Daily Market Notes: 4-8-2021

The major indices sort of chopped around yesterday but with clear winners and losers and ended close to their best levels of the session with a bit of a positive late recovery.

For instance, the Dow was lower by 53 points at 3:35pm but then decided that it liked the upside and made a very late push into positive territory and ended with a closing advance of 15 to 33,446. It was led by nice gains In JPM and MSFT.

The S&P followed a similar pattern and was lower by 2 points at that time and then decided that it wanted to try the upside and ended 5 points higher to 4080 which was a record high level for the 18th time this year. It was helped in this endeavor by continued good gains in the FANG group which is waking up after taking the first-quarter off as investors started to buy the re-opening value cyclical types of stocks which did well during that time such as energy, financials and travel issues.

Despite the Nasdaq ending lower, the Nasdaq 100 Index, which is loaded with these large technology issues such as MSFT, GOOG and FB at new highs and AAPL and AMZN, did well with a 38 point advance.

The broader market has been mostly subdued this week as investors remain cautiously optimistic about the economic recovery. Vaccine distribution has been ramping up and President Biden has bumped up his deadline for states to make doses available to all adults by April 19th. The vaccines are helping to fuel a recovery, but the virus is still very much a threat as variants are discovered and threaten additional lockdowns.

The Russell 2000 Index of small stocks sold off again with a 36 point decline down to 2223 but is still higher by 12.6% so far this year, while the S&P is ahead by 8.6%.

Analysts expect the economy to recover this year, but they also anticipate the market to remain choppy as investors shift money to companies and industries that stand to benefit as the pandemic eases.

CCL, which essentially shut down during the pandemic, gained as the company said bookings have picked up. Other cruise line operators also gained ground as they plan to re-start operations.

The yield on the 10-year Note inched up to 1.66% after moving up and down for much of the day. A sharp increase in bond yields since the beginning of the year reflects a growing concern among investors that inflation could return as economic growth heats up and the U.S. pulls out of its pandemic-induced recession.

The minutes of last month’s F.O.M.C. meeting revealed that Fed officials were encouraged by evidence that the U.S. economy was picking up, but they showed no sign of moving closer to ending their bond purchases or lifting their benchmark short-term interest rate from nearly zero.

Fed policymakers also said they expect inflation will likely rise in the next few months because of supply bottlenecks, but they believe it will remain near their 2% target over the longer run.

They seem to be focusing on the labor market to justify holding rates at close to zero as they mentioned that they are “far from achieving their employment goal.” The minutes are from the  Fed meeting that came before last week’s March jobs report, which showed a surprisingly strong 916,000 positions were added that month, the most since August while the unemployment rate fell to 6% from 6.2%.

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  – LW lower; today – STZ lower; tonight – CAG, LEVI, WDFC.

Economic reports will have: yesterday – release of minutes from last month’s Fed meeting (see above), February trade deficit increased to a record $71.1 billion; today – weekly jobless claims rose again to 744,000 but continuing claims fell to 3.73 million which was the lowest since March 2020; 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.