Trade reopening continues as the travel ban in the United States lifts

Key points:

US and Chinese governments drive market movements Changes in market issues become more positive as the earnings season progresses. Oil prices are rising despite the White House trying to pressure OPEC + production

President Joe Biden is expected to sign an infrastructure bill that was passed by the House and Senate over the weekend. The bipartisan bill had the support of 15 Republicans in the House, but six Democrats voted against it. Equity index futures are trading higher in the news, which means S&P 500 (SPX) could keep its seven-day winning streak alive.

The infrastructure bill has sparked demonstrations in some actions such as Caterpillar (CAT), which builds part of the large machinery needed for infrastructure projects. The CAT rose more than 5% before the bell. Fluorine Engineering and Construction (FLR) shares rose more than 3% in pre-market trading. And ChargePoint (CHPT) increased nearly 12% in pre-market negotiation because the spending bill wants to increase the number of electric vehicle charging systems nationwide to make trips with electric vehicles more feasible for longer trips.

Despite the possibility of new charging stations, Tesla (TSLA) is trading more than 4% lower before opening after CEO Elon Musk conducted a Twitter poll to determine if it should sell 10% of the their participation in the company. The results of the survey showed that his Twitter followers agreed with the decision.

The Chinese government is also driving market movements. This morning, The Wall Street Journal reported that China will issue licenses to educational enterprises for extracurricular tutoring programs. Earlier this year, Chinese education companies were hit hard when the Chinese government was worried about capitalist excesses. The news sparked protests in New Oriental Education & Technology (EDU) which increased by almost 10% in pre-market trading, Gaotu Techedu (GOTU) increased by more than 18% and TAL Education (TAL) increased by approximately 9%. % before the opening bell.

Deviation issues

The topics for the earnings season in October were inflation, higher costs, higher interest rates, labor shortages and supply chains. But November seems to have altered the attitude because more earnings announcements seem to reflect that the population is already on the path to normalcy. In addition, it appears that investors have moved from pandemic trading to trade reopening.

Moviegoers leave their home systems and return to cinemas. Cinemark (CNK) lost earnings estimates and was initially sold before the bell. However, stocks turned around and rose more than 8% throughout the day. Although the company lost estimates, its revenue grew from $ 35.5 million in the second quarter to $ 225.5 million in the third. Cinemark competitor AMC Entertainment (AMC) reports Monday.

Displacement by the cabin

U.S. travel restrictions for vaccinated travelers are over today, meaning vaccinated foreign tourists can visit the United States. Delta (DAL) and JetBlue (JBLU) helped lead the way among the major airlines, with 8% and 7.6% respectively. United (UAL) was up 7.26%, while Southwest (LUV) was up more than 6%. American (AAL) was the weakest of the group, with 5.77%.

Airlines were not the only travel group to move on Friday; cruise lines also set sail. Royal Caribbean (RCL) rose more than 8.95% and tested its annual highs. Carnival (CCL) will accumulate 8.35%.

The impetus for these moves may have come from Expedia’s earnings announcement (EXPE). Expedia outperformed top and bottom figures, causing stocks to rebound more than 15% on Friday. Airbnb (ABNB) also helped fuel the excitement as it rose nearly 13% after exceeding its estimates.

In contrast, stocks at home like Netflix (NFLX) have fallen more than 6% in the last two days, despite no bad news and a rebound in the tech sector. Another activity of staying at home was sports betting, but DraftKings (DKNG) reported errors in earnings and income, which caused the shares to trade 2.37% higher. Players could be looking to place their bets in person because MGM Resorts (MGM) increased 6.27%. After selling on Thursday, Caesars Entertainment (CZR) and Penn National Gaming (PENN) recorded rebounds of 3.26% and 7.6%, respectively.

GRAPH OF THE DAY: OIL PRESSURE. Crude oil (/ CL: candles) has increased by around 117% over the last year … [+] and trades at 2014 prices. Uptrends are usually made with higher highs and higher lows. Currently, oil prices appear to be moving between historical support and resistance lines.

Data sources: ICE, S&P Dow Jones Indices. Graphic source: the thinkorswim® platform.

Supply issues: Friday, crude (/ CL) rose more than 3% and continued to rise on Monday morning before opening, as traders expressed concern about OPEC + (Organization of the Petroleum Exporting Countries and Allies) plans , including Russia) for oil production. Reuters reported that the Biden administration has pressured OPEC + to increase its production and help curb rising prices, but the organization has decided to stick with its current plan.

Rising oil prices could become a brake on the recent rise in technology stocks. Not only because many hardware components are made from petroleum products, but because rising oil prices often result in higher yields and interest rates. Rising interest rates tend to have a negative effect on the valuation of technology stocks.

Interest rate puzzle: It seems a little strange to talk about the problems with rising interest rates when the 10-year Treasury yield (TNX) fell 4.66% on Friday. However, it is difficult to determine the reason for the fall in yields. The October employment status report released earlier in the day was much better than expected. Many analysts would expect investors to react by selling bonds to buy stocks because the economic outlook is improving. Selling bonds would normally increase yields.

Perhaps investors speculate that the transitional part of inflation will be resolved earlier than expected. Another possible explanation is that some investors may be concerned about long-term economic growth and are looking for the relative security of bonds. Unfortunately, we may just have to wait for an answer to be revealed. The 10-year yield rose 1.72% on Monday morning before the market opened.

Vaccination harassment: Vaccine-maker Moderna (MRNA) closed 16.56% lower on Friday and has fallen by approximately 31% in the last three days. There are two possible reasons for the fall. First, the company reported that its vaccine against COVID-19 will not be licensed for children and adolescents until the end of the year. Second, the company is having supply problems that result in struggles to get the vaccine to several countries.

To make matters worse for vaccine manufacturers, the Fed’s October Beige Book revealed that resistance to vaccinations causes many workers to quit their jobs instead of receiving the vaccine. On Friday, U.S. News and World Report listed 11 states that have filed lawsuits against the Biden administration’s business vaccine warrants. These developments could slow the growth of vaccine adoption.

Last week, the Kaiser Family Foundation published a study that found that parents of children between the ages of five and 11 were divided to give their children COVID-19 vaccines. Of the respondents, only 27% were anxious to vaccinate their children, while 43% wanted to wait and see how things went for the other children. The last 30% refused to vaccinate their children against COVID-19. Parents of children between the ages of 12 and 17 reported that about half of them had vaccinated or will vaccinate their children. Another 31% of parents said they would not vaccinate their teens against COVID-19. The rest were undecided.

Pfizer (PFE) and Merck (MRK) will soon offer COVID-19 therapy that has data proving to be effective in treating COVID-19 and preventing hospitalizations and deaths. While these companies and the CDC have warned that therapeutics are not a substitute for vaccination, they do offer a dubious vaccine alternative.

While COVID-19 vaccines continue to increase, growth in the U.S. may be more difficult to achieve, especially as life returns more and more to normal and the urgency of vaccine protection diminishes.

Comments from TD Ameritrade® for educational purposes only. SIPC member.

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