Markets Bounce Back on S&P 500, Nasdaq

Markets closed the first trading day of the week mixed, after starting the day in the red across the board. Bouncing off lows nearly -260 points, the Dow this morning closed down -35.75, a mere -0.10% — partially due to a rough day for Disney DIS, -3% on a downgrade from Barclay’s related to slowing Disney+ subscriber growth. The S&P 500 and Nasdaq closed near session highs: +0.34% and +0.84%, respectively, with the Nasdaq back above the 15K threshold for the first time in four weeks.

Part of the outperformance on the tech-heavy Nasdaq may have to do with investors positioning ahead of Q3 earnings expected this week: Netflix (NASDAQ:NFLX) NFLX, which reports tomorrow after the closing bell, was +1.5%. Tesla (NASDAQ:TSLA), which reports Wednesday afternoon, was up +3.2% today. Microsoft MSFT and Apple AAPL, which don’t report until next week, grew +1% on the day. And Zoom Video ZM saw a +3% bounce-back following the Five9 (NASDAQ:FIVN) deal which fell apart a couple weeks ago.

Speaking of Apple, today was its annual Event Day, in which the new products on offer might not have been as exciting as the method of the company bringing these products to market: MacBook laptops and Airpods are fine-selling items, but today’s unveiling informs that these products use new 5 nano processors developed by Apple itself. That means they are not reliant on outsourced foundries, and thus are not prone to the same supply-chain constraints as other electronics products.

After the market close today, Steel Dynamics (NASDAQ:STLD) STLD has put up beats on both top and bottom lines. The Zacks Rank #1 (Strong Buy)-rated For Wayne, IN-based company earned $4.85 per share, including an 11-cent one-time charge related to the construction of a new steel mill in Texas, which beat the Zacks consensus of $4.59 per share. It’s also around 900% higher than the year-ago earnings of 51 cents per share. Sales in the quarter came in at $5.1 billion — a new record high, and an improvement on the $4.99 billion analysts were expecting.

With construction projects back up and running — with plenty of backlog based on pandemic conditions and supply bottlenecks — Steel Dynamics also posted a record 211K tons of steel fabrication shipments. The company has now topped earnings estimates for eight straight quarters. Shares are up +2.1% on the earnings release, and now north of +70% year to date. The Steel industry ranks in the top 10%, with more than half a dozen Zacks Rank #1 steel stocks.

Ahead of tomorrow’s opening bell, we expect Q3 results from Johnson & Johnson JNJ, which is 10% off its August highs despite approval for a booster Covid vaccine last week. Shares of J&J are just +2% year to date, far behind the benchmark S&P 500. Perhaps a big earnings beat will reverse the stock’s fortunes — however, while J&J literally never misses on earnings estimates going back more than 10 years, margins of earnings beats are not usually very wide.

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