Daily Market Notes: 10-22-2021

If it weren’t for an absolutely awful day in IBM after its report, the Dow would have joined the S&P at a new all-time record closing high yesterday but at least the other indices were able to ignore the former.

So after a 10 point lower start in the S&P and a 167 point 11am low in the Dow, things began to improve from those levels led by the Nasdaq which was basically higher all day due to strength in TSLA after its earnings report and a tremendous comeback by NFLX, which made a new high of its own after having sold off the day before as a result of its earnings.

Because of this, the S&P kept pushing higher as the day moved along and ended at its best level ever with a closing advance of 13 to 4500. It was the seventh straight daily gain and the index is on track for its third straight higher week. The Dow was able to recover from the IBM disaster (and what is this has-been stock still doing there in the first place?) and due to strength in HD at its own new high, MSFT, NKE, UNH which has had quite an earnings-related week of its own, it cut that large morning decline into a final close of only 6 down to 35,603. So this was a moral victory for sure and is still a little short of its record close of August 16th.

The Nasdaq’s strength which when in contrast to the Dow’s weakness usually goes in favor of the former, resulted in a closing advance of 94 up to 15,215 while the Russell 2000 Index of small stocks got pulled up again by the strength in the other indices and ended higher with a 6 point gain up to 2296.

And how about the VIX, which got as high as almost 26 as the S&P was correcting by 5.2% off of its prior September 2nd high, which  closed right at its support level at 15.01 so this is crucial as if it can break below this area, then the market can continue to push even higher and if this support level holds, then there would have to be some sort of setback in the major indices soon, so we shall see how this plays out in the next few days.

Some companies that rely on consumer spending did well as previously mentioned HD made a record and POOL and CROX also made new highs after their strong reports.  And energy stocks fell back after their recent gains as the price of crude oil had the nerve to ease back a bit after it has gone higher for seven straight weeks. It ended at $82.60 a barrel.

And on a day when the 10-year Note yield moved a little higher up to 1.67%, most financial stocks fell, so go figure this relationship out on a day to day basis.

The uneven finish came as investors continued to review the latest company earnings reports, with global supply chain problems and the impact from rising inflation a key focus. Many companies have warned that the supply chain issues and overall higher costs will hurt operations and investors are trying to gauge just how much it will detract from corporate profit growth and margins.

For instance, PG which has already been raising prices on baby, home and fabric care products amid rising commodity and freight costs, said this week that it will also start to increase prices on a range of other goods, including skin care and oral care products. Last week, DAL warned that rising fuel prices will lead to a “modest” loss in the fourth quarter.

We Work rose by 13% in its second attempt to become a publicly traded company. The company, which provides shared workspaces, had a spectacular collapse during its first attempt to do so two years ago and is emerging after the pandemic closed millions of square feet of office space.

Shares in a SPAC that is planning on taking a new media company launched by former President Trump public soared after news of the venture broke late Wednesday resulting in DWAK soaring by more than 300%. The company, which went public several weeks ago, merged with Trump Media & Technology Group, which plans to launch a social media app and streaming video service.

There are so many earnings reports this week that we will list them day by day and yesterday we had Dow component IBM lower in addition to DOW, DHR, LVS, NUE, SAP and ALK while TSLA, T, DGX, CROX, AAL, TSCO, VLO, POOL, UNP were  higher; today – Dow components HON and INTC plus SNAP which is sharply lower, in addition to  WHR, VFC, CMG and Dow component AXP is higher.

Economic reports will have: yesterday – 2pm release of the Fed Beige Book of economic activity which said that economic activity is proceeding at a moderate pace with elevated price levels forcing companies to raise their selling prices ; today – weekly jobless claims fell further to a new post-pandemic low of down 6,000 to 290,000, September existing home sales rose by 7%, October Philadelphia Fed Manufacturing Index fell to 23.8 which partially offset the gains from the prior month, September leading economic indicators rose by 0.2% for the 17th straight month of gains.

Donald M. Selkin

Chief Market Strategist

 

Don Selkin is the Chief Market Strategist at Newbridge Securities Corporation, member FINRA/SIPC and provides the Fair Value analysis for CNBC each morning. The commentary provided in this Market Letter is intended to provide our current or potential customers with timely market analysis and should not be considered a research report. This Market Letter may contain, and is limited to: Discussions of broad based indices; Commentaries on economic, political or market conditions; Technical analysis concerning the demand and supply for a sector, index or industry based in trading volume and price; Statistical summaries of multiple companies’ financial data, including listings of current ratings; and, recommendations regarding increasing or decreasing holdings in particular industries or securities. This Market Letter does not make a financial or investment recommendation or otherwise promotes a product or service of the firm. This Market Letter contains only news, facts, and commentary on information previously reported from a news source believed to be accurate and reliable by the author. These news sources include the following: {Bloomberg Financial, Reuters, and Associated Press}. It is possible that at any given point in time, the author, Newbridge Securities, or one or more of its employees or registered individuals associated with Newbridge Securities, may hold a position, either long, or short, as well as options, bonds or other instruments in the companies mentioned in this report.