Monday, April 19, 2021
Stocks are continuing their momentum from last year, with major indexes around the world making new highs and the S&P 500 Index already up more than 12% year to date. While optimism surrounding the reopening is certainly understandable, LPL Research takes a look to see if sentiment is flashing a near-term contrarian warning sign for stocks and also provide an update on market technicals and internals in this week’s Weekly Market Commentary, available at 1 p.m. ET.
U.S. stocks open modestly lower after posting the 23rd all-time high of 2021 on Friday
- European markets are little changed in midday trading with France outperforming.
- Asian stocks were higher overnight with China outperforming amid easing concerns about state enterprise financial health.
S&P 500 Index earnings tracking to a more than 30% year-over-year increase in the first quarter
- With just 43 S&P 500 companies having reported, first quarter earnings are already tracking 6 percentage points above March 31 estimates at 24%.
- Financials have driven most of the strength, with 94% of companies in the sector beating estimates with an average upside surprise of 39%.
- S&P 500 Index earnings estimates for the next four quarters have risen by 1% since earnings season began, impressive at this early stage of the season.
- This week more than 80 S&P 500 companies will report first quarter earnings results.
The following economic data is slated to be released this week:
- Tuesday: Johnson Redbook retail sales (Apr.)
- Wednesday: Energy Information Administration (EIA) weekly petroleum status report, Mortgage Bankers Association (MBA) weekly mortgage applications
- Thursday: Weekly initial and continuing claims, Leading Indicators (Mar.) and existing home sales (Mar.)
- Friday: Building permits (Mar.), PMI Composite (Apr.)
The S&P 500 posted its fourth straight week with a more than 1% gain, something that hasn’t occurred since January 2019. The index is also back to more than 16% above its 200-day moving average, nearing the 17% peak of the reading seen in December.
The United States reported 40,000 new COVID-19 cases on Sunday, below the 7-day average of 67,000 (source: New York Times).
- According to the Centers for Disease Control and Prevention (CDC), just over 50% of the adult population has received at least one dose of the vaccine, while around a third of the adult population is fully vaccinated (source: CDC).
- Decision on the continued use of the Johnson & Johnson vaccine is expected to be made by the end of the week, though current vaccination progress has been made using the two-dose Pfizer/BioNTech and Moderna vaccines
Earnings Season Is Here
On the LPL Market Signals podcast, Chief Market Strategist Ryan Detrick and Equity Strategist Jeff Buchbinder discuss why they think another very solid earnings season is on the horizon.
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