Hi Everyone,
The main sectors diverged substantially despite the choppy day at the level of the major indices, with tech stocks and consumer discretionaries performing the best. Healthcare stocks also pulled their weight, with industrials showing relative strength as well, thanks to the optimism regarding the infrastructure bill. Materials and energy stocks lagged the broader market throughout the day due to the sharp drop in commodity prices, with financials, utilities, and consumer staples also losing ground.
Traders said that today’s session was consistent with a healthy bullish market, despite the mixed showing of the major indices. As one trader explained, “The broad-based S&P 500 finished higher for the seventh day in a row and closed at a new all-time high, so, even though the Dow failed to maintain its bullish momentum, investors should be delighted by today’s developments.”
IBM’s (IBM, – 9.6%) revenue miss shows just how hard it is to compete with the biggest players of the tech sector, even for companies with decades of experience. IBM missed revenue estimates despite the strong growth in the sector, and the continued struggle of the company could even lose its membership in the Dow. On the other side of the spectrum, Tesla (TSLA, + 3.3%) is among the high-flying stocks of the market, and following yesterday’s excellent earnings report, the company could soon join the elite trillion-dollar club in market value.
While the Philly Fed Index and the CB Leading Index both posted small negative surprises, the second pandemic-era low in new jobless claims in two weeks might signal a much-needed change in employment dynamics. A stronger job market could be the basis of the next phase of the economic recovery, which might see lower, but more sustainable growth rates. The Biden administration’s social infrastructure package could provide an extra boost, but with wages increasing at the quickest pace in well over a decade, employment growth would be a stronger bullish catalyst for the consumer sector.
“Once you do something you love, you never have to work again.”
Willie Hill
As always, have a great evening and stay tuned!!
