April 24, 2021
Market Recap Week Ending April 23
Monday – Dow (123) to 34,077, Nasdaq (137) to 13,914 and the S&P (22) to 4,163. All three indices traded down perhaps still trying to digest recent gains or perhaps in response to the massive sell off in crypto assets over the weekend. Bitcoin was down almost 20% at one point before rebounding slightly to down 17%. Ten of the eleven S&P sectors traded negatively today with the sole exception of Real Estate. The 10-year yield bounced 4 bp to 1.62%…Coca-Cola (KO) beat both revenue and earnings expectations and traded up modestly…IBM (IBM) beat both top and bottom-line expectations as well. Revenue growth was the strongest since 2018. The stock traded up 3% post close…United Airlines (UAL) traded down 2% after hours, after reporting losses that exceeded analysts’ expectations….
Tuesday – Dow (256) to 33,821, Nasdaq (128) to 13,786 and the S&P (28) to 4,135. The red numbers continued today with all three indices trading down. Seven of the eleven S&P sectors traded negatively led by Energy. Utilities and Real Estate led the four other sectors higher…The 10-year yield dipped back down to 1.56%. Concerns over Covid-19 seemed to have spooked the market; the seven-day moving average of infections rose 63% to 628k vs 384k on February 28th and there are rumors that India’s Prime Minister Modi, is going to announce a full national lockdown. Johnson and Johnson (JNJ) reported earnings that beat top and bottom-line expectations; the stock traded up 2.3%…Proctor and Gamble beat on sales and earnings, announced a price hike in certain product categories to go into effect in the fall, and the stock traded up 0.83%…Netflix (NFLX) traded down 9% after hours because they handily missed their subscriber growth numbers. It wasn’t all bad for the streaming giant; revenues for the first quarter nearly exceeded those for all of 2019 and earnings beat estimates by 26%…Lockheed Martin (LMT) missed slightly on revenues but raised full year revenue and earnings guidance….
Wednesday – Dow +316 to 34,137, Nasdaq +163 to 13,950 and the S&P +38 to 4,173. Investors bought the dip today. After two straight down days, investors raced in to buy newly discounted shares. All three indices rose in a broad-based rally that saw 82% of the stocks in the S&P rise and 26 of the 30 components of the Dow trade higher as well. Materials and Energy led nine of the eleven S&P sectors higher. Only Communication Services and Real Estate traded lower today. The 10-year continued to retreat, down 2 bp to 1.54%…Chipotle Mexican Grill (CMG) reported in-line revenues and an earnings beat; the stock traded up modestly after hours…Verizon (VZ) lost 178k wireless subscribers, more than what was expected but beat on earnings and revenues; the stock traded down slightly post-close…Nasdaq (NDAQ) also beat top and bottom-line numbers and it too, traded down slightly post-close…Teradata (TDC) was supposed to announce earnings tomorrow but pre-announced post-close and crushed their numbers. The company announced earnings of more than 4x expectations and revenues 20% higher than expected. TDC traded up 33% after hours….
Thursday – Dow (321) to 33,815, Nasdaq (131) to 13,818 and the S&P (38) to 4,134. The market was doing just fine, continuing yesterday’s rally, when word leaked that President Biden is proposing raising the top individual tax bracket to 39.6%, where it was prior to the 2017 Tax Cuts and Jobs Act. Further, under this plan, long term capital gains taxes would rise from 20% to 39.6% for those households earning more than $1 million. All three indices promptly reversed, and all closed down nearly 1%. All eleven S&P sectors traded down, with Materials, Energy and Technology the worst performers. Jobless claims beat expectations handily for the second week in a row. Claims totaled 547k vs expectations of 603k and vs last week’s print of 586k…Existing home sales fell 3.7% in March, again like last month, due to lack of supply. The average home is on the market for a mere 18 days, beating last month’s record by 2 days. The average price of a home rose to $329,100, a 17% increase year over year (a new record high and the fastest pace of appreciation on record)…AT&T beat top and bottom-line expectations and traded up 4.15%…Las Vegas Sands missed its revenue number and fell 4%…Snap Inc (SNAP) beat on all metrics and traded up nearly 5% post-close…American Air (AAL) missed on top and bottom-line numbers, but reported that it has reduced its cash burn rate from $27 million/day in the first quarter to $4m/day by late March. AAL traded down 4.47%….
Friday – Dow +227 to 34,043, Nasdaq +198 to 14,016 and the S&P +45 to 4,180. The markets shrugged off their fears of increasing taxes and focused instead on more excellent economic news. The Markit Manufacturing PMI (purchasing manager’s index) printed at 60.6 for April ahead of estimates of 60.5. A reading above 50 indicates year-over-year expansion. The Services Index was even better at 63.1 vs expectations of 61. In addition, New Home Sales for March were 1.02 million, easily beating the 880k consensus estimate despite a challenging environment of rising building costs and scarce building materials. Inventory fell to 307k new homes for sale across the nation, 44.6% fewer new homes for sale than in March 2020. Financials, Materials, and Tech led nine of the eleven S&P sectors higher. The only two sectors to trade down were Consumer Staples and Utilities…Intel Corp (INTC), demonstrating how the market is “priced for perfection,” beat both top and bottom-line numbers handily last night but analysts focused on their data-center sales which dropped more than 20%; the stock was a rare underperformer in a sea of green today, down 5.32%
The week in review…Dow (157) or (0.45%), Nasdaq (36) or (0.25%), and the S&P (5) or (0.11%). This week felt a whole lot worse than it actually was. After last week’s performance with all three indices climbing over 1%, this week, the markets consolidated their gains and were for all intents and purposes flat. Earnings and economic data continue to be strong. According to Refinitiv, 86% of companies that have reported thus far have beaten their earnings estimates. When it is all said and done, profits are expected to be up 33.9% in the first quarter with revenues up 9.9%. Further, after much gnashing of teeth over whether the 10-year Treasury would continue its meteoric rise, it has settled into a range between 1.50% and 1.75% and closed on Friday at 1.56%, down 2 bp from last Friday, despite all the bullish news…The massive Covid-19 resurgence in India bears watching and serves as a warning to the rest of the world. Today, its Health Ministry announced 346,786 new infections OVERNIGHT, a third consecutive world record, and hospitals across the nation are either out or running dangerously low on oxygen. The military has been engaged to deliver oxygen to the more remote areas of the country, but even so, cities such as Jaipur and Amritsar are reporting deaths due to lack of the gas.
What we are watching next week…the heart of Q1 earnings with 180 S&P members reporting including all the Big Tech names and Fed Chair Jerome Powell’s comments upon the conclusion of the Fed’s two-day Open Market Committee meeting on Wednesday.
Monday – Tesla (TSLA).
Tuesday – Alphabet (GOOG), Microsoft (MSFT), Starbucks (SBUX), Advanced Micro (AMD), Federal Open Market Committee meets.
Wednesday – Apple (APPL), Boeing (BA), Facebook (FB), Ford Motor (F), Comments expected by Fed Chair Jerome Powell.
Thursday – Amazon (AMZN).
Friday – Exxon (XOM), Chevron (CVX), Clorox (CLX), Colgate (CL).
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Disclaimer: This is not a recommendation to either buy or sell any of the securities listed above. I personally, or a family member’s account for which I control, own the following…Bitcoin (coin), Cardano (coin), Chainlink (coin), Ethereum (coin), ETHE, GBTC, TSLA, and WKHS.