Daily Market Notes: 4-29-2021

Yesterday saw another volatile day of trading in individual stocks and after all was said and done, the major indices ended mixed with basically nominal changes in either direction.

The Dow was lower all day but was able to rally off of triple-digit declines at 2:45pm when Fed Chairman Powell said during his news conference that this is not the time “to talk about tapering.” But from that best level of down 38, it eased back lower into the close and ended with a final decline of 164 to 33,820. It was hurt by large earnings-related declines in components AMGN, BA and MSFT, which basically accounted for the entire Dow decline just by themselves.

The S&P had been slightly lower for most of the day, then rallied as well to a gain of as much as 15 points at 2:45pm when it also succumbed to that late round of selling and ended with a nominal 3 points loss to 4183, still short of its record which could be overcome today.

The Nasdaq was on the weak side all session due to  negative AMGN and MSFT earnings reactions in addition to AMD going from a nice earnings gain on the opening to a lower close. It was also hurt by declines in NVDA, TSLA, ZM, ROKU and MU as well and ended down by 39 to 14,051 and it had also stuck its head into positive territory as well at 2:45pm. On the other hand, the declines were limited by a very strong gain in GOOG to a new high after its report. The index could make those losses back today on the heels of strong reports from AAPL and FB.

The Russell 2000 Index of small stocks traded narrowly on either side of unchanged and finally ended 3 points higher at 23.04. The VIX eased back down a little, perhaps in anticipation of today’s strong opening and ended at 17.28.

In its latest policy update, the Fed left its benchmark short-term rate near zero, where it has  been since the pandemic erupted nearly a year ago, to help keep loan rates down to encourage borrowing and spending. It also said that it would keep buying $120 billion in bonds each month to try to keep longer-term borrowing rates low.

The market has been mostly grinding higher in recent weeks, pushing stock indexes to record highs, as the rollout of COVID-19 vaccinations, the massive support from the U.S. government and the Fed, and a string of encouraging economic data fuel expectations for a better economy and solid corporate profit growth this year.

The expectations for a strong rebound, and rising prices for oil, lumber and other commodities, have also spurred concerns over inflation and the prospects for higher interest rates. Those worries have helped fuel a rapid rise in bond yields from where they were at the start of the year with the 10-year Note ending at 1.63% after starting 2021 under 1%.

In its remarks, the Fed noted that the economy and job market have “strengthened.” And, while it acknowledged that inflation has risen, the central bank said it sees the increase as transitory. Fed officials have said they want to see inflation exceed their 2% annual inflation target before they would consider raising rates.

Large earnings-related moves on the downside included SPOT, which sank 12.3% after the music streaming company announced that subscriber growth had slowed more than expected. On the other hand, SHOP rose by as much after its strong report.

The market did not seem to mind the President’s speech to a joint session of Congress last night at which is laid out several parts of his agenda such as increased infrastructure spending, likely increased taxes on the wealthy and higher funding for government programs. The $1.8 trillion program will also create universal access to pre-kindergarten schooling as well as provide support for child-care programs.

This week will see the following reporting: yesterday  – Dow components MSFT, AMGN and BA plus TXN, PINS, SBUX, DISCA, SPOT, AMD lower while GOOG, MDLZ, AMD, COF, SIX, BSX, WING, SHOP, GD plus Dow component V were higher; today Dow component AAPL higher in addition to FB, QCOM, KDP, CDCSA, TAP, KHC, DPZ, OSTK while F, EBAY, TREE, MO, TROW, SWI, MA PCG  in addition to  Dow component MRK are lower; tonight – AMZN, SWKS, GILD and TWTR; Friday – Dow component CVX plus COL, XOM.

Economic  reports will see: yesterday – results of F.O.M.C meeting are discussed above and will be dealt with in more detail in next Tuesday’s Weekly Market Comments; today – weekly jobless claims fell to a post-pandemic low of 553,000; initial estimate of 1Q G.D.P. came in at 6.4% with spending higher by 11% and the price index up by 3.5%, March pending home sales rose by 1.9%; 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.