Daily Market Notes: 4-22-2021

Well, well, well – after two sharply lower days to start the week, the bullish forces once again took control of the market yesterday, as after a lower start to satisfy those who felt the need to sell after the two down days, things turned around dramatically to the upside and kept pushing right into the close to end at the best levels of the day.

The Dow began with a 47 point loss which was quickly reversed to the upside within 15 minutes and from there it just kept going and going higher. And in a pattern that we have seen often lately on up-days, it was ahead by 200 at 3:10pm, from which level it exploded late once again to finally end at its best level with a 316 point gain to 34,137. It was led by gains in CAT, continued advances in IBM after its report and UNH as well.

The S&P followed a similar pattern, as a 9 point early decline got reversed as well and from there it was up, up and away as a 26 point advance at 3:10pm turned into a final 38 point gain up to 4173. It was helped by good gains in many of the technology leaders.

The Nasdaq exhibited the largest turnaround as it was 80 points lower to start and got to a 100 point advance at 3:10pm before continuing to spurt and finally finished with a 164 point gain to 13,950. It was helped through buying in the larger technology leaders although the stay at home type issues such as PTON and ZM continued to lag on the re-opening of the economy theme.

The Russell 2000 Index of small stocks, which did very poorly to start the week, was higher from the start and finally ended with a closing advance of 51 to 2239. And naturally the VIX went lower after jumping on the first two down market days of the week and ended at 17.29, still above last Friday’s low of 16.25 on the record highs in the Dow and S&P. And breadth numbers were very strong at a 5 to 1 upside ratio.

The yield on the 10-year Note held steady at 1.56% while crude oil was lower at $61.10 a barrel and gold continued its recent upside move and reached $1,785 an ounce.

Much of the market’s focus over the next two weeks will be on individual companies and how well their quarterly results turn out. This week roughly 80 members of the S&P are due to report results, as well as one out of every three members of the Dow. On average, analysts expect quarterly profits across the S&P 500 to climb 24% from a year earlier.

CSX said its first-quarter profit fell because of higher expenses, but it expects to benefit as the U.S. economy strengthens further over the rest of the year. As a result, it gained 4%. Health care stocks helped lead the broader market higher after several companies reported solid financial results. Surgical device maker ISRG gained 10% after handily beating analysts’ first-quarter forecasts. Medical device maker EW rose by 6% after also reporting strong financial results.

The big loser was NFLX, which  slumped by 7% for the biggest decline in the S&P as the video streaming pioneer disappointed investors with its latest report on subscriber additions, which came in below its own forecasts. The gangbuster growth it had seen during the pandemic appeared to be slowing as people start leaving their homes more and as competition from rival services picks up.

The market is now in the busiest two weeks of the earnings reporting season as this week alone there are 81 S&P companies reporting which includes 10 Dow components. The lineup is as follows: yesterday –  NFLX, ANTM and Dow component VZ lower while ISRG, NDAQ were higher; today – T, LUV, AAL, BIIB, BX, ALK, WHR, SAVE, TDC higher while UNP, LVS, CMG,  FCX and Dow component DOW are lower; tonight – Dow component INTC in addition to SNAP and SAM; Friday – Dow components AXP and HON plus KMB and SLB.

Economic reports include: Thursday – weekly jobless claims fell to a new post-pandemic low of 547,000; March existing home sales fell by 3.7% but year over year are higher by 12.3%, March L.E.I gained by 1.3%; 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.