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Earnings, Economic Data, and Jobs Report Lead to Broad Based Gains

Weekly Update – April 16, 2021

  • The S&P 500 index rose 1.4% last week and set new record highs yet again as the first round of financial results from Q1 came in ahead of expectations while weekly jobless claims fell to their lowest level since March 2020.
  • The market benchmark ended the week at 4,185.47, up from last Friday’s close of 4,128.80 and marking a record closing high. The index also reached a new intraday high Friday at 4,191.31. The S&P 500 is now up 11% for the year to date.
  • The weekly climb was broad, with one sector barely in the red and all other sectors in the black for the week. Utilities had the largest percentage increase, up 3.7%, followed by a 2.9% rise in health care and a 2.6% gain in real estate. The lone declining sector was communication services, down by less than a hundredth of a percentage point.
  • Investor sentiment was boosted by stronger-than-expected Q1 reports as well as economic data. The companies that reported Q1 results above analysts’ expectations included Goldman Sachs (GS), Alcoa (AA) and PepsiCo (PEP). The week’s economic data, meanwhile, featured the drop in weekly jobless claims to their lowest level since March 2020 as well as a 9.8% jump in US retail sales.
  • The investor optimism came even as the seven-day average of newly reported US COVID-19 cases edged up and the US vaccination effort hit a major setback. The Food & Drug Administration and the Centers for Disease Control & Prevention recommended a pause in the use of Johnson & Johnson’s (JNJ) COVID-19 vaccine following six cases of a rare blood clot in six women who had received the vaccine. Still, with two other authorized vaccines in the US, the news of the pause didn’t prevent the stock market from climbing.
  • The utilities sector’s gainers included Entergy (ETR), whose shares rose 5.4% on the week as the electric power producer said its board declared a quarterly dividend payment of $0.95 per share on its common stock, maintaining the company’s previous quarterly rate.
  • In health care, UnitedHealth Group (UNH) shares jumped 3.9% as the provider of health care benefits as well as technology-enabled health services reported stronger-than-expected Q1 earnings and revenue and boosted its guidance for 2021 adjusted earnings per share.
  • In real estate, shares of Public Storage (PSA) rose 3.5% as the acquirer, developer and operator of self-storage properties announced a deal to acquire ezStorage, another self-storage company, for $1.8 billion. Public Storage expects the deal to immediately boost its funds from operations following an anticipated closing in May.
  • The decliners in communication services included shares of Discovery (DISCA), down 11% amid reports that Credit Suisse (CS) is unloading holdings in the media company after Archegos Capital Management defaulted on its credit with the Swiss lender and other banks.
  • Next week’s earnings calendar features Coca-Cola (KO) and United Airlines (UAL) on Monday, Procter & Gamble (PG) and Netflix (NFLX) on Tuesday, Verizon Communications (VZ) and Halliburton (HAL) on Wednesday, AT&T (T) and Intel (INTC) on Thursday, and American Express (AXP) and Kimberly-Clark (KMB) on Friday.
  • The economic calendar will be light, with no major reports due the first three days of the week. Weekly jobless claims, March existing home sales and leading economic indicators are expected Thursday, followed by March new home sales and Markit’s April purchasing managers indexes.

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