Bulls in Control...For Now, How I Plan on Trading

By Yasin Ebrahim – The S&P 500 rebounded Tuesday, as investors took advantage beaten down travel-related stocks and financials following a rout the previous day.

The S&P 500 rose 1.5%, the Dow Jones Industrial Average gained 1.6%, or 550 points, the Nasdaq was up 1.6%.

The United States 10-Year yield rose above 1.2% after dropping to 1.14% earlier in the session, providing a much needed boost to financials, mostly bank stocks following Monday's selloff.

JPMorgan (NYSE:JPM), Goldman Sachs (NYSE:GS) and Bank of America (NYSE:BAC) rose more than 1%.

The selloff on Monday was largely attributed to fears that a resurgence in Covid-19 infections would stall the recovery. The delta variant is now estimated to make up 83% of all Covid-19 cases in the U.S., the director of the CDC said Tuesday.

Some on Wall Street suggest the economy has transitioned from a recovery stage to an expansion phase.

"The most visible signs of the transition have been the return of inflation-adjusted output in June to pre-pandemic levels; productivity-enhancing investment in high-tech equipment; broadening loan growth beyond consumers to businesses; and strong job gains as businesses gained renewed confidence," Wells Fargo (NYSE:WFC) said in a note.

Industrials were one of the biggest sector gainers, led by surge airline stocks including Southwest Airlines (NYSE:LUV), United Airlines (NASDAQ:UAL), American Airlines (NASDAQ:AAL), with the latter up 8%.

Energy also recovered some of its losses from a day earlier, up more than 1% amid a tentative rebound in oil prices as the delta wave threatens demand.

"Our bottom-up estimate of the impact that a Delta wave could have on global demand instead points to a potential 1 million-barrel-a-day hit for only a couple months, and even less if vaccines prove effect at lowering hospitalizations in DMs, the origin of most summer demand improvements," Goldman Sachs said.

Energy was given an added boost from a 3% surge in Halliburton (NYSE:HAL) as the oil services company reported results that topped market expectations.

Technology stocks also benefited from dip-buying, with Apple (NASDAQ:AAPL), in the ascendency, up more than 2%

UBS lifted its price target on Apple to $166 from $155, after raising estimates on tech giant's revenue and EPS for the third quarter to $74.7 billion and $1. 01 from $71.3 billion and 95 cents, respectively.

Microsoft (NASDAQ:MSFT, Facebook (NASDAQ:FB), Google-parent Alphabet (NASDAQ:GOOGL), and (NASDAQ:AMZN) were higher.

International Business Machines (NYSE:IBM) rose 2% after its second-quarter results topped analysts estimates.

"We’re encouraged by momentum around our wider hybrid cloud thesis," Credit Suisse (SIX:CSGN) said in a note as it raised its price target on IBM to $167 from $165.

On the economic front, June housing starts rose 6.3% to 1.64 million, above the consensus. "Housing starts bounced unexpectedly in June but starts appear to be capped at this level, given labor and material shortages," Jefferies (NYSE:JEF) said.
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