Monday, May 3, 2021 – DIA 341.11 +.64%, QQQ 336.19 -.53%, SPY 418.20 +.22%
ISM manufacturing index indicated a slower pace of manufacturing than expected 60.7 v. 65, still showing an expansion but at a moderated pace. ISM Manufacturing Employment Index came in weaker than anticipated 55.1 vs. 61.5 as well. (Some analysts have pointed to government social payments acting as a competing force against employers' ability to find people willing to work). Energy (XLE) 50.75 + 2.75% was the top sector on the day. Also exhibiting strength was Basic Materials (XLB) 84.28 +1.49% Even though the 10-year government note was lower in yield (TNX) 16.07 -.24 (down 24 basis points equivalent), it did not boost Technology (XLK) 139.31 -.28% nor Communications (XLC) 77.62 -.53%. The market exhibited a defensive rotation with a hint of inflationary expectations. Upside standouts on the day were oil services provider Baker Hughes (BKR) 21.69 +8.02%, and building materials producer Mohawk Industries (MHK) 221.00 +7.54% which beat earnings and revenue. Internet retailer eBay (EBAY) 58.15 +4.23% reasserted strength after last week’s drubbing on poor management guidance. On the downside, Advanced Micro Devices (AMD) 75.55 -3.76% has continued to slide since their earnings call last week. The stock has actually underperformed since December. Estee Lauder (EL) 288.93 -7.93% beat earnings expectations, but got hammered as investors focused on poor sales trends.
Tuesday, May 4, 2021 – DIA 341.49 +.38, QQQ 330.14 -1.80%, SPY 415.62 -.62%
Goods and Services Trade Balance came in as expected with a deficit of $74.4 billion for March (which is larger than the year-ago period at the start of the pandemic). Factory orders were light of expectations at a growth rate of 1.1% v. 1.3% consensus. Basic materials (XLB) 85.20 +1.09% led the market along with Financials (XLF) 36.73+.80%. Basic materials & chemical provider Dow Inc. (DOW) 66.22 +2.59% led the DJIA. Technology (XLK) 136.81 -1.79% was the laggard sector. Personal technology provider Apple Inc (AAPL) 127.85 -3.54% was the worst performer in the DJIA. The star performer on the day was information technology services provider Gartner, Inc. (IT) 225.49 +14.22% which beat on earnings and guided higher. The big disappointment on the day was Biotech firm ChemoCentryx (CCXI) 36.63 -45.45%, which lost nearly half its value after the company document to the FDA showed several areas of concern regarding its development stage vasculitis drug, Avacopan.
Wednesday, May 5, 2021 – DIA 342.28 +.79, QQQ 329.03 -.34%, SPY 415.75 +.03%
Equity markets were mixed and consolidating from the lows of April 23. Even in the face of lower interest rates on the 10-year government note index (TNX) 15.84 -.50% (down 50 basis points equivalent), Technology (XLK) 136.48 -.24% did not respond. Energy (XLE) 52.42 +3.23% was the best performing sector on the day with Devon Energy (DVN) 25.23 +7.59% leading the S&P500 index higher after reporting promising earnings. Oil services firm Schlumberger (SLB) 30.34 +6.87% was also strong and hit a new recovery high. Sports fashion retail firm Under Armor (UA) 21.13 +7.15% beat on earnings and revenue as sales rebounded dramatically. Copper & Gold company Freeport McMoRan (FCX) 41.54 +5.92% hit another new high. On the downside, risk analytics consulting firm Verisk (VRSK) 172.63 -8.43% missed slightly on revenues and earnings, and the stock was pummeled as a result.
Thursday, May 6, 2021 – DIA 345.51 +.94%, QQQ 331.51 +.75%, SPY 419.07 +.80%
Initial Jobless Claims dipped to 498K v. 540K expected, giving a boost to the presumption that the recovery from the pandemic was taking hold. Interest rates continued to decline (TNX) 15.61 -.23 (10 Yr. note Index down 23 basis points). Ignoring the lower interest rates, Financials (XLF) 37.55 +1.49% led the market by sector. While Consumer Staples (XLP) 70.64 +1.29% were also strong. Cisco Systems (CSCO) 52.44 +2.56% led the DJIA. The stock pivoted out of a pullback and closed above the 20-day moving average. Cisco reports earnings 5/19. T-Mobile US (TMUS) 138.88 +3.54% beat on earnings and raised guidance. The stellar performer on the day was Liquidity Services (LQDT) 25.83 +37.69%. The online surplus goods auctioneer beat earnings and revenue estimates. On the downside Etsy, Inc. (ETSY) 157.68 -14.57% beat handily both earnings and revenue expectations but lowered guidance for the next quarter. Cloud website design provider Fastly, Inc. (FSLY) 42.31 -27.13% was pounded on missed earnings and revenues. The stock broke a declining triple bottom pattern.
(The Federal Reserve released a statement stating that risk assets may be vulnerable to a decline. Years ago, former chairman Alan Greenspan made a similar pronouncement as to the “irrational exuberance” of stock market participants. A considerable amount of time passed before he was proven correct.)
Friday, May 7, 2021 – DIA 347.88 +.69%, QQQ 334.20 +.81%, SPY 422.09 +.72%
Non-Farm Payrolls came in far weaker than expected 266K v. 978K. The Labor Force participation rate ticked up to 61.7% for April v. March at 61.5%. Average Hourly earnings showed a significant gain +.7% v. 0% expected. The Unemployment Rate for April ticked up to 6.1% v. 5.8%. The U6 - Under Employment Index showed improvement for April 10.4% v. March at 10.7% as more people found full-time employment. Both the DJIA and S&P500 hit new highs on the day, the NASDAQ 100 moved higher as well but remains off of new high territory. Energy (XLE) 53.63 +1.78% once again was the lead sector, with EOG Resources (EOG) 83.10 +7.95% hitting a 52 week high on a beat of earnings and revenues. Nike (NKE) 137.81 +3.24% led the DJIA. The stock has formed a double bottom and has advanced after hitting its 200 day MA on April 21. It closed the day above its 20 day MA for the first time since March 18th. Expedia (EXPE) 173.46 +5.24% led the NASDAQ 100, as the online travel company had better than expected loss on earnings but with a beat on revenues. The day’s disaster was again ChemoCentryx (CCXI) 10.46 -61.95% which continues to sell off and disintegrate going from 49 to 11 in just a few days since the company document to the FDA earlier in the week.
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