Daily Market Notes: 4-19-2021

And what else is new as once again both the Dow and S&P rose nicely during the course of the session on Friday and ended at new closing highs for both, as the Nasdaq got closer to ending at its best level as well. It was also the fourth straight higher week for the first two and the third straight better week for the latter, so April is certainly holding up to its reputation as being a strong month for the market as it has finished higher during this time in 14 out of the past 15 years.

But bond yields rose a bit from their lows earlier in the week when the 10-year Note got down to as low as 1.53% and it ended on Friday at 1.59%, so this might have put some pressure on technology stocks, many of which still made good gains for the week as these yields are still lower than the 1.76% reached  a couple of weeks ago when all of the so-called “experts” were falling all over each other to predict when this item would reach 2 – 2.5% which still might happen, but certainly not in the near-term.

The Dow ended up by 164 to a best-ever 34, 200 led by advances in GS, HD at records in addition to HON. The S&P gained 15 to a record 4185 while the Nasdaq advanced by only 13 as it was restrained by declines in AAPL, NVDA after its tremendous move to record highs and NFLX. On the other hand, it was supported by gains in MSFT, BIDU, ADBE and BKNG.

The Russell 2000 Index of small stocks eked out another small gain of 5 up to 2263. And the VIX kept inching down to 16.25, the lowest in 14 months before things collapsed last February and March.

Stocks have rallied in recent weeks amid a string of encouraging reports on hiring, consumer confidence and spending that point to an accelerating U.S. economy. COVID-19 vaccinations and massive support from the U.S. government and Federal Reserve are fueling expectations for solid corporate profit growth as more businesses re-open after being forced to close or operate on a limited basis due to the pandemic.

The last round of stimulus from the government helped lift retail sales, and investors now have to weigh other proposals in Washington, which include investments in infrastructure and potential tax changes.

Investors also continue to be focused on the global economic recovery. China’s economy expanded at a strong annual pace of 18.3% in the first quarter of the year, the government reported Friday. The world’s second-largest economy contracted, as most of the world did, during the first months of the pandemic.

Homebuilder stocks moved broadly higher Friday after it was reported that March housing starts rose to 19.4% which was the fastest pace since 2006 while building permits, an indicator of future activity, increased by 2.7% to a seasonally adjusted annual rate of 1.77 million units. As a result, DRI and KBH made nice gains.

Several companies rose after reporting solid earnings. Paint and coatings maker PPG Industries jumped by 9% for the biggest gain in the S&P after easily beating forecasts while JBHT also advanced. On the other hand, MS declined after its solid results.

Crude oil eased back a bit to $63.21 a barrel while gold made a nice move higher from under $1,700 an ounce a few weeks ago and ended at $1,780 and this was due to the overall lower bond yields this week which always helps the precious metal.

The market is now heading into the busiest two weeks of the earnings reporting season as this week alone there are 72 S&P companies reporting which includes 10 Dow components. The lineup is as follows: today – Dow components KO higher in addition to HOG, IBM lower in addition to UAL; Tuesday – Dow components JNJ, PG and TRV plus ISRG, LMT, NFLX, PM; Wednesday – Dow component VZ plus CMG, LRCX; Thursday – Dow components DOW and INTC plus AAL, T, FCX, LUV and UNP; Friday – Dow components AXP and HON plus KMB and SLB.

Economic reports include: Thursday – weekly jobless claims, March existing home sales, March L.E.I; Friday – March new home sales.

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.