX fell 0.82 percent.

Dow Jones Industrial Average Jumps on Walmart Earnings Despite Trump Huawei Ban – Barron's

Illustration by Michael George Haddad

11:14 a.m. Who care about trade wars when you have strong earnings from Cisco Systems (CSCO) and Walmart (WMT), and stronger housing data to boot? Not the Dow Jones Industrial Average.

After yesterday’s close, U.S. President Donald Trump signed an executive order banning telecommunications equipment from “foreign adversaries,” an obvious attack on China’s Huawei. That’s also a clear escalation of the trade war, one that was met by a comments from China’s Commerce Ministry that increased tariffs “severely hampered” negotiations.

But is the stock market down? No way. The Dow has advanced 243.21 points, or 1%, to 25,891.23, while the S&P 500 has risen 1.2% to 2884.35, and the Nasdaq Composite has gained 1.3% to 7920.63.

Stock futures edge higher as investors weigh latest trade salvos

Stock futures edged higher Thursday, erasing modest losses seen after U.S. President Donald Trump appeared to target China telecommunications group Huawei with an emergency declaration against threats to U.S. technology — potentially adding to trade tensions between the world’s two largest economies.

How are major indexes faring?

Dow Jones Industrial Average futures YMM9, +0.33%  were up 70 points, or 0.3%, at 25,744, while S&P 500 futures ESM9, +0.32%  rose 8.75 points, or 0.3%, to 2,863,75. Nasdaq-100 futures NQM9, +0.32%  rose 27 points, or 0.3%, to 7,556.25.

On Wednesday, the Dow Jones Industrial Average DJIA, +0.45% rose 115.97 points, or 0.5%, to 25,648.02 and the S&P 500 index SPX, +0.58%  0.6% to 2,850.96. The tech-heavy Nasdaq Composite Index COMP, +1.13%  outperformed its peers 1.1%, to 7,822.15.

Read: The woman who nailed the 2018 stock-market volatility blowup has kicked off an actively managed ETF

What drove the market?

The Trump administration appeared to fire a fresh salvo in a trade spat with China late Wednesday, issuing an executive order that bans telecom equipment from countries considered “foreign adversaries”. The move seemed all but targeted at Huawei, which has been under pressure from the White House for months. The Commerce Department will have 150 days to figure out regulations.

A spokesman for China’s Commerce Ministry said the country opposes other countries imposing unilateral sanctions on Chinese entities and that Washington should avoid further affecting Sino-U.S. relations, Reuters reported. The spokesman also said he had no information on plans for a U.S. trade delegation to visit China, the report said.

The tussle comes against the backdrop of trade tensions between the U.S. and China that have triggered volatility across global equity markets. Huawei responded to CNBC that such a move will only put the U.S. behind when it comes to 5G development, given the Chinese tech giant is the “unparalleled leader” in the field, it said.

The executive order came after markets Wednesday received a lift from reports that Trump would delay a decision on instituting new tariffs on car and auto part imports for up to six months. Hours earlier, Treasury Secretary Steven Mnuchin said the U.S. would “most likely” meet with Chinese delegates again in Beijing after each side fired off trade tariffs at the other.

Some budding optimism over trade relations between the two countries has offered some reprieve to investors this week, with the S&P 500 now higher for two-straight sessions after last week’s sharp losses.

Read: Can the stock market hold out long enough for Trump to win a trade war?

Away from geopolitical developments, Thursday’s economic calendar includes weekly jobless claims, housing starts and building permits for April, along with a Philly Fed manufacturing index for May — all due at 8:30 a.m. Eastern Time.

How are other markets trading?

Asian markets had a mixed session, with a 1.2% drop for Korea’s Kospi SEU, -1.20%  and a 0.6% gain for the Shanghai Composite SHCOMP, +0.58% In Europe, stocks hinted at opening losses.

Crude oil CLM9, +0.89% prices advanced, while gold GCM9, -0.25% and the U.S. dollar were softer.

Providing critical information for the U.S. trading day. Subscribe to MarketWatch’s free Need to Know newsletter. Sign up here.

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Stock futures slip after Trump appears to crack down on China’s Huawei

Stock futures edged higher Thursday, erasing modest losses seen after U.S. President Donald Trump appeared to target China telecommunications group Huawei with an emergency declaration against threats to U.S. technology — potentially adding to trade tensions between the world’s two largest economies.

How are major indexes faring?

Dow Jones Industrial Average futures YMM9, +0.36%  were up 70 points, or 0.3%, at 25,744, while S&P 500 futures ESM9, +0.37%  rose 8.75 points, or 0.3%, to 2,863,75. Nasdaq-100 futures NQM9, +0.36%  rose 27 points, or 0.3%, to 7,556.25.

On Wednesday, the Dow Jones Industrial Average DJIA, +0.45% rose 115.97 points, or 0.5%, to 25,648.02 and the S&P 500 index SPX, +0.58%  0.6% to 2,850.96. The tech-heavy Nasdaq Composite Index COMP, +1.13%  outperformed its peers 1.1%, to 7,822.15.

Read: The woman who nailed the 2018 stock-market volatility blowup has kicked off an actively managed ETF

What drove the market?

The Trump administration appeared to fire a fresh salvo in a trade spat with China late Wednesday, issuing an executive order that bans telecom equipment from countries considered “foreign adversaries”. The move seemed all but targeted at Huawei, which has been under pressure from the White House for months. The Commerce Department will have 150 days to figure out regulations.

A spokesman for China’s Commerce Ministry said the country opposes other countries imposing unilateral sanctions on Chinese entities and that Washington should avoid further affecting Sino-U.S. relations, Reuters reported. The spokesman also said he had no information on plans for a U.S. trade delegation to visit China, the report said.

The tussle comes against the backdrop of trade tensions between the U.S. and China that have triggered volatility across global equity markets. Huawei responded to CNBC that such a move will only put the U.S. behind when it comes to 5G development, given the Chinese tech giant is the “unparalleled leader” in the field, it said.

The executive order came after markets Wednesday received a lift from reports that Trump would delay a decision on instituting new tariffs on car and auto part imports for up to six months. Hours earlier, Treasury Secretary Steven Mnuchin said the U.S. would “most likely” meet with Chinese delegates again in Beijing after each side fired off trade tariffs at the other.

Some budding optimism over trade relations between the two countries has offered some reprieve to investors this week, with the S&P 500 now higher for two-straight sessions after last week’s sharp losses.

Read: Can the stock market hold out long enough for Trump to win a trade war?

Away from geopolitical developments, Thursday’s economic calendar includes weekly jobless claims, housing starts and building permits for April, along with a Philly Fed manufacturing index for May — all due at 8:30 a.m. Eastern Time.

How are other markets trading?

Asian markets had a mixed session, with a 1.2% drop for Korea’s Kospi SEU, -1.20%  and a 0.6% gain for the Shanghai Composite SHCOMP, +0.58% In Europe, stocks hinted at opening losses.

Crude oil CLM9, +0.92% prices advanced, while gold GCM9, -0.26% and the U.S. dollar were softer.

Providing critical information for the U.S. trading day. Subscribe to MarketWatch’s free Need to Know newsletter. Sign up here.

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Precipio Regains Nasdaq Listing Compliance

Precipio Regains Nasdaq Listing Compliance – NASDAQ News Today – EIN News

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Majid Al Futtaim marks listing of sukuk on Nasdaq Dubai

Majid Al Futtaim, a leading shopping mall and leisure pioneer, today (May 15) rang the market-opening bell at Nasdaq Dubai to mark the listing of the world’s first benchmark corporate Green Sukuk and the first Green Sukuk issued by a corporate in the region.

Valued at $600 million and with a tenor of 10 years, the Green Sukuk is testament to Majid Al Futtaim’s long term commitment to support the transition to a low carbon economy. The investment will be used to finance and refinance Majid Al Futtaim’s existing and future green projects, including green buildings, renewable energy, sustainable water management, and energy efficiency.

To mark the occasion, Alain Bejjani, chief executive officer at Majid Al Futtaim – Holding, rang the market-opening bell in the presence of Essa Kazim, Governor of Dubai International Financial Centre (DIFC) and chairman of Dubai Islamic Economy Development Centre (DIEDC), Hamed Ali, chief executive of Nasdaq Dubai and members of Majid Al Futtaim’s leadership team.

Bejjani said: “This issuance will enable Majid Al Futtaim to deliver more sustainable experiences for our customers and to address the implications of climate change. As we progress on our sustainability journey, we are extremely proud to list the world’s first benchmark corporate Green Sukuk and look forward to identifying and pioneering innovative ways to meet our ambition to be Net Positive by 2040.

“The widespread interest from global investors in the bond indicates their confidence in our ESG rating, BBB credit rating, and prudent financial and risk management approach. Investors’ faith in our vision empowers us to continue on our path to become one of the most environmentally sustainable companies within our industries.”

Essa Kazim said: “Majid Al Futtaim’s Green Sukuk listing reflects the forward-looking and progressive outlook of Dubai’s leading businesses and the vitality of its capital markets infrastructure. The listing further supports Dubai’s growth as the global capital of the Islamic economy, under the initiative launched by His Highness Sheikh Mohammed Bin Rashid Al Maktoum, UAE Vice President and Prime Minster, and Ruler of Dubai.”

With the Green Sukuk listing, the value of all debt instruments listed on Nasdaq Dubai by Majid Al Futtaim has reached $2.4 billion. The company’s other listings comprise one Sukuk of $500 million that listed in 2015, and two conventional bonds of $500 million each that listed in 2013 and 2014 respectively, and a $300 million tap on the 2014 bond that listed in 2016. – TradeArabia News Service

Astoria Company Launches MortgageLeads.com

Astoria Company Launches MortgageLeads.com – NASDAQ News Today – EIN News

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