Aug 23 2021 (Mon)
Stock indexes gained momentum on Aug. 23 after a minor pullback last week. The Dow Jones Index is up 0.8% while the S&P 500 has gained 1%, in early market trading today. According to CMC Markets analyst Michael Hewson, “A large part of the reason behind last week’s change in sentiment was increasing concerns over a slowing global economy, as well as increasing angst over rising infection rates and vaccine durability.”
The markets this week will be tied to the performance of several macroeconomic indicators. The U.S. Manufacturing PMI (purchasing managers index) stood at 61.2 which was lower than estimates of 62.5. The U.S. Services PMI was 55.2, again below estimates of 59.5. Existing-home sales however stood at 5.99 million, surpassing estimates of 5.82 million.
These indicators provide analysts with insights to see if the economy has been impacted by the delta variant which is viewed as a massive headwind right now. An Instinet report stated that market volatility rose by 20% in the past week which was the seventh surge (of over 20%) since the bear market of 2020.
The Federal Reserve Chairman Jerome Powell is due to give a speech this Friday and investors will looking for any hints with regards to the rollback of asset purchases or an increase in bond rates.
Canadian cannabis stocks have risen today but there is no relevant news surrounding this particular sector to which the gains can be attributed. Shares of HEXO, Aurora Cannabis, Canopy Growth, and Cronos have gained 9%, 4%, 1.5%, and 2% respectively on August 23.
There is a good chance that investors are buying marijuana stocks at a lower multiple after a less than impressive performance from these companies for more than two years.
Most Canadian cannabis producers have been hit by a range of structural issues that include lower than expected demand, widening losses, high inventory levels, a thriving black market, and much more.
Due to high cash burn rates, most marijuana producers have raised equity capital several times which has diluted shareholder wealth at an alarming rate. But, the cannabis sector continues to grow at an enviable rate, making stocks part of this sector solid long-term bets.
According to Utradea’s Reddit dashboard, the most popular stocks on the social media platform over the last 72 hours include Pfizer, Alibaba, and AMC Entertainment. Pfizer's stock is up 2.7% at the time of writing after the company announced the acquisition of Trillium Therapeutics for $2.26 billion.
Alibaba stock on the other hand is up less than 1% after it was revealed that an institution investor bought $611 million worth of BABA stock on Friday. Alibaba has been one of the worst performers among tech stocks and is down 30% year to date primarily due to the ongoing crackdown of the Chinese government on technology companies.
AMC Entertainment continues to remain a Reddit favorite and is up over 9% in intra-day trading. In the first eight months of 2021, the stock is up a stellar 1,750%.