US Close- Another Mega-cap tech rally, Oil stronger, Gold can’t hold $2000

US stocks are off to a strong September as mega-cap tech stocks lead the way higher.  The usual suspects, Apple, Amazon, Microsoft, Facebook and Google led the climb higher.  Tesla was the lone exception after announcing the sale of up to $5 billion shares.

With no chance that the Fed will be tightening over the next handful of years, investors continue to pile into stocks, with no love lost for the stay-at-home stocks.  The COVID-19 headlines continue to remain mostly constructive, California has cases heading in the right direction, Texas is closer to reopening up their economy and NY remains cautious, albeit on target to hold in-person school. The National Academies of Sciences Engineering and Medicine expert panel unveiled a four-phase plan for the COVID-19 vaccine distribution. The news was not all positive after the NIH undermined an emergency authorization issued just days ago by the FDA, noting not enough evidence to recommend use of convalescent plasma for hospitalized coronavirus patients.

Oil

Crude prices are rebounding despite a small bounce with the US dollar.  Crude prices are primarily focused with the robust Chinese and American manufacturing data.  They world’s two largest economies have their economic recoveries firmly intact.  Mixed euro zone manufacturing data however put a damper on the demand outlook.  The demand picture is improving however it is uneven and likely to experience disruptions with the next wave in the fall. 

Oil’s supply side and demand fundamentals will likely keep crude prices stuck in their  recent trading range.  Energy traders are anticipating steady declines with inventories due to the recent disruptions with oil production due to hurricane season.  Unless inventories deliver a sharper-than-expected decline, oil prices will struggle to climb higher from here. 

Gold

The US ISM manufacturing report poured a bucket of ice water over gold’s strong start to the trading week.  The dollar was ripe for a mini-pullback and investors used that to lock-in bullion profits.  At the end of the day, today’s headlines from the US and Europe strongly support the stimulus trade for gold.  The euro zone manufacturing recovery is struggling and the ISM labor component suggests US employment rebound is losing steam.  Fiscal support will likely be the key driver for gold’s climb back toward record high territory. 

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