Today’s gains were broad, with over 425 of the index’s individual constituents closing higher. Tech stocks and cruise lines in particular were the biggest winners. Apple (NASDAQ: AAPL) and NVIDIA Corporation (NASDAQ: NVDA) Shares rose 3.8% and 4.3% respectively, becoming the top performers of the mega-cap tech giants on a bright day for the tech sector. Norwegian Cruise Line Holdings (NASDAQ: NCLH), up 13.7%, and Carnival (NYSE: CCL), up 9.7%, climbed the most of any stock in the S&P 500 today after a bullish rating from a Wall Street analyst.
On the downside, oil stocks continue to struggle. Apache (NASDAQ: APA) and National Oilwell Varco (NYSE: NOV) were the biggest losers in today’s S&P, and most oil stocks ended lower.
Analyst: Maybe early, but cruise stock turnover is coming
Join Norwegian and Carnival today, sharing Royal Caribbean (NYSE: RCL) closed almost 8%. That put the three near the S&P top in earnings today, following a note from a Barclays analyst who raised his price targets for all three. Analyst Felicia Hendrix believes the industry is approaching an ‘inflection point’. She expects the US Centers for Disease Control and Prevention to provide light at the end of the tunnel soon by updating the “no sail” order prohibiting cruise ships from operating in US waters.
All three stocks rose sharply against the bottom in late March and early April. Yet in the past two weeks, they’ve given up on some of those gains. Even with today’s boost, they’re all still in double digits from their September highs:
I hope Hendrix is right on two points. First, the cruise industry will eventually recover. Second, it’s probably too early to call it a turnaround. I’m just not convinced the time to go back to cruise stocks is now. Anticipating the CDC’s update of the no-browse order could cost investors dearly if the recovery takes as long as I think – and I think it will take a lot longer than Hendrix thinks.
Apple upgrades major tech stocks
The tech sector drove the three-week sell-off that almost pushed the market into a correction. For example, Apple shares lost 20% at one point. The company is no longer a member of the $ 2 trillion market capitalization club.
But at least one analyst thinks it’s time for investors to start buying the tech king of mega-caps again. In a note to investors released Friday, Katy Huberty of Morgan Stanley reiterated its “overweight” rating on Apple stocks and its price target of $ 130, helping to boost stocks by nearly 4% on a fine day for the industry as a whole.
the Select SPDR ETF technology (NEW: XLK), which tracks the tech components of the S&P 500, gained 2.4%, easily became the top performing sector of the day. While mega-cap tech stocks did a lot of work, they weren’t the only winners. Of the 72 tech stocks, 70 closed higher today. The only giant of memory Micron technology (NASDAQ: MU) and Hewlett Packard Enterprise (NYSE: HP) have seen their shares fall.
Tech stocks are still down about 10% from the September 2 high, and Apple shares are down more than 14%. Some observers say the sector is still overvalued.
It is not certain whether tech stocks will rebound further or sell in the short term. Yet technology underpins much of the future of the global economy. The industry has crushed the market in the long run. These qualities of the industry are likely to remain true for years to come, if not weeks or months.
Oil stocks lagging behind due to oversupply
Apache and National Oilwell weren’t the only oil stocks on today’s worst-performing list. Seven of the last 10 countries currently were companies operating in the petroleum industry. While the ETF Energy Select Sector SPDR (NEW: XLE), which tracks S&P 500 oil and gas stocks, ended very weak today, with most energy stocks closing lower. These stocks include independent oil producers like Apache and Occidental Petroleum (NYSE: OXY), down 4%, along with equipment and service companies like National Oilwell and Schlumberger LTD (NYSE: SLB), down 4.2%.
Crude oil prices took another hit after petrostats like Saudi Arabia and Libya turned to global markets. After being shut down for much of 2020, Libya recently reopened its oil exports and could add up to 1 million barrels per day to an already crowded global market. Meanwhile, Saudi Arabia recently began refreshing oil to U.S. refiners for the first time since the coronavirus crisis hit demand for oil this spring.
Oil producers and related companies – like OEMs – face a painful and uncertain path. As long as global demand for oil remains below previous levels, independent U.S. producers may be forced to wage an oil price war they cannot win.