Stocks commerce combined as tech shares drop, Nasdaq turns unfavourable

by akoloy


Stocks traded combined on Monday, with the S&P 500 and Dow trying to kick off May on a excessive be aware whereas the Nasdaq declined.

The S&P 500 added about 0.4%, whereas the Dow jumped by 0.9%. On Friday, the S&P 500 ended ended decrease, however nonetheless closed out its finest month since November with a month-to-month advance of greater than 5%. In April, the communication companies and shopper discretionary sectors led positive factors within the S&P 500, returning to a management place after lagging earlier in 2021 amid a rotation into cyclical and “reopening” shares. However, development names pared some positive factors final week, with Federal Reserve Chair Jerome Powell highlighting that some asset valuations appeared “frothy.”

Still, a wave of stronger-than-expected earnings outcomes from firms throughout industries helped gas the newest transfer greater within the broader market, with company earnings rebounding alongside the pick-up in financial exercise. As of Friday, 86% of S&P 500 firms had crushed first-quarter earnings expectations, in keeping with FactSet information. This would mark the best proportion since at the least 2008, if it holds by way of the top of first-quarter earnings season. Companies together with Uber (UBER), Lyft (LYFT), Square (SQ), Peloton (PTON) and Pfizer (PFE) are poised to report outcomes later this week. 

Underpinning the financial restoration has been the robust tempo of vaccinations within the U.S., which has in flip enabled extra enterprise throughout the nation to reopen and bolstered customers’ confidence in a return to a semblance of normalcy. As of Sunday, greater than 104 million Americans have been absolutely vaccinated, according to data from the Centers for Disease Control and Prevention, to comprise practically one-third of the nation’s whole inhabitants. 

However, some strategists cautioned traders about getting complacent, with the ample excellent news on the restoration now nicely priced into the markets. 

“I think the market is priced almost to perfection, right? We’ve priced in a good vaccine rollout. We’ve priced in a strong reopening to the economy. I’m a little concerned about the second half of the year,” Allan Boomer, Momentum Advisors Chief Investment Officer, told Yahoo Finance. “I think it’s possible that in the short term, earnings have basically peaked and … this is a great quarter, but I don’t know that the rest of the year will be quite as strong.”

“One of the things that I think you’ll start to see is that we’ve got a labor shortage in the United States. We talk about the jobs that were lost. We don’t really talk about the fact that there’s a lot of companies that have a lot of vacancies that are outstanding,” he added. “So I think you’ll start to see in the second half particularly companies that rely on labor, you’ll start to see some issues around a labor shortage for sure.”

The Labor Department will launch its April jobs report on Friday, which is anticipated to indicate a staggering practically 1 million payrolls got here again final month, accelerating from March’s acquire. 

1:19 p.m. ET: ‘Both traders and coverage makers proceed to underestimate the unimaginable restoration in each the economic system and earnings all through this pandemic’: Strategist 

Even with shares hovering close to document ranges, some strategists mentioned traders are nonetheless under-appreciating the energy of the U.S. financial restoration poised to happen this 12 months, and the wave of spending it’s going to unlock for customers and companies alike. 

“What’s interesting here is that both investors and policy makers continue to underestimate the incredible recovery in both the economy and earnings throughout this pandemic,” Michael Arone, State Street Global Advisors chief investment strategist, told Yahoo Finance on Monday. “So consistent, quarter after quarter, the numbers are beating by wide margins. And analysts are struggling to catch up. And so, I think that’s one of the key takeaways, is that the numbers just continue to be incredibly strong. 

“And one of many issues I proceed to level out is, that there is a lot priced into this market. And one of many issues particularly is across the shopper,” he added. “I feel what’s being under-appreciated is that companies are additionally influenced by the identical dynamics. And their earnings and money circulate is extremely robust. And I feel it is going to unleash an unimaginable spending growth by companies over the rest of this 12 months.” 

12:05 p.m. ET: Stocks trade mixed, Nasdaq dips

Stocks traded mixed Monday afternoon, with the S&P 500 and Dow gaining while the Nasdaq fell.

The S&P 500’s gains were led by the energy, materials and health-care sectors. Technology stocks lagged, extending last week’s stretch of weakness. The Nasdaq turned negative during the afternoon session.

The Dow outperformed, gaining more than 300 points, or 0.9%, at session highs. Materials company Dow Inc (DOW) and Home Depot (HD) led the advances, adopted by Walgreens Boots Alliance (WBA) and IBM (IBM). 

11:03 a.m. ET: Construction spending increased far less than expected in March 

Construction spending increased at a pace that came in far below expectations in March, with non-residential structures and public spending still taking place at a weak rate amid the pandemic. 

Construction spending increased 0.2% in March over February, the Commerce Department said Monday. This came following a 0.6% drop in spending in February, which was largely due to inclement weather. Consensus economists were looking for a rise of 1.6% in construction spending during the month. Still, spending was up 5.3% year-over-year, with strength in housing construction still helping buoy the metric overall.

10:56 a.m. ET: U.S. manufacturing sector activity cooled slightly in April as soaring demand pushed prices higher: IHS Markit 

IHS Markit’s final U.S. manufacturing purchasing managers’ index for April pulled back slightly at the end of the month, with rising costs and supply chain delays weighing on the sector. 

The IHS Markit manufacturing purchasing managers’ index closed out the month at 60.5, or below the 60.6 reported in the preliminary print and the 60.7 expected from consensus economists, according to Bloomberg data. Still, the index was strongly in expansionary territory, or well over the neutral level of 50.0. 

“US manufacturers reported the biggest boom in at least 14 years during April,” Chris Williamson, chief enterprise economist at IHS Markit, mentioned in a press assertion. “Demand surged at a pace not seen for 11 years amid growing recovery hopes and fresh stimulus measures.”

“Supply chain delays worsened, nevertheless, working on the highest but recorded by the survey, choking manufacturing at many firms,” he added. “Suppliers have been in a position to command greater costs because of the energy of demand for inputs, pushing materials prices greater at a charge not seen since 2008.” 

9:31 a.m. ET: Stocks open higher

Here’s where markets open Monday morning: 

  • S&P 500 (^GSPC): +23.16 factors (+0.55%) to 4,204.33

  • Dow (^DJI): +199.09 factors (+0.59%) to 34,073.94

  • Nasdaq (^IXIC): +64 factors (+0.46%) to 14,028.74

  • Crude (CL=F): +$0.24 (+0.38%) to $63.82 a barrel

  • Gold (GC=F): +$20.90 (+1.18%) to $1,788.60 per ounce

  • 10-year Treasury (^TNX): -1 bp to yield 1.621%

9:27 a.m. ET: Verizon to sell media business including Yahoo Finance to Apollo in $5 billion deal

Telecommunications giant Verizon (VZ) said Monday it agreed to sell its media business segment, including Yahoo and AOL, to private equity firm Apollo Global Management. Verizon is currently the parent company of Yahoo Finance. 

The $5 billion deal is expected to close in the second half of the year, and will rename the business currently known as Verizon Media as Yahoo. Other brands in the portfolio include TechCrunch, Makers, Ryot and Flurry. Verizon’s media group reported revenue of $1.9 billion in the first three months of 2021, for a 10% year-over-year increase. 

8:00 a.m. ET: ‘Capex, R&D and M&A will account for a majority of corporate cash spending in 2021’: Goldman Sachs

With uncertainty from the pandemic lifting, corporations have begun to announce ambitious new strategies, many of which involve massive investments into their future growth. According to Goldman Sachs U.S. chief market strategist David Kostin, this spending will be primarily funneled into one of three key areas.

“Capex, R&D and M&A will account for a majority of company money spend,” Kostin wrote in a note Monday morning. “Many corporations have used 1Q reporting season to announce substantial new development initiatives. U.S. spending plans by AAPL ($430 billion over 5 years), and capex boosts by INTC ($20 billion) and WMT ($14 billion) are notable examples.”

“We forecast a +19% rebound in money use in 2021 and +6% development in 2022,” he added. “Tax represents a ey threat to the trajectory of money spending in 2022 and past.” 

7:27 a.m. ET Monday: Stock futures point to a higher open

Here’s where markets were trading before the opening bell Monday morning: 

  • S&P 500 futures (ES=F): 4,194.75, up 20.25 points or 0.49%

  • Dow futures (YM=F): 33,967.00, up 200 points or 0.59%

  • Nasdaq futures (NQ=F): 13,884.00, up 34.25 points or 0.25%

  • Crude (CL=F): +$0.08 (+0.13%) to $63.66 a barrel

  • Gold (GC=F): +$10.80 (+0.61%) to $1,778.50 per ounce

  • 10-year Treasury (^TNX): +1.3 bps to yield 1.644%

NEW YORK, NEW YORK - APRIL 15: People walk by the New York Stock Exchange on April 15, 2021 in New York City. After major companies reported strong earnings and new economic data points to a rebound in consumer spending, U.S. stocks climbed to record levels on Thursday. (Photo by Spencer Platt/Getty Images)

NEW YORK, NEW YORK – APRIL 15: People walk by the New York Stock Exchange on April 15, 2021 in New York City. After major companies reported strong earnings and new economic data points to a rebound in consumer spending, U.S. stocks climbed to record levels on Thursday. (Photo by Spencer Platt/Getty Images)

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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