Your Tuesday Blip 9/8/20

Your Tuesday Blip 9/8/20

Recent dry weather and fires east of the Cascades has Seattle smelling like a Forest Service fire camp. Airlines were up today along with housing related stocks while techs posted their third straight down day. The Dow closed lower by 632 or 2.2% to 27,500 on heavy trading volume. The NASDAQ meanwhile was down over 4% showing that most of the selling occurred in the high growth tech space. IBD still has markets in rally mode but pressure is rising.
News came out that one of the reasons behind the recent tech selloff was Japan’s Softbank had made massive options purchases on US tech stocks and this drove prices up but is now as the trade unwinds it is having the opposite effect. Another reason for the tech pullback was that Tesla was expected to be added to the S&P 500 Index but today we learned they were passed over and will not be included. Many had purchased the stock in hopes of its inclusion into the index but this news now takes away the prospect of passive index mutual funds and ETFs which mirror the index from buying the stock. Tesla shares finished off 21% today. Ouch.
Shares of GM were higher after they were selected as the manufacturing partner by Nikola for its electric pickup called the “Badger”. The deal involves GM taking a $2 billion equity stake in Nikola and it gives Nikola access to GM’s part supplier and manufacturing network as well as its battery technology. Nikola is taking preorders of the new truck and hopes to have it in production sometime in 2022 at a price of $60,000 to $90,000 with a 600 mile range and massive horsepower. The Badger will come in an all-electric or a hydrogen fuel cell version. Look out Ford F-150!
In local news shares of Boeing were lower after the FAA said it would look into manufacturing issues with the 787 Dreamliner. Boeing said during fabrication of the 787 horizontal stabilizer it learned some components were clamped with greater force than specified, which could result in improper gap verification and shimming. The situation could require an inspection of all 900 planes in service.

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