Oil Allows A Tech Rally – Market This Morning

Oil rose and stocks followed yesterday

Tech is leading on both good days and bad days

Apple has become a global firewall

oil_allows_a_tech_rally

It is becoming a pattern. When energy prices go up, the U.S. stock market goes up, but tech goes up most. When oil goes down, the U.S. stock market goes down, but tech goes down least.

As traders creep to their desks today on the 14^th anniversary of the 9-11 attacks, as fraught with emotion as Pearl Harbor Day was for their grandfathers, the pattern is holding. West Texas Intermediate rose 3.49% to $45.69/barrel, Brent rose 2.46% to $48.75/barrel, so the Dow (DIA) rose .47% to 16,630, the S&P 500 (SPY) was up .53% to 1,952, and the Nasdaq (QQQ) rose .84% to 4,796.

The rally got an early start, stalled around 10 AM and then got new momentum, especially on the Nasdaq, with a peak at 11 AM, and another around 2 PM. The markets then began falling, and it looked like a nothing day was on offer until around 3:30, when new buyers emerged. After the market closed it was revealed that mutual funds and ETFs continue to suffer net withdrawals, which may be why stocks are falling late in the afternoon.

An Apple a Day

But whether oil is up or oil is down, tech leads. And Apple Inc. (AAPL) leads tech.

Thus much of the talk on the floor involved digesting the previous day’s product announcements from Apple, the most valuable company in the world at a market cap of $625 billion. There were questions about the new Apple TV, jokes about the iPad Pro with its $100 stylus, a feature the late Steve Jobs said his company would never support, but in the end what stood out was the new iPhone 6s line, and the company’s decision to finance purchases directly, rather than having phone carriers do it.

This promise of disintermediation – the idea of carriers being slowly replaced by Apple, even of TV companies being slowly replaced by Apple TV – excited investors over the course of the day, and the shares finally finished the day up 2.2%, up $2.42/share to $112.57. From a post-split low of $56.65 in mid-2013, the stock has now doubled in value, and while it remains 14% below its all-time high of $130, the prevailing view on it is positive.