Nasdaq Records Biggest One-Day Gain Since April

What’s happening: US stocks closed sharply higher on Wednesday, putting an end to the downturn over the last three trading sessions.

What happened: After notching a record high last week, the Nasdaq 100 entered correction territory on Tuesday, at the fastest pace in the history of the index.

Investors shrugged off AstraZeneca’s disappointing update on its covid-19 vaccine candidate to focus on tech stocks, which have been the main beneficiaries of the virus outbreak. The rise in tech behemoths from early in the session helped the tech-laden Nasdaq 100 to book its largest gain since April 29.

Why it matters: The day began with a rally in the shares of Apple and Microsoft, which had come under pressure after analyst reports suggested that these stocks were grossly overvalued.

After nosediving over the last three trading sessions, tech stocks gained on Wednesday on expectations of the work- and learn-from-home trends continuing for longer. The tech rally fueled a market-wide rebound.

Even then, markets have been anxiously waiting for the launch of a covid-19 vaccine. Amid this, AstraZeneca said it will need to pause the late-stage study for its vaccine candidate as one of the participants was diagnosed with an unexplained illness. The drug-maker announced that an independent committee will review the safety data. Although AstraZeneca termed this as “routine action,” the delay and a possible termination of the study caused investor concern, as confirmed cases rose past 28 million, with the death toll exceeding 900,000.

Investor sentiment was lifted by the Labor Department reporting an increase in job openings, with 6.6 million openings in July.

Tesla’s stock jumped 11% on Wednesday after booking the biggest single session decline the previous day. Shares of Apple, Microsoft, and Amazon rose around 4%.

The Dow Jones added 439.58 points to close at 27,940.47 on Wednesday, while the S&P 500 rose 2% to 3,398.96. The Nasdaq 100 climbed 2.7% to settle at 11,141.56, after recording a pullback of more than 10% over the last three sessions.

What to watch: Traders await data on initial jobless claims, producer prices and wholesale inventories from the US. The number of persons filing for jobless benefits is expected to decline to 846,000 in the latest week, from 881,000 in the week ending August 29. Analysts expect producer prices to rise 0.2% in August, versus a 0.6% improvement in July. Wholesale inventories are projected to decline 0.1% in July.

Some profit-taking by investors after yesterday’s rally could exert pressure on US stocks today. US stock futures were trading lower in the Asian session, signaling a lower start on Wall Street.

Investors will continue to monitor covid-19 cases. Despite some decline in daily cases in the US, the pandemic continues to be the main concern for investors.

Crude prices will be in focus today, ahead of the EIA’s (Energy Information Administration) report on crude oil stockpiles.

Context: Oil futures closed higher in the previous session, after declining more than 7% on Tuesday. Concerns over subdued energy demand due to the pandemic continued to limit upside momentum in crude prices.

Details: The recent downturn in global stock markets resulted in increased pressure on crude oil. A rise in the US dollar also triggered a selloff in crude contracts.

Meanwhile, in its monthly report, the US EIA lifted its 2020 projections for WTI (West Texas Intermediate) and Brent crude. The EIA now expects WTI oil prices to rise 1.3% in 2020, versus its earlier forecast of $38.99 per barrel. The agency also raised its Brent crude price outlook by 1.2% to $41.90 per barrel. It also projected US crude production rising 1.1% to 11.38 million bpd (barrels per day) for the year.

WTI crude for October delivery gained 3.5% to close at $38.05 per barrel on the NYMEX (New York Mercantile Exchange). November Brent crude rose 2.5% to settle at $40.79 per barrel on ICE Futures Europe.

In other energy commodities, October gasoline gained 1.5% to $1.1193 a gallon, while October natural gas rose 0.3% to $2.406 per million British thermal unit on Wednesday.

What to watch: Traders await the EIA’s data on crude stockpiles, which is delayed by one day due to the Labor Day holiday. Crude supplies are expected to drop 500,000 barrels for the week ending September 4. Analysts expect gasoline supplies to decline 2.5 million barrels, while distillates are likely to rise 300,000 barrels last week.

Other Markets: European indices closed higher on Wednesday, with the FTSE 100, French 40 and Dax 30 index up by 1.39%, 1.4% and 2.07%, respectively.

Italy's industrial production, South Africa’s current account, mining production, gold production, SACCI business confidence index and industrial production, Turkey’s gross foreign exchange reserves, European Central Bank’s interest rate decision and Brazil's retail trade.