S&P 500 Gains 12 Points as Apple, NVIDIA Stocks Surge Higher

The S&P 500 Index (^GSPC -1.11%) gained 0.34% on Friday, August 21. Closing at 3397.16, the index of 505 stocks that makes up the vast majority of the U.S. stock market's value, ended the week at an all-time high, after returning to record levels on Tuesday. 

Today's move higher was underpinned by a big day for two mega-cap stocks. Apple (AAPL -1.32%) shares gained more than 5% following positive analyst comments, and semiconductor giant NVIDIA (NVDA -2.09%) shares closed up 4.5% on continued momentum following its earnings earlier this week. The two tech giants were the two biggest gainers in the S&P on the day. 

Image source: Getty Images.

There were more S&P 500 stocks that lost value today than gained, with the mega-caps that moved higher doing the heavy lifting to move the index higher. Big losers included the airline sector, with United Airlines (UAL -1.21%) leading the way down 3%, along with oil stocks Marathon Oil (MRO), Diamondback Energy (FANG 0.20%), and Apache Corp (APA 1.15%) falling on weak oil prices and concerns about the global economy. 

Optimism around tech giants moving the market

Despite the ongoing coronavirus crisis that started a global recession and put tens of millions of Americans out of work, technology companies have proved surprisingly resilient. Apple shares are up almost 70% year to date and up about double from the 2020 coronavirus crash low point in March. Yet its business has proven surprisingly durable for a consumer products company, with profits remaining very strong. 

At least one analyst thinks the good times could get even better. Dan Ives of Wedbush, in a note to investors, says the stock could run another 27% over the next year or so, citing a "supercycle" for the upcoming iPhone series as millions of customers look to upgrade to 5g. Ives thinks as many as 350 million of the 950 million iPhones in service today could get upgraded over the next 18 months. 

^SPX data by YCharts

For NVIDIA, the depth and breadth of the markets its products serve continues to expand, and investors are piling in. Its shares have surged even higher than Apple's this year, and with a $300 billion market cap compared to Apple's $2 trillion market value, investors think there's plenty of room to run. 

Airline stocks down on American service cuts, economic worries

United Airlines shares were the worst-performing of the S&P 500 airline stocks, but American Airlines (AAL) stock also fell more than 2.7% to close the week. Yesterday, American detailed its plan to suspend service to 15 markets starting on October 7, through at least early November. 

These cuts were delayed due to financial support it and its peers got as part of the CARES Act earlier this year, but once the requirements to maintain service and payroll levels expire at the end of September, every major airline will be forced to make major cuts, barring additional -- and substantial -- government financial support that is increasingly unlikely. 

Even with financial support, the airline industry is facing what will likely prove a multi-year downturn due to the coronavirus pandemic. Air travel has increased 10-fold over the past few months from the lows in April, but still remains down about 70% in the U.S. Barring a medical breakthrough, travelers could avoid air travel in large numbers for at least another year. 

Oil stocks feeling a similar pinch

The S&P 500's oil sector also took it on the chin today, with 20 of the 26 sector stocks falling today. Oil prices finished lower, with Brent and West Texas Intermediate crude futures both down more than 1% and still in the low $40s per barrel. 

Low prices and weak demand continue to weigh on the energy industry on a global basis. While China soaked up a lot of excess oil demand in recent months, taking advantage of record low prices, most of the rest of the world has dealt with double-digit drops in demand. India imported less oil in July than in any other month in more than a decade, while U.S. driving travel was down more than 13% in June. 

MRO data by YCharts

With prices still below breakeven for many producers, demand remaining constrained, and the amount of oil in commercial storage still above five-year averages, the oil patch continues to feel immense pressure as a protracted downturn looks likely. This will continue to weigh on oil producers like Marathon, Apache, and Diamondback for some time to come.

Earnings next week

While many of the biggest companies have already dropped their second-quarter results, next week brings us a handful of notable names. Best Buy, Hormel Foods, Salesforce.com, and Medtronic report on Tuesday, Aug. 25, giving investors a look at four very different sectors: consumer discretionary spending, consumer staples, enterprise cloud services, and healthcare. 

Later in the week, consumer specialty retailers Tiffany & Co and Ulta Beauty, along with discounters Dollar Tree and Dollar General will report. Be sure to tune in here for a closer look when they report.