Daily Market Notes: 4-13-2021

After Friday’s bizarre late rally to new all-time highs in the Dow and S&P, things traded mostly lower all day yesterday as the major indices ended with nominal losses as advances of the sort that took place last week perhaps cannot be sustained at the present time. This of course could change for the better or worse once we hear from some major companies later this week on earnings.

The Dow traded in a relatively narrow range of between declines of 135 and 14 before ending  quietly lower as it was hurt by losses in BA, CRM and INTC. The S&P tried to extend its record close from last Friday by going positive a couple of times during the day by 3 points after having been lower by 14 and finally ended with a very nominal decline of 1 down to 4128. The Nasdaq was lower all session as losses in GOOG, NFLX and AAPL occurred after their recent strong runs, while BIDU, ROKU, ZM and BKNG, all of which have gone nowhere lately, all eased back a bit as well.

The Russell 2000 Index of small stocks also did little and ended lower by 10 down to 2234 while the VIX rose nominally up to 16.91, still not giving back much of its recent declines as the Dow and S&P rose to records a few times last week.

Bond yields inched higher with the 10-year Note at 1.68% which did not seem to have an effect on anything, after easing most of last week. Investors have been focusing on the economic recovery as well as the risks that higher inflation pose to consumers and companies. Those concerns have helped push up bond yields for much of this year.

Monday’s pullback snapped a three-day winning streak for the S&P, which closed out last week with its third straight weekly gain.

Technology has been very choppy lately as investors shift money to other industries that could see solid gains as the economy recovers. Rising bond yields have also made technology stock values look pricey after months of big gains.

Traders 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.

While many economists are projecting a strong economic rebound this year, some companies that stand to benefit from the reopening of the economy were among the decliners Monday, such as the cruise liners and other travel-related issues.

NUAN soared by 16% after MSFT said it would buy the speech technology company for about $16 billion. BABA jumped by 9% after the Chinese conglomerate said it would restructure its Ant Group financial affiliate in order to placate Chinese government regulatory concerns.

As listed below, the main earnings area this week will be the large banks. Investors expect big profits for them, mostly due to rising interest rates and the ability for these banks to move loans that went bad in the early weeks of the pandemic back onto the “good” side of their balance sheets. The question will be – have their strong advances already discounted any good news that they are expected to provide?

Profits for the first-quarter are now expected to grow by 24%, compared with the view back in September that companies in the S&P would see 13% earnings growth.

The lineup is as follows: yesterday – APHA lower; today – FAST lower; 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: today – March C.P.I. rose by 0.6% which was the highest since June 2009 while the core rate which excludes food and energy was up by 9.3%. The overall rate is now higher by 2.6% year over year while the core rate is up by 1.6% for this same time period; 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.