Daily Market Notes: 4-28-2021

The fact that the major indices ended with nominal changes yesterday sort of obscures the fact that there were large moves in either direction for individual stocks that sort of balanced things out at the end of the session.

As a result, the Dow ended with a nominal gain of 3 to 33,984 after having taken the opposite pattern from the day before when it started with a large gain and then ended lower. Yesterday it began with a decline of 111 on the lows, then went positive at 2:30pm and reached its best level of the session with a 63 point gain at 3:40pm before fading back to finish as mentioned. It was led on the upside by gains in GS and MCD but restrained by an earnings-related decline in 3M.

The S&P sort of followed the same pattern with a morning decline of 11 which then saw a high of 6 points at 3:40pm as well before some very late selling left it with a nominal 1 point closing decline down to 4187.

The Nasdaq was the weak link after its record high close the day before as it could never get it together due to a horrible post-earnings reaction in TSLA, plus weakness in NFLX, NVDA and GOOG ahead of its report, as much to the chagrin of those who sold, it had a tremendous upside reaction and will start out today very strongly to further new all-time highs.

The Russell 2000 Index of small stocks made nominal moves on either side of unchanged and finished with a very late spurt to the upside to a final advance of 3 to 2301. The VIX sort of eased back down with a nominal decline to 17.56.

The S&P had made its 31st record high this year on Monday and barely missed a new one yesterday as the month of April continues the recent historical pattern of being a very good and reliable one for equities as the S&P is ahead by 5.4% as the month is coming to an end while the Nasdaq is ahead by 6.6% with three more trading days to go including today.

Investors expect U.S. corporate results due out this week to show stronger profits as coronavirus vaccines are rolled out and as consumer spending strengthens with an emphasis on the guidance that they are giving going forward later into this year and next.

The market has been choppy over the last few weeks as investors gauge how companies fared during the first quarter and any other information that can help paint a clearer picture of where the economy is headed. UPS jumped by10% for the biggest gain in the S&P after reporting another surge in delivery volumes as well as profits that came in well ahead of what investors were expecting.

Mighty TSLA, whose stock had soared over the past year, fell 4.5% despite reporting stronger sales of electric vehicles. It might now take a good while for it to overcome its all-time high of 900 from earlier this year. GE declined after the troubled industrial giant reported a double-digit drop in revenue and a quarter loss, as the company continues to struggle in its turnaround plan. GE’s stock has been volatile this year, but on the other hand it has gained as much as 80% from last year’s lows.

Beyond earnings, investors are watching the latest economic reports for more clues about the pace and scale of the economic recovery. Consumer Confidence rose sharply for a second straight month in April, hitting the highest level since the pandemic began. Meanwhile, the CaseShiller Home Price report showed that they rose in February at the fastest pace in nearly seven years as strong demand for housing collided with a tight supply of homes on the market.

We will get the results of the F.O.M.C. meeting today at 2pm as investors expect the U.S. central bank to keep its key lending rate close to zero and keep injecting more money into the financial system through bond purchases.

Also in Washington, the market will be paying attention to the President’s speech to a joint session of Congress tonight. He is expected to lay out several parts of the agenda, which will include increased infrastructure spending, likely higher taxes on the wealthy as well as higher funding for government programs.

Bond yields rose with the 10-year Note up to 1.62% from 1.57% on Monday.

This week will see the following reporting: yesterday  – TSLA, GE, LLY, HAS, SHW, JBLU and Dow component 3M were lower while UPS, RTX, PENN and CROX were higher; today – Dow components MSFT, AMGN and BA plus TXN, PINS, SBUX, DISCA, SPOT are lower while GOOG, MDLZ, AMD, COF, SIX, BSX, WING, GD plus Dow component V are higher; BA; tonight – Dow component AAPL in addition to  F, QCOM, FB, SHOP,ALGN, GRUB, EBAY, TDOC, ORLY, NOW, MGM; Thursday – Dow components CAT, MCD and MRK plus MO, AMZN, BMY, MA, NEM and TWTR; Friday – Dow component CVX plus COL, XOM.

Economic  reports will see: yesterday  – April Consumer Confidence rose to a post-pandemic high of 121.7, February CaseShiller Home Price Index rose by 14%; today – results of F.O.M.C meeting; Thursday – weekly jobless claims, March pending home sales; Friday – March personal income and spending, final U. of Michigan Consumer Sentiment Survey, April Chicago Purchasing Managers’ Index.

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.