Friday morning brought another great performance from the stock market, with major market benchmarks launching higher yet again in what appears to be a likely attempt to hit new all-time highs. Market participants are expecting that all the right things will happen, including a healthy stimulus package from the federal government, prudent management of monetary policy from the Federal Reserve, and continuing support from other financial markets.
Just before noon EDT today, the Dow Jones Industrial Average (^DJI 0.07%) was up 235 points to 28,661. The S&P 500 (^GSPC 0.21%) had picked up 32 points to 3,479, and the Nasdaq Composite (^IXIC +0.01%) had moved higher by 126 points to 11,548.
Many of the software-as-a-service (SaaS) stocks that have helped launch markets higher throughout 2020 were on the rise again Friday, showing ongoing demand for fast-growing tech companies. For some investors, a more surprising entry on the list of winners is GameStop (GME 1.73%), but the video game retailer continued to gain ground after announcing a key new partnership Thursday.
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Investors are feeling SaaS-y
Several SaaS stocks were on the upswing Friday morning. Most noteworthy were Datadog (DDOG 4.25%), which came in with a 9% rise, and Fastly (FSLY +4.21%), which launched higher by more than 8%. Slack Technologies (WORK +0.00%) weighed in with a 5% gain, while Appian (APPN 3.18%) gave shareholders a boost of nearly 6%.
It's hard to tie these gains to any single news item. All of these companies to some extent benefit from the digital transformation going on in the business world right now:
- As more businesses take their operations to the cloud, Datadog's cloud monitoring software becomes more essential.
- Fastly's speed-enhancing data transfer technology helps client apps function more effectively, giving users a competitive edge over rivals not using the service.
- Slack's workplace collaboration platform is getting more popular, especially as workforces remain remote and consider longer-term changes to keep adding flexibility to work arrangements.
- Appian's software development solutions make it easier for users to automate vital workflows, doing more with less and avoiding the need for expensive in-house tech teams.
In the absence of company-specific news to the contrary on any given day, SaaS stocks have generally followed an upward trend. That seems poised to continue as long as the broader bull market in stocks lasts.
GameStop is playing to win
Elsewhere, shares of GameStop rose 6%. The stock continued to gain ground after a lucrative deal announced Thursday raised hopes for the long-ailing video game retailer.
Somewhat unusually, GameStop announced in the middle of the trading session on Thursday that it had entered into a strategic partnership with Microsoft (MSFT 0.95%). The agreement involves a considerable commitment from GameStop to use a variety of different Microsoft products and services, including the Dynamics 365 customer-relationship management platform, Surface devices, Microsoft Teams workplace collaboration software, and the Microsoft 365 productivity suite.
GameStop investors seem to believe that upgraded store locations will help the company solve its difficulties. What's less clear, though, is whether it will bring more customers in through the door. Moreover, the assumption that Microsoft will have more of a reason to see GameStop succeed because of the strategic partnership seems less than entirely compelling as a value proposition.
Shareholders have been hoping for a turnaround from GameStop for quite a while. Whether this will get the job done remains to be seen, but this holiday season will be crucial for GameStop to prove its long-term viability.
