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Weekly Updates

S&P Slides, Despite Positive Q1 Earnings, and Gains in Real Estate

Weekly Update – April 23, 2021

  • The S&P 500 index slipped 0.1% last week, its first weekly decline in a month, amid surging global cases of COVID-19 and reports of a planned increase in the US capital gains tax rate, although better-than-expected corporate earnings and economic data helped minimize the drop.
  • The market benchmark ended the week at 4,180.17, down from last week’s close of 4,185.47, which was a record closing high. The index has yet to reach a new closing high since then, but hit a new intraday high Friday at 4,197.14.
  • This marks the S&P 500’s first weekly drop since the week ended March 19. It is still up 5.2% for April to date and up 11% for the year to date.
  • The weekly decline came despite falling US cases of COVID-19, as the number of afflicted elsewhere climbed. India hit a global record for daily new infections. Amid the concerns about global cases, the US State Department added more than 100 countries to its “do not travel” advisory list, which now covers about 80% of countries worldwide.
  • Investors also fretted over reports that US President Joe Biden is planning to propose nearly doubling the capital gains tax rate for wealthy individuals.
  • Still, many US companies have reported Q1 earnings above expectations, and economic data have also been showing positive signs of a recovery. Among the encouraging releases that helped limit this week’s stock market decline, IHS Markit posted the fastest expansion in service-sector activity since it began collecting the data in 2009, and the Commerce Department reported new home sales rose nearly 21% in March to a 14-year high.
  • By sector, energy had the largest percentage drop of the week, down 1.8%, followed by a 1.2% decline in consumer discretionary. The other sectors in the red were utilities, communication services, technology, consumer staples and financials.
  • On the upside, real estate had the largest percentage gain of the week, up 2%, followed by a 1.8% increase in health care. Other gainers included industrials and materials.
  • The drop in energy came as crude oil futures also fell amid the worries about global COVID-19 cases. The decliners included Halliburton (HAL), whose shares dropped 7.9% on the week. Halliburton reported year-over-year declines in Q1 adjusted earnings per share and revenue this week, although both figures surpassed Street expectations and the company said it expects international activity growth to accelerate in 2021 while it is seeing early positive momentum in North America.
  • The decliners in consumer discretionary included Las Vegas Sands (LVS), which reported a wider Q1 adjusted loss from continuing operations than in the year-earlier period. The loss matched the Street consensus view, disappointing investors who were hoping for a beat. Revenue, meanwhile, fell by more than expected. The company’s shares posted a 2% weekly drop.
  • The real estate sector’s gainers included Crown Castle International (CCI), which reported Q1 adjusted funds from operations up from the year-earlier period and above analysts’ mean estimate. The company also raised its outlook for 2021. Shares climbed 4.2%.
  • Next week’s earnings slate includes Tesla (TSLA) on Monday; Alphabet (GOOGL) and Microsoft (MSFT) on Tuesday; Boeing (BA), Facebook (FB) and Apple (AAPL) on Wednesday; Merck (MRK), McDonald’s (MCD) and Kraft Heinz (KHC) on Thursday; and Clorox (CLX), Exxon Mobil (XOM) and Chevron (CVX) on Friday.
  • The data calendar features March durable goods and core capital goods orders on Monday; April consumer confidence on Tuesday; March pending home sales on Thursday; and March consumer spending and core inflation, among other reports, on Friday. There will also be a Federal Open Market Committee meeting next week, concluding with an announcement Wednesday afternoon.
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