Daily Market Notes: 4-12-2021

In one of the more astounding sessions in a series of recent astounding ones, the major indices which were trending higher, made one of the hardest to believe upside moonshot at 3:15 to end at further all-time highs for the Dow and S&P once again.

For example, the S&P was ahead by 11 at 3:15pm before a sudden violent upside push resulted in a 20 point further advance in those last 45 minutes to finish at a new record high of 31 to 4129. It was the fourth record high last week and its third straight weekly gain.

The Dow did the same thing as a 159 point advance at that time ended in a closing gain of 297 to a new record of 33,800. It was led by strong advances in HD, HON and CRM.

The Nasdaq was sort of the weaker one as it had the nerve to be lower by 81 in the morning but also got caught up in the bullish mania and ended with a 71 point advance to 13,900 and is now less than 2% below its all-time high after having fallen into correction mode with a 10% decline last month. And once again it was the old-time FANG stocks that led the upside while the stay at home heroes of last year, which have shown some signs of strength lately after most of them had fallen into bear markets of their own, lagged once again.

And the Russell 2000 Index of small stocks did nothing and managed to get caught up in the higher drive at the end to finish with a 1 point closing advance to 2243. It is still the leader this year with a 13.6% advance while the S&P is ahead by 9.9%, but the differential has been narrowing a bit lately. And how about the VIX, which continues to sag lower as the S&P moves higher and is now at a 15-month low of 16.69.

Stocks have benefited this week as bond yields, which had been steadily ticking higher, retreated from highs hit earlier in the month. This was particularly important on Friday as a strong March P.P. I. report with a gain of 1% and the core rate excluding food and energy  got the year over year advance up to 4.2%, well above the Fed’s target. But bond yields, which had jumped in the morning after this report, cooled off a bit as the 10-year Note rose only one basis point to 1.67% which was probably the reason that the tech stocks did better.

The market’s latest gains are in line with the upward tack this week as investors weigh concerns about the virus tripping up a steady economic recovery against progress in vaccinations and business re-openings.

Investors are showing cautious optimism about the economic recovery, especially in the U.S., where vaccine distribution has been ramping up and President Biden has advanced the deadline for states to make doses available to all adults to April 19th.

In remarks to the International Monetary Fund Thursday, Federal Reserve Chair Powell said a number of factors are putting the nation “on track to allow a full re-opening of the economy fairly soon.”

Investors will turn their attention to quarterly results this week when earnings season gets underway full-steam ahead. Estimates are rising as for instance the expectation is for around  24%, compared with the view back in September that companies in the S&P would see 13% earnings growth.

And as mentioned, the lineup is as follows: Tuesday – FAST; Wednesday – BBBY, Dow components JPM and UNH plus WFC; Thursday – BAC, BLK, SCHW, C, DAL, PEP, USB, RAD; Friday – BNY, KSC, PNC, MS.

Economic reports will have: Tuesday – March C.P.I.; Wednesday – March import and export prices, Fed Beige Book, April NAHB Housing Market Index; Thursday – weekly jobless claims, March retail sales, March industrial production and capacity utilization; Friday – March housing starts and building permits, mid-month 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.