Friday, June 12, 2020

Will Adobe Provide Support to Nasdaq 100 Today?

Tags

News shaping
the markets today

     

What’s happening: The Nasdaq 100 index fell sharply on Thursday, retreating from its record highs achieved in the previous session.

What happened: After closing at a record high of above 10,000 on Wednesday, the tech-laden index plummeted dramatically yesterday on US Federal Reserve Chairman Jerome Powell’s pessimistic economic outlook.

Adobe, an important component of the Nasdaq 100, reported stronger-than-expected earnings for its fiscal second quarter after the closing bell yesterday, sending its stock higher in extended trading. Further gains in the software maker’s shares could help the tech-heavy index recover some of its losses in today’s indices trading session.

Details: Yesterday, US stocks recorded their worst day since the coronavirus-induced market sell-off in March. Signs of a second wave of covid-19 infections, along with the Fed’s grim economic outlook led to bears taking charge in index trading.

Investors even shrugged off news of a decline in initial jobless claims in the latest week amid fears of another spike in infections and economic contraction. The Nasdaq 100 declined by 5.3% to 9,492.73, a day after closing above the 10,000 milestone. The Dow Jones index also shed more than 1,800 points.

With people working from home amid the coronavirus outbreak, Adobe extended its earnings in the fiscal second quarter. The pandemic proved to be massive driver for Adobe’s digital products, as individuals and companies using more digital documents to collaborate from remote locations.

Adobe’s revenues climbed to $3.13 billion, from $2.74 billion in the year-ago quarter. The San Jose, California-based company reported a quarterly profit of $1.1 billion, or $2.27 per share, significantly higher than the $632.6 million, or $1.29 per share, recorded in the same quarter last year. Adjusted earnings came in at $2.45 per share, topping the consensus estimate of $2.32 per share.

Management projected adjusted earnings of $2.40 per share on revenues of $3.15 billion for the third quarter, while refraining from providing any full-year guidance.

How the shares responded: Adobe’s shares had jumped to a record high of $409.98 on Wednesday. The stock fell, however, by 4.7% in regular trading on Thursday, but gained 4.2% to reach $404.00 in after-hours trading on the company’s strong earnings.

What to watch: The Nasdaq 100 index could rebound slightly today, supported by gains of Adobe’s stock. Wall Street is expected to open on a positive note today, with US stock index futures trading higher in the European session.

The Markets Today

     

Gold will be in focus today, after the precious metal recorded its highest close in more than a week on Thursday.

Context: Gold futures trading gained on Thursday, following rising concerns of a second wave of coronavirus cases in the US and a grim economic forecast from the Federal Reserve Chairman.

Details: The Fed announced its policy decision and projections for the year, forecasting a 6.5% contraction in the economy this year, and an unemployment rate of 9.3%.

Powell’s comments sent gold prices higher, as investors scurried towards safe-haven assets as hopes of economic growth quickly faded.

Bears emerged as investors went short on CFD trading assets, even as economic data from the US came in better than expected. The number of people applying for unemployment benefits in the latest week declined to 1.54 million, from 1.9 million in the previous week. The producer price index rose 0.4% last month, following a record 1.3% decline in April.

Amid higher gold trading, contracts for August delivery gained 1.1% to finish at $1,739.80 an ounce, marking its highest settlement since June 1.

Among other metals, silver prices rose 0.5% to $17.889 an ounce. July copper dropped 2.6% at $2.5865 a pound on Thursday, after posting a gain of 2.2% in the previous session.

What to watch: Traders will be keeping an eye on covid-19 numbers on heightened concerns of a second wave of infections. The number of coronavirus cases in the US has gone past the 2 million mark, with over 113,800 deaths.

Other Markets: European indices were trading higher on Friday, with the FTSE 100, French 40 and Dax 30 index up by 0.4%, 0.3% and 0.7%, respectively.

Support & Resistances
for Today

     

market snapshot

     

Futures at 0400 (GMT)

What else to watch today

     

India’s foreign exchange reserves, industrial production, retail price inflation and manufacturing production, Canada’s capacity utilization and new motor vehicle sales, China’s foreign direct investment, South Africa's SACCI business confidence index as well as the US import prices, export prices, University of Michigan's consumer sentiment index and Baker Hughes crude oil rigs.