Monday, May 24, 2021
Stock Market Gains Likely To Slow
LPL Research explores how, as this bull market gets a little older, the pace of stock market gains will likely slow but does not expect pullbacks to last very long. Learn more in this week’s Weekly Market Commentary.
U.S. equities higher amid pandemic recovery inflation concerns
- The Nasdaq Composite is up 0.6% as growth names advance.
- European stock are essentially flat through midday trading with the Euro Stoxx 50 off a fraction.
- Asian equities were mixed with both China (Shanghai Composite) and Japan (Nikkei) markets marginally higher.
Wrapping up a remarkably strong earnings season
- S&P 500 Index earnings for the first quarter are tracking to a remarkable 51.5% year-over-year increase, more than double the 24% increase reflected in March 31 estimates.
- The consensus S&P 500 earnings estimate for the next four quarters has increased by an unusually strong 4.2% since earnings season began.
- Year to date, the consensus S&P 500 earnings estimates for 2021 has increased by 12.6%, similar to the index’s 11-12% advance.
This week closes out first quarter earnings season with 13 S&P 500 companies reporting, which will bring the total to over 490.
The S&P 500 went on a round trip last week, briefly testing the previous week’s low as well as the 50-day moving average before closing down at just 0.4%. Leadership leaned defensive, while cyclical value sectors moved broadly lower. This week we’ll be watching to see if the benchmark index can hold recent lows (4056), while short-term upside levels to eclipse are 4188 (Friday’s intraday high) and 4238 (all-time intraday high).
The following economic data is slated to be released this week:
- Tuesday: Federal Housing Financing Agency March Home Price Index, S&P/Case-Schiller Home Price Index (Mar.), consumer confidence (May), new home sales (Apr.)
- Thursday: Weekly initial and continuing claims, pending homes sales (Apr.), durable orders (Apr.), revised GDP (Q1 2021)
- Friday: Personal consumption expenditures (Apr.), wholesale inventories (Apr.), University of Michigan Sentiment (May)
Inflation, Inflation, Inflation
On the LPL Market Signals podcast, Chief Market Strategist Ryan Detrick and Equity Strategist Jeff Buchbinder dive into the hotter than expected recent inflation data and explains why massive inflation down the road is unlikely.
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