Daily Market Notes: 3-23-2021

After last Friday’s manipulated quarterly “witching hour” close, in which the Dow and S&P ended negative, things did much better yesterday to start the new week, although there was a late fade off of the best levels as well, although not quite as severe as Friday’s.

The Dow began with a 115 point early decline based on continued movement back into recently beaten-down technology issues, and this reversal actually began on Friday. But then gains in other Dow components away from the financials turned things around to the point where this index was showing a gain of as much as 182 points at the 3pm high before another late slippage resulted in a final gain of 103 to 32,731. The advances were led by AMGN, MSFT and MCD while recently strong BA, GS and JPM declined on a further drop in the 10-year Note yield down to 1.68% after it had gotten as high as 1.75% last week.

The S&P did better, from a small gain at the start to a strong advance of 42 on the 3pm high which also could not be sustained and it ended at 27 better up to 3940. The hero of the day for the second straight session was the recently weak Nasdaq which had been lower for four of the previous five weeks and is perhaps ready to do better after this decline as the high-flying technology and stay at home issues have now found some buying support after their bear market declines and corrections in many cases.

As a result, the Nasdaq ended with a closing advance of 162 to 13,377 although this was also off of its best level as well. And the former tech leaders such as AMZN, AAPL, FB, GOOG did well for a recent change along with some of the stay at home issues such as PTON, ROKU and ZM, but they still lack that former upside zest, so to speak as they appear to have topped out and hopefully will build bases for perhaps more moderate advances. But this will be now a function of how the bond market reacts going forward, with all of the economic growth and inflation worries that lie ahead that might influence Fed policy one way or the other.

A steady rise in bond yields over the past month had been luring investors away from high-flying tech stocks, but traders have also been quick to snap up these issues on days when bond yields decline or only rise slightly.

The prospect of higher interest rates as bond yields rise has some investors concerned that economic growth could slow. There are also worries that the rise in bond yields could be a harbinger of inflation. But if rates are rising on signs of better economic growth, this should not be an impediment for further equity gains.

After their recent strength, shares in several travel-related companies, including airlines, cruise operators and booking sites, fell. CCL slid by 5%, while AAL dropped by 4.6% and EXPE lost 4%.

The U.S.-traded shares of British drug company AZN rose by 4% after British and U.S. health officials said the company’s COVID-19 vaccine was safe and earlier reports of blood clots were outweighed by the health benefits of the vaccine.

KSC jumped by 11% for the biggest gain in the S&P after a Canadian railroad announced it would buy the company for $25 billion. APO rose by 4.5% after the private equity company announced that its longtime chairman Leon Black would be retiring. Black’s reputation had been damaged in the last couple of years by his association with disgraced financier Jeffrey Epstein.

The Turkish lira got rocked lower by 8% after the country’s president, Recep Tayyip Erdogan, fired his third central bank head in less than two years over the weekend. The latest abrupt change raised concerns about a possible return to the unconventional monetary policy favored by the Turkish president.

This week sees a few earnings reports before the start of the first-quarter reporting season in April, two weeks away. The lineup is: tonight – ADBE and GME, which should be interesting due to all of the wild gyrations that this one has shown these past few months; Wednesday – GIS, KBH, RH; Thursday – DRI.

Economic reports will have: yesterday – February existing home sales fell by 6.6%; today –  February new home sales fell by 18.2%; Wednesday – February durable goods orders; Thursday – weekly jobless claims and third and final estimate of 4Q G.D.P. at 4.1%; Friday – personal income and spending, final March U. of Michigan Consumer Sentiment Survey. 

Donald M. Selkin

Chief Market Strategist

 

Disclosures:

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.