Daily Market Notes: 5-7-2021

In one of the more astounding days of trading lately, the major indices yesterday started out mixed to sharply lower in the morning, then started to recover in the early afternoon before making one of those historical very late upside pushes in the final hour to end with a new Dow all-time high and the S&P not very far behind.

The former began the session with a 45 point loss which then improved to a 105 point gain at 2:45pm. It was at that time that the upside fun and games began with a tremendous further upside push into the close which resulted in an astounding closing advance of 318 to a new record high of 34,548. It was led in this endeavor by advances in GS to a new record itself, in addition to HD, HON, newly rejuvenated IBM, JPM and lagging MSFT, of all things.

The S&P followed the same pattern with a 20 point loss in the morning before this index improved to a gain of 1 point at that crucial 2:45pm time as well. From there, it literally exploded to the upside and in the process ended with an astounding 34 point advance up to 4201, just short of its record 4211 from a couple of weeks ago. It now turned positive for the week after a shaky start to the month of May and is now higher in eight out of the past 10 weeks.

And how about the Nasdaq, which was lower by 133 to still down by 90 at 2:45pm and look at the disparity between it and the Dow at that time (+105 versus -90). But from there into the close, it also caught the upside fever and ended with a gain of 50 to 13,632 which prevented it from a fifth straight loss, which would have been the worst such streak since last October.

The Russell 2000 Index of small stocks had nothing going for it but was also able to recover from a decline most of the session to end unchanged at 2241. And how about the VIX, which went as high as 20.5 as stocks were on their morning low as previously mentioned, to finish with a decline down to 18.39.

Some healthcare stocks fell after news late Wednesday that the White House supports waiving intellectual property rights for coronavirus vaccines to help immunize poorer countries faster. That slide was countered by gains in household goods makers, banks and communication companies. For example, MRNA was lower after the company reported its first-ever quarterly profit, helped by the company’s coronavirus vaccine. The drop was largely tied to the news from the White House, as shares of other drug companies fell, including PFE which also dropped, nothing new here.

Stocks have mostly pushed higher on expectations of an economic recovery and strong profits this year. Massive support from the U.S. government and the Federal Reserve, and increasingly positive economic data, have also encouraged investors to push stock prices to all-time highs, despite an undercurrent of worry about inflation and the potential for higher interest rates later this year.

This week the earnings parade continues with the following, among others: yesterday  – WW, PYPL, VIAC, REGN, VIAC, K were higher while GDDY, RKT, ETSY, FSLY,UBER, TPR, NCLH, BKNG were lower; today – SQ, EXPE, ROKU, PTON, DDOG, AMC are higher while BYND, PLNT, SHAK and TRIP are lower.

Economic reports will be highlighted by the April jobs report today which was a doozy – yesterday –  weekly jobless claims broke to a new post-pandemic low of 498,000; Friday- April non-farm payrolls which showed the worst miss since 1998. Instead of the predicted one million with the unemployment rate down to 5.8%, it came in at only 266,000 with the unemployment rate going up at bit to 6.1%. This will be gone into in more details in this coming Tuesday, May 11th Weekly Market Comments 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.