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Weekly Updates

Market Up for 5th Week out of 6 as Fed Commits to Keeping Accommodative Stance

Weekly Update – April 30, 2021

  • The S&P 500 index reached a record high of 4,218.78 and ended up for the fifth week in six, fueled by the Federal Reserve’s commitment to keep its foot on the gas, upbeat earnings from mega-caps along with bullish economic data.
  • Though month-end profit-taking faded most of last week’s gains, the benchmark index ended the week at 4,181.17, a gain of 0.02% from the prior week’s close of 4,180.17. The index ended April with a gain of 5.2%.
  • The Federal Open Market Committee meeting on Wednesday gave stocks a boost as Fed Chair Jerome Powell’s uber-dovish stance in the face of simmering inflationary pressures and outsized economic growth nudged the index above 4,200.
  • “Amid progress on vaccinations and strong policy support, indicators of economic activity and employment have strengthened … [and] the sectors most adversely affected by the pandemic remain weak but have shown improvement,” the FOMC said.
  • In Washington, US President Joe Biden outlined his $2.3 trillion American Jobs and $1.8 trillion American Families Plan, pledging to pay for the unprecedented fiscal stimulus with higher taxes on Americans making more than $400,000.
  • Of the 11 S&P 550 sectors, consumer staples, health care, and technology ended the week lower. The energy sector was the biggest percentage gainer with a move of +3.6% corresponding to a 2% gain in West Texas Intermediate futures. Within the energy sector, shares of NOV Inc (NOV) were driven 12.5% higher from last week as the expectation for a rebound in equipment bookings overshadowed a second consecutive miss in quarterly earnings. Exxon Mobil (XOM) which reported better-than-expected results on Friday, gained 3% last week with a tailwind from rising commodity prices.
  • Despite impressive results from component stocks Apple (AAPL), Amazon (AMZN), Alphabet (GOOG, GOOGL) and Microsoft (MSFT), the technology sector was the biggest percentage decliner for the week.
  • Seagate Technology (STX) took the top spot with a gain of 4.1% as the company beat both Q1 earnings and revenue expectations. Seagate’s strong performance wasn’t enough to keep the sector in the green, leaving it 2.1% lower for the week.
  • Industrials squeezed out a 0.3% gain thanks to a rally in shares of United Parcel Service (UPS). The logistics company saw its profit and revenue increase above Wall Street’s expectations and ended the week with a 14% increase in its share price.
  • The financial sector was underpinned by solid gains in Willis Towers Watson (WLTW) and Discover Financial Services (DFS), both of which beat expectations for the first quarter. The sector closed the week with a solid 2.3% gain.
  • In economic data, dwindling inventory coupled with diminished affordability (the Case Shiller HPI posted its biggest gain in more than seven years) was reflected in housing market data. Pending home sales increased by just 1.9% in March, well below expectations for a gain of 4.4%.
  • The preliminary glimpse of the first quarter showed that the economy grew at an annualized rate of 6.4%, well above the 4.3% pace in the fourth quarter, but shy of Wall Street expectations.
  • Growth should continue to accelerate, evidenced by the stimulus-fueled 21% gain in personal income which was accompanied by a 4.2% increase in March personal spending. Additionally, consumer confidence shot higher, bolstered by massive government stimulus and low interest rates.
  • The Conference Board’s consumer confidence index and sentiment index measured by the University of Michigan both reached their highest levels in a year.
  • Next week’s earnings calendar includes Avis (CAR), Mosaic (MOS), CVS (CVS) DuPont (DD), Pfizer (PFE), Sysco (SYY), Under Armour (UAA), Hyatt (H), Lyft (LYFT), Prudential (PRU), T-Mobile (TMUS), Carnival (CCL), General Motors (GM), Hilton (HLT), PayPal (PYPL), Uber (UBER), Kellogg (K), Norwegian Cruise Lines (NCLH), ViacomCBS (VIAC), American International (AIG), Expedia (EXPE), Peloton (PTON), Shake Shack (SHAK), and Square (SQ).
  • The economic calendar includes manufacturing and services sector data from US purchasing managers, factory orders, durable goods orders, non-farm productivity and unit labor costs, culminating Friday with the pivotal labor market report for May. Early estimates are for a 970,000 increase in non-farm payrolls for April, pushing the jobless rate down to 5.7% in April.
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