By Matthew
Klein | Wednesday, August 26
Heads
in the Cloud. It was a banner day for
tech stocks, with the S&P 500 index gaining 1% thanks to massive gains at Netflix
(12%), Adobe
(9%), Facebook
(8%), and, most notably, Salesforce.com, which gained a
whopping 26% on the back of strong earnings and general enthusiasm
for cloud software companies. Had Salesforce already been in the Dow
Jones Industrial Average, the index would be about
400 points higher.
So far this
year, Salesforce and Netflix are both up about 70% year-to-date, while Adobe
is up 60% and Facebook is up 50%. Other large tech stocks, including Alphabet, Amazon.com, Microsoft, were up
about 3% on the day, continuing their strong runs since the start of the
year.
(Tesla isn’t in the S&P 500 because it doesn’t
have a sufficient history of profitability, but it was up more than 6% on the
day and is currently trading five times higher than what it was at the start
of the year, with a market cap of more
than $400 billion.)
The good
news wasn’t limited to just U.S. tech. Europe’s Stoxx
600 index
was up 0.9% today thanks to solid gains at companies such as SAP—which is
also in the enterprise software business—as well as industrial companies such
as Siemens and Linde. Canada’s TSX was also up 1%.
Yet the
majority of the companies in the S&P 500 ended the day lower, with only
219 components gaining. Similarly, the Russell
2000 index of small cap
stocks was down 0.7% on the day. The divergence is symptomatic of a
broader phenomenon. Ever since the pandemic began, tech shares have benefited
from the perception that software is destined to outperform when workers and
consumers are stuck at home.
The big
losers have been in such obvious sectors as airlines, cruise lines, casinos,
oil companies, mall operators, and office landlords. Tellingly, those were
among the biggest losers today, with the largest declines at Norwegian
Cruise Line Holdings, Carnival, SL
Green Realty, Vornado, Simon Property Group, Hess, Occidental
Petroleum, Diamondback
Energy, Apache, and Baker
Hughes.
Other
markets were mostly flat today, with currencies, interest rates, oil, and
precious metals relatively unchanged. One development to keep an eye on: the
ongoing rebound in inflation break-evens, which are now all trading higher
than before the pandemic.
 |
DJIA: +0.30% to 28,331.92
S&P 500: +1.02% to 3,478.73 Nasdaq: +1.73% to 11,665.06
The Hot
Stock: Salesforce.com +26.0%
The Biggest Loser: Norwegian Cruise Line Holdings -6.2%
Best Sector:
Communication Services +3.4%
Worst Sector: Energy -2.1%  |
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