Daily Market Notes: 4-6-2021

After the long holiday weekend, at which time the Dow and S&P had set record highs on Thursday before the Good Friday holiday, the market continued the upside party yesterday to begin the new week with even more record highs in these two items in addition to the Dow Jones Transports.

The upside yesterday was motivated by the strong March jobs report which came out on Friday when the market was closed, so investors finally had their chance to react to it and it was a very favorable reaction indeed.

The Dow opened higher and was able to maintain itself at the better levels all session and finally ended with a closing advance and new record at up 374 to 33,527. It was led by (who else?) BA, HD, MCD, MSFT, UNH and WMT.

The S&P joined the upside party with a very strong advance of 58 to a record 4078 for the 17th time this year and as was previously mentioned, when the S&P advances by more than 5% during the first-quarter of a year (it was 5.8%), there is an 81% probability that it will end the year higher, so history is on the side of the market this year as well. And April has been the beset month for stocks lately, with gains in 14 out of the past 15 years, so the market is so far following history here as well.

The Nasdaq gained 225 to 13,705 and is now 4.4% from a record after having slipped back into a 10% correction last month after that very weak February and March slide due to former large cap technology leaders going to sleep, so to speak as investors rotated into cyclical value types of issues like energy, financials, travel issues and so on.

The Russell 2000 Index of small stocks lagged with “only” a 9 point advance to 2263 but is still the upside leader with a 14.7% gain this year versus the S&P at 8.6%. The VIX actually had the nerve to rise a bit up to 17.9, which is really unusual on such a record setting upside day but perhaps it had gotten too low on Thursday.

The main upside motivation was the March jobs report which showed a gain of 916,000 positions, the most since last August and the unemployment rate declining to 6%.Another positive report was that the March ISM Services Index rose to 63.7 which was one of the highest readings in over 30 years.

Both employment and the services industry have been lagging other areas of the economy throughout the recovery. Investors believe that both need to show signs of growth in order for the recovery to remain on track. COVID-19 and the potential for a spike in cases remains a concern, but the strong rollout of vaccinations is making an eventual return to normal for many people seem clearer and closer.

The gains were widespread, with nearly every sector ending higher. Companies that stand to benefit from a broader reopening of the economy and economic growth did well, such as NCLH  which jumped  by 7% for the biggest gain in the S&P as it seeks permission to re-start cruises out of U.S. ports in July with a vaccination requirement for passengers and crew members. Others such as CCL and RCL also did nicely.

TSLA made a nice gain on a report that vehicle deliveries more than doubled in the first quarter and it rose by over 4%. Energy companies lagged the broader market as crude oil prices fell to under $59 a barrel. This caused OXY and MRO to decline between 8% and 5%. And beloved (by some) GME fell after announcing a secondary stock offering.

Bond yields were mostly lower with the 10-year Note down to 1.71% from 1.72% late last week and this is what probably helped the technology stocks to do so nicely.

This is the week before the flood of first-quarter earnings start to appear next week and is a light one with the following lineup: today  – PAYX and PSX lower while ILMN and NIIU are higher; Wednesday – LW; Thursday – CAG, STZ, LEVI, WDFC.

Economic reports will have: yesterday – March ISM Services Index rose to 63.7 which was the highest ever, February final durable goods orders were lower by 1.2%, February factory orders slipped by 0.8%; today – February JOLTS (job openings) rose to 7.4 million, the highest since January 2019; Wednesday – release of minutes from last month’s Fed meeting, February trade deficit; Thursday – weekly jobless claims; Friday – March P.P.I. report. 

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.