A Friendly FED, a Solid IPO, and Strong Tech Earnings Push NASDAQ Higher

Maybe investors needed a good night’s sleep to reassess the broadly bullish policy statement delivered by the Federal Open Market Committee (FOMC) Wednesday afternoon.

While the round trip price action in the last 2 hours on Wednesday set up a broadly lower opening Thursday, that early decline was very short lived. Within 20 minutes of the opening bell, market averages had reversed to go decidedly green, and never looked back.

Is the IPO Market Finally Back?

Investor optimism was charged by more than just a “closer look” at the FOMC policy statement. Levi Strauss & Co. (LEVI), completed a very well received initial public offering. In its first day of trading, LEVI, closed +$5.53, or +31% above the offering price of $17.00, and managed a modest gain of +$0.31 or +1.4% from its opening trade price of $22.22.

While this is only 1 day of trading in 1 stock, it’s the first meaningful Initial Public Offering (IPO) this year, and is likely to be followed by a steady parade of offerings the next 6 to 12 months.

Keep in mind the capital markets calendar has been at a standstill for nearly 6 months. During the market swoon in Q4 last year, issuers put plans on hold, followed by the government shutdown in January which shuttered the required regulatory review process by the SEC for nearly the first half of Q1.

LYFT is scheduled to complete its IPO next week, followed by UBER and Pinterest in early April. Beyond that we expect Initial Public Offerings from Slack Inc, WeWork, AirBnb and data mining company Palantir, could come to market during the next few months.

A healthy IPO market is a staple of any expanding economy and vibrant bull market. Let’s hope the forward calendar brings solid companies with mature and disciplined owners and managers, that will add value to their shareholders and the economy for the long term.

Technology Earnings Continue to Impress

Semiconductor stocks were particularly strong as the tech sub-sector and relevant ETFs rallied to a 9 month high. The catalyst here was clearly a very positive second quarter earnings report from Micron Technologies (MU) +$3.95, or +10% to $44.05.

From South Korea to Silicon Valley, the entire semiconductor space posted strong gains, highlighted by Advanced Micro Devices Inc. (AMD) gaining +$2.20 or +8% to $27.90, and Applied Materials Inc. (AMAT) rising +$2.03 or +5% to $41.60.

This helped fuel the outperformance we’ve seen from the entire technology sector this year.

The NASDAQ Composite (^IXIC) gained +1.4% to post its best closing price, 7838.96, since the first week of October. With just 6 trading days left in Q1, the NASDAQ leads all Major Market Averages with a QTD and YTD gain just over +18%. For March, the Nasdaq has a MTD gain of +2.5% after recovering from a -1.5% decline the first week of the month.

The Nasdaq composite at 7838.96 is now merely 3.3% from its all time closing high of 8109.69 from August 29 of last year.

Numerous NASDAQ stocks had impressive gains on the day, including NVIDIA; NVDA, +$9.60, or +5.5% to $184.00; Apple Inc. (AAPL) +$7.25, or +3.8% to $195.41, Align Technology; ALGN, +$15.00 or +4.5% to $280.70; and Microsoft MSFT, +$2.50, or +2.1% to an all time high of $120.00.

The S&P 500 (^SPX) gained just over 30 points, or +1.1% to settle at 2854.88, its highest close since October 9 of last year, while taking out Wednesdays intraday highs. The S&P closed within 2.5% of the all time closing high of 2930.75 set on September 20 of last year. The S&P 500 is now +2% for the month of March and +14% YTD.

With 6 trading days left in March, market averages are looking to close the month with a much more positive tone than they started. A week from today is also the last day of the First Quarter.

Next week could very likely be a back and forth tug of war between investors taking some well deserved trading profits, and managers looking to show minimal cash reserves at the end of a very strong quarter.