Market plays waiting game

  • Tech earnings surge, but sector slips
  • Energy stocks climb as oil rebounds
  • This week: Jobs report, busiest week of earnings yet

Stocks will kick off the new month on an up note, having just wrapped up their sixth-best April of the past three decades.

Not that the S&P 500 (SPX) did much of anything last week—somewhat surprising, perhaps, given the number of high-profile companies that released earnings. But the index still managed to “rebound” from the previous week’s small loss by posting an even smaller gain (exactly 1 point) and hitting another record high in the process:

Chart 1: S&P 500 (SPX), 3/22/21–4/30/21. S&P 500 (SPX) price chart. Hanging around the highs.

Source: Power E*TRADE

The headline: Market consolidates near records as earnings roll in.

The fine print: Big earnings beats by the likes of Apple (AAPL), Microsoft (MSFT), Facebook (FB), Tesla (TSLA), and Amazon (AMZN) dominated the headlines last week. But President Biden’s American Families Plan (a proposed $1.8 trillion in education, childcare, and family leave perks1) and another dovish Fed statement2 were reminders that “stimulus,” in all its forms, is still very much alive—as are the discussions about the taxes and inflation that some market watchers see as potential repercussions.

The number: 6.4%, the initial estimate of Q1 GDP—slightly less than the consensus estimate, but the second-highest reading since 2003.

The scorecard: The Nasdaq 100 (NDX) trailed the pack again despite all the tech earnings beats:

US stock index performance table for week ending 4/30/20. S&P 500 (SPX), Nasdaq 100 (NDX), Russell 2000 (RUT), Dow Jones Industrial Average (DJIA).

Source (data): Power E*TRADE

Sector roundup: The strongest S&P 500 sectors last week were energy (+3.7%), communication services (+2.9%), and financials (+2.4%). The weakest sectors were information technology (-2.2%), health care (-1.9%), and consumer staples (-0.1%).

Highlight reel: Microvision (MVIS) +47% to $26.44 on Monday, then -24% to $20.16 on Tuesday. Aldeyra Therapeutics (ALDX) +34% on Tuesday, Revolution Medicines (RVMD) -21% to $33.80 on Wednesday.

Futures action: June WTI crude oil (CLM1) rallied to a six-week high of $65.47/barrel on Thursday before pulling back more than 2% on Friday to $63.58. June gold (GCM1) drifted slightly lower for the week, closing Friday at $1,767.70/ounce. Copper prices continued their quest to hit all-time highs, with July futures (HGN1) hitting a new contract high of 4.551 on Thursday. May corn (ZCK1) was the week’s biggest gainer (+12.9%), while July orange juice (OJN1) was the week’s biggest loser (-3.8%).

Coming this week

With more than 1,400 companies poised to release their numbers, this will be the busiest week of earnings season so far:

Monday: ON Semiconductor (ON), Chegg (CHGG), Estee Lauder (EL), FreshPet (FRPT)
Tuesday: Activision Blizzard (ATVI), Verisk Analytics (VRSK), Hyatt Hotels (H), CVS Health (CVS), Vulcan Materials (VMC), Cardlytics (CDLX), Unitil (UTL), Global Payments (GPN), Zillow (ZG), Virgin Galactic (SPCE), Match Group (MTCH), LGI Homes (LGIH)
Wednesday: Albemarle (ALB), Barrick Gold (GOLD), General Motors (GM), Emerson Electric (EMR), Etsy (ETSY), PayPal (PYPL), Q2 Holdings (QTWO), Sunrun (RUN), Qorvo (QRVO), Plug Power (PLUG), Uber (UBER), PetIQ (PETQ)
Thursday: Beyond Meat (BYND), Kellogg (K), US Concrete (USCR), Carvana (CVNA), Dropbox (DBX), Epam Systems (EPAM), Penn National Gaming (PENN), Moderna (MRNA), Square (SQ), Roku (ROKU)
Friday: Cigna (CI), DraftKings (DKNG)

The busy top-of-the-month earnings calendar crescendos with the jobs report on Friday:

Monday: Markit Manufacturing PMI, Construction Spending, ISM Manufacturing PMI, Vehicle Sales
Tuesday: Trade Balance, Factory Orders
Wednesday: ADP Employment, ISM Non-Manufacturing PMI
Thursday: Productivity (Q1 preliminary), Labor Costs (Q1 preliminary)
Friday: Employment report, Wholesale Inventories, Consumer credit

This week’s IPOs include:

Wednesday: Honest Company (HNST), Five Star Bancorp (FSBC)
Thursday: Bowman Consulting Group (BWMN)
Friday: iPower (IPW)

Check the Active Trader Commentary each morning for an updated list of earnings announcements, IPOs, economic reports, and other market events.

Sell when and do what?

If nothing else, this month has the honor of being associated with the stock market’s most famous rhyme—“Sell in May and go away”—borne of the not completely misguided notion that a disproportionate chunk of stock gains occur between November and April.

But “not completely misguided” was more relevant back in the day because, among other realities, between 1960 and 1990 the S&P 500 had an average return of -0.36% in May, making it the second-weakest month of the year.

Since then, not so much. Over the past 31 years May has:

● closed higher more often than all but three other months (70% of the time).
● the sixth-highest median monthly return (1.2%).

So, while it may not be a month investors should necessarily expect to “make their year,” it also hasn’t screamed “go away” as much as it may have in days of yore.

Every year is different, of course, and this time around the SPX will enter May very near its all-time high after gaining 5.2% in April—and also having lost momentum over the past couple of weeks. And one final bit of context: As noted in “Market on the run,” April marked the sixth-straight month the SPX made a higher high. While the index has usually pushed to a higher monthly high the next month, it closed that month lower more often than not.


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1 Fed holds interest rates near zero, sees faster growth and higher inflation. 4/28/21.
2 Here's what's in Biden's $1.8 trillion American Families Plan. 4/28/21.
3 Reflects S&P 500 (SPX) monthly price, 1960–2020. Supporting document available upon request.

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