Apr 29, 2021
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“I didn’t know what Facebook was, and now that I do know what it is, I have to say, it sounds like a huge waste of time.” – Betty White
“Toxic” “Divisive” “Waste of Time” “Useless” These are just some of the adjectives we’ve heard to describe the Facebook (FB) platform over the last 24 hours, and they’ve come from analysts and investors who have nothing but positive things to say about the company’s profitability and business model. Facebook proved that last night with a blowout earnings report that surpassed even the most optimistic of forecasts. While people may say they use Facebook’s services less and less, the numbers tell an entirely different story. People hate Facebook so much that they can’t get enough of it.
In economic news this morning, Jobless Claims were roughly inline with forecasts, GDP came in modestly weaker than expected, but data on prices surged 4.1% compared to forecasts for an increase of just 2.6%.
Read today’s Morning Lineup for a recap of all the major market news and events including the biggest overnight events, some key earnings reports, economic data from around the world, as well as the latest US and international COVID trends including our vaccination trackers, and much more.
Facebook is on pace to gap up over 7.5% this morning, and based on our Earnings Explorer that would rank as the 10th largest upside gap in the stock in reaction to earnings since its IPO in 2012 and the 14th upside gap of 5%+ in reaction to earnings. Two of those 5%+ gaps have actually occurred in the last year (4/29/20 and 7/30/20). Of the prior 13 5%+ upside gaps, FB has continued higher from the open to close just four times with the largest gain coming in July 2013 when it tacked on an additional 2.4% finishing the day up just under 30%! Of the days where FB gave up ground during the trading session, declines were typically modest with the largest giveback being 3.7% in October 2012.
Apr 28, 2021
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“I believe that if you show people the problems and you show them the solutions they will be moved to act.” – Bill Gates
Despite another round of blowout earnings since yesterday’s close, futures are flat to modestly lower. The economic calendar is light again today, but the pace of earnings will continue to be busy, and this afternoon, all eyes will be on the FOMC with its latest views on rates and the economy.
Read today’s Morning Lineup for a recap of all the major market news and events including the biggest overnight events, some key earnings reports, economic data from around the world, as well as the latest US and international COVID trends including our vaccination trackers, and much more.
Concerns over interest rates have taken a back seat lately, mostly because yields have been moving lower for the last several weeks. In recent days, though, we have started to see a modest reversal of that trend. Just as the yield on the 10-year US Treasury tested its 50-DMA, yields have started to move higher in recent days. This morning, yields are ticking slightly higher, and that has resulted in an upside break of the short-term downtrend from the peak yield in March. With an FOMC announcement and press conference coming up later today, it’s pretty safe to assume that yields are going to start getting a bit more attention.
Apr 27, 2021
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“When Henry Ford made cheap, reliable cars people said, ‘Nah, what’s wrong with a horse?’ That was a huge bet he made, and it worked.” – Elon Musk
The pace of earnings reports has picked up steam considerably, but the pace of earnings beats has remained strong so far. This morning, nearly 80% of companies reporting have topped EPS forecasts and more than 70% have topped revenue forecasts. All in all, a strong showing. We’re also even seeing a number of positive price reactions to the companies reporting with UPS being a notable winner in early trading.
Read today’s Morning Lineup for a recap of all the major market news and events including the biggest overnight events, some key earnings reports, economic data from around the world, as well as the latest US and international COVID trends including our vaccination trackers, and much more.
The S&P 500 hit an all-time high yesterday, and overall breadth has remained positive. One example we wanted to highlight this morning is the fact that of the 62 industries within the S&P 500, 49 (79%) are within 5% of a 52-week high, and 21 (34%) are within 1% of a high. That leaves just 13 industries (21%), which are highlighted in the chart below, down more than 5% from their respective 52-week highs. Leading the way to the downside, Energy Equipment is down nearly 17% after its blistering rally late last year and early this year while the Autos group is down just over 14%. Another notable industry in the group is Technology Hardware, which is basically a proxy for Apple (AAPL). That’s the only industry from the Technology sector in the group that is down over 5%, but we did find it interesting that two other industries with the word ‘technology’ in them are also included- Biotechnology (-5.02%) and Health Care Technology (-10.2%).
Apr 26, 2021
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“Focus and simplicity…once you get there, you can move mountains.” – Steve Jobs
The S&P 500 closed just 0.33% from an all-time high on Friday, and futures are mixed heading into the new trading week. S&P 500 futures are flat, Dow futures are higher, and the Nasdaq is indicated lower.
Whether the week finishes at new highs or not will likely depend on earnings as this week will be the biggest week for earnings of the earnings season, including reports from the largest companies in the S&P 500. To kick off the week, we have seen ten reports cross the wires so far, and not a single one of them missed EPS forecasts. Whether these reports translate into positive returns in each of the company’s stocks, however, is hardly a foregone conclusion the way things have been playing out lately.
The pace of reports will pick up considerably after the close with more than 30 reports, including Tesla (TSLA) and NXP Semi (NXPI).
Read today’s Morning Lineup for a recap of all the major market news and events including the biggest overnight events, some key earnings reports, economic data from around the world, as well as the latest US and international COVID trends including our vaccination trackers, and much more.
Maybe it’s because of the earnings reports that we typically see at this time of year, but historically the period spanning the last few days of April and the first days of May haven’t been particularly friendly for bulls. The snapshot below from our Seasonality Tool shows that over the last ten years the S&P 500’s median performance from the close on 4/26 out through the next week has been a decline of -0.09%. That ranks in just the 30th percentile relative to all other one-week periods throughout the year. Looking out over the next month, the median return has been a gain of 0.56% which, while positive, still ranks in just the 34th percentile relative to other one-month periods. While the short-term returns have been on the weak side, longer-term, the S&P 500’s median return over the upcoming three months has been a gain of 3.71% which actually ranks in the 73rd percentile.
Apr 23, 2021
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“Real knowledge is to know the extent of one’s ignorance.” – Confucius
It’s a mixed picture for equity futures this morning after Thursday’s drubbing. There’s been no economic data so far, but at 10 AM we’ll get flash readings on April Manufacturing and Services activity from Markit. Investors will be looking for signs of how serious or likely the Democrats will be to pass Biden’s plans to raise capital gains tax rates for the highest earners, but with some Democrats even voicing concerns, this plan may not be the slam dunk that the market feared yesterday.
Read today’s Morning Lineup for a recap of all the major market news and events including the biggest overnight events, some key earnings reports, economic data from around the world, as well as the latest US and international COVID trends including our vaccination trackers, and much more.
Economic data has generally been strong around the world lately, but don’t tell that to the 10-Year US Treasury. Yesterday, the yield on the 10-year US treasury closed below its 50-DMA for the first time since last August.
Apr 22, 2021
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“Be brutally honest about the short term and optimistic and confident about the long term.” – Reed Hastings
It’s been another strong overnight session in terms of earnings results, but as has been the case recently, the market isn’t very impressed. Futures are modestly negative to flat, even after jobless claims came in well below forecasts and at their lowest levels since the pandemic. The ECB left its policy position in place, but we’ll be looking for further details in the press conference coming up shortly.
Read today’s Morning Lineup for a recap of all the major market news and events including the biggest overnight events, some key earnings reports, economic data from around the world, as well as the latest US and international COVID trends including our vaccination trackers, and much more.
Yesterday was a strong day for the equity market, and while the Nasdaq 100 are both near all-time highs, the Russell 2000 continues to struggle. Even after yesterday’s rally, IWM remains below its 50-day moving average. On the one hand, until it can break back above its 50-DMA, the burden of proof is on the bulls, but if it can break above that level, you could argue that much of the froth in small caps has been worked off, so expectations are relatively low.
