Stocks Surge after Holiday Weekend
By Laif Meidell, CMT, president of American Wealth Management, and portfolio manager of the AdvisorShares Meidell Tactical Advantage ETF (MATH)
Investors appeared to come back from the long holiday weekend in a better mood than when they left, driving stock prices significantly higher at the opening bell and throughout the trading day. Although Tuesday’s gains were not able to erase all of last week’s losses, some of the indexes including the Nasdaq Composite got close, gaining 2.73 percent while the Standard & Poor’s 500 rose 2.52 percent on the day. Though Tuesday’s gains were impressive, the indexes were not able to break out of the trading range they have been in the past few weeks.
On Monday, Chinese trade data revealed that for August, Chinese imports fell 14.3 percent from a year earlier, the 10th successive monthly decline, while China’s exports were also lower down 5.5 percent year over year. Bad economic news from China was interpreted as good news for investors, as talk of increasing the likelihood of stimulus from the Chinese central bank circulated the trading floors. The Shanghai Composite rose in late trading on Monday to close 2.92 percent higher, a pattern that been associated with government buying.
Though U.S. stock futures began trading higher on China’s news, they received an additional boost from Europe when better-than-expected economic data revealed the eurozone 2Q GDP grew by more than expected, growing at a 0.4 percent rate quarter over quarter versus 0.3 percent.
Among this week’s top-performing commodities are industrial metals, which haven’t shined for quite some time. Until recently, industrial metals had been falling due to fears of dwindling demand from China’s slowing economy. However, news over the weekend that a major commodities miner was cutting its copper production as part of its debt-reduction plan sent copper prices higher. The S&P GSCI Copper index is near the top of this week’s list, gaining over 5 percent on Tuesday and up 4.20 percent over the past five trading days. Also near the top of the list this week was the S&P GSCI Cocoa index, up 3.90 percent over the same period.
This commentary originally published in the Reno Gazette-Journal. Performance numbers used in this article were obtained through eSignal and are not guaranteed to be accurate.