Market Recap: Wednesday, August 26

Stocks rose to fresh record highs Wednesday as tech stocks powered the Nasdaq higher by more than 1.7%. Investors eyed positive developments around Moderna’s COVID-19 vaccine candidate, encouraging signs around US-China trade progress and a strong batch of corporate earnings results. The Final Round panel breaks down the details.

Video Transcript

[BELL RINGING]

- Woo.

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SEANA SMITH: And that does it for the trading day today. Again, all three of the major averages in the green. Dow closing up just over 80 points. S&P up just around 1%. And the NASDAQ up 1.7%. A new record for the S&P and both the NASDAQ.

Taking a look at some of the big winners in today's action, in the S&P, Salesforce, a standout, namely reported those earnings after the bell yesterday on the show. The stock was initially up just around 5% or 6%, added to gains quickly thereafter. But today, closing up just around 26%, taking some of the other software names was that Adobe one of those names up just around 9% today.

And then in the FANG names, Netflix, a massive outperform, up over 11% today. Facebook, another big winner, up just around 8%. Taking a look at some of the Dow leaders, Microsoft among the big outperformers today followed by Home Depot and Walt Disney. These three stocks leading the way for the Dow.

The sector action today a little bit interesting. Energy, real estate, and utilities, the biggest underperformers. Financials giving back some of its recent gains. It's in the red today. And then leadership coming from technology, like I said, makes sense, a lot of those stocks that I was mentioning at the top, as well as the communication services sector. And we also have consumer discretionary as another one of those big winners today.

Econ data helping investor sentiment this morning. Durable goods-- orders rising 11.2%. That was much better than what the Street had been expecting. So here for more on today's action, I want to bring in my co-host for the next hour, Myles Udland. We're also joined by Yahoo Finance Editor-in-Chief Andy Serwer, along with Rick Newman, Akiko Fujita, and Jared Blikre.

And Myles, what do you make of today's action because gains across the board once again another record for the S&P and to the NASDAQ?

MYLES UDLAND: Yeah, I mean, we've probably said it 15 times over the last couple of months. But today was another day you say, it feels like panic buying. The NASDAQ's up 200 points. The NASDAQ feels like it's going to be at-- I mean, it's at 11,006 right now. It was a big deal 10 days ago when it went above 11,000. And in two days, we could easily see the NASDAQ above 12,000. And the market has been relentless in its rally.

Jared Blikre just dumped a bunch of the record closes into our slack channel here. And I think if we just gave ourselves a couple of minutes and didn't look, we could get more than half of these names. They are all of the stocks and all of the sectors and all of the styles that we've talked about for so long.

All these trades really remain in play. And, I mean, I wrote about it in this morning's morning brief about some analysts growing concerned about certain signs in the market. And, you know, concern is fine to register. Obviously it is not yet meaningful to any one day's price action.

And so all we can really do is try to understand the market as it presents itself to us. And the market continues to present itself as one that remains very much in an uptrend, one that is favoring growth names, tech names, and all of these styles. And all these different kind of pillars of the rally still very much remain in play.

SEANA SMITH: Yeah, the pillars of the rally are certainly in play today. And Jared Blikre, I mean, help us understand at this market, because this seems like day in and day out, like Myles was just mentioning, it's another record for the S&P, another record for the NASDAQ. And it's the same names that continue to lead this rally to the upside.

JARED BLIKRE: Yeah, and we're starting to get some orange flashing warning signs. We tried some yellow ones the day before and last week. So I just want to bring this up now. First, let's take a look at the S&P 500 over the last five months since late March. And we can see it's up 32%. And this is a pretty steep incline here. And we've reached the upper end of this trend channel.

And a lot of-- some traders may take profits here. We have higher profit targets from 3,530 all the way up to 3,600. But my concern is the leadership here. Now, we have a handful of stocks because of their market cap size driving the rally. But breadth is not very good. We have the NYSE advance decline line and that of the S&P 500.

That's the advancers minus the decliners. That was actually down today. So when we see that-- and you can also measure it by looking at the equal-weighted S&P 500. When you get that kind of divergence, sometimes, actually oftentimes, you see that at market tops.

Now, it doesn't mean that it's going to roll over tomorrow. And if you were to sell now, who knows. You might miss 3%, 5% to the upside. But we do need to keep an eye on this. The other part of that equation is the VIX. And we'll look at a two-month chart here. And we can see this green candle here. The VIX is up today.

That's not a good sign when the general market is up. That's another sign that there are some warnings going on that the market is trying to tell us. And we have the 10-year T note yield. That started the day up about five or six basis points, closing the day up a half a basis point. It did sell off from the 70 resistance.

So as long as it's in this box, not too worrying. If it goes up slowly, that's fine. If it comes back down-- comes right after this support level, that's fine. But if it accelerates in any direction, or it comes back down here, that's going to cause a problem for equities. So having said that, it is nice to look at all these record highs.

Facebook, the notable outperformer among the FANG stocks today, up 8%-- up 86% over that same five-month period. And then the software space just really blowing it out today off of those Salesforce earnings. We sort by the winners and losers. And we have a number of stocks-- 1, 2, 3, 4, 5-- that are at 9% gains today or better. That includes Adobe, Workday, Salesforce, and several others. Only Autodesk trading to the downside today, Seana.