Daily Market Notes: 4-7-2021

After staring out the month of April with consecutive all-time Dow and S&P highs, the market took a little breather yesterday although it was not for want of trying earlier in the session.

The Dow basically gave it up after a very brief trip into nominally positive territory early and then slid irregularly lower as the day moved on. As a result it ended lower by 97 to 33,430 led by declines in AMGN, BA (which invariably goes in the same direction as the Dow) and UNH.

The S&P tried to do better in the first part of the day with a gain of as much as 9 before it also eased back in the afternoon to end nominally lower with a 4 point decline to 4074. This loss snapped a three-day winning streak.  The Nasdaq really tried to do well earlier at a 74 point advance but it also got caught up in the late afternoon slide and finished down by 7 to 13,698. It was led lower by the FANG group but others from the stay at home group actually did well such as ROKU, ZM, PTON, CRWD, etc., which is somewhat ironic in the sense that the main theme of the market lately has been that of re-opening, go figure!

The Russell 2000 Index of small stocks also did little and ended 5 points down to 2259. It is still the upside leader this year with a 14.4% advance versus 8.5% for the large-cap S&P. The VIX rose only nominally to 18.12 on this down day because it actually went a little higher on the strong day to begin the week on Monday.

Much of the gyrations within the market lately are occurring as investors assess the health and speed of the economic recovery. Investors have been weighing concerns about higher inflation as the economy grows, along with expectations that retailers and other service sector stocks will make solid gains as the world moves past the pandemic and returns to some semblance of normalcy.

Bond yields fell as the 10-year Treasury Note slipped to 1.65% from 1.72% late Monday. Crude oil prices recovered a bit after Monday’s slide and ended at $59.27 a barrel.

The International Monetary Fund has projected that global economic growth will accelerate this year as vaccine distribution ramps up and the world rebounds. The 190-country lending agency said it expects the world economy to expand  by 6% in 2021, up from the 5.5% it had forecast in January. That would be the fastest expansion in IMF records dating back to 1980.

The JOLT’s, or job opening report said that openings  in February, a harbinger of healthy hiring and a hopeful sign for those looking for work, reached its highest level in more than two years. That upbeat report follows encouraging reports last week on job growth and improvements in the services sector, which is one of the hardest hit areas of the economy from the pandemic.

Swiss bank CS said that it now expects a $4.7 billion loss related to a default by a U.S. hedge fund. Two top executives are leaving the bank. They also suspended a stock buyback program and cut the dividend. The bank’s U.S.-listed shares, which already fell sharply last week after initial news of the default came out, rose a bit yesterday.

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: yesterday  – PAYX and PSX lower while ILMN and NIIU were  higher; today – LW is lower; Thursday – CAG, STZ, LEVI, WDFC.

Economic reports will have: yesterday – February JOLTS (job openings) rose to 7.4 million, the highest since January 2019; today  – release of minutes from last month’s Fed meeting, February trade deficit increased to a record $71.1 billion; 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.